From entering the metaverse to shockproofing your supply chain, here’s what the savviest CEOs should be prioritising this year, says Sophia Ambrono
Out with the old and in with the new. Of the 18 chief executives appointed to lead UK retailers with revenues more than £50 million in 2021, 11 of these were first-time CEOs.
According to the research from head-hunter Korn Ferry, nine of these were internally promoted. And of those that were existing CEOs, more than a third (38 per cent) had only been in-post for three years or fewer. “A trend for a new generation of leaders,” the research declares.
At Re_Set we work with enlightened leaders and next-generation businesses to navigate disruption and find solutions to the problems of today and tomorrow. So, what advice do we have for this latest cohort of retail CEOs? With disruption around every corner, here are five key priorities points to add to your list for 2022.
1. Go circular, or go home
The traditional operating model of retailers delivering goods to customers without a thought for the planet are over. This is the year when retailers must start reviewing their operations both upstream and downstream. The savviest will quickly adopt new technologies to speed up their internal processes, while developing new propositions to engage and support customers beyond the point of purchase.
The transition to circular business models is coming fast. This is about more than just take-back schemes and recycling initiatives. Instead, there’s a new focus on driving value from waste.
Several initiatives under the EU’s Circular Economy Action plan will come into force at the beginning of this year – some of which require businesses to further substantiate green claims and others requiring the textile industry to apply circular economy principles. This will affect everything, including production, products, consumption, waste management and secondary raw materials, as well as directing investment, research, and innovation to circular technologies.
Fortunately, with pressure intensifying on retailers to change their practices, innovations are also maturing, helping provide some solutions to increase the adoption of closed-loop systems. From an app that provides mobile access to zero waste shopping, to a scheme that transforms the pallet distribution model, our innovation intelligence hub, Springwise is an amazing resource of the latest innovator thinking from around the world.
2. Remember the customer is still king
The awareness of climate change and wasteful practices was heightened during the pandemic, but the reality is, even the most sustainable of consumers still enjoy the simple pleasure of shopping. As we move into the third year of the pandemic, and with consumer behaviours no longer linear and boxed within clear archetypes, retailers must find new ways of tailoring their preferences to an ever-more demanding customers.
Being able to respond to conflicting and more nuanced customer needs is what will set successful retailer apart in 2022. While lockdowns and extended periods of working from home made consumers demand comfort as well as style, the great ‘opening up’ as lockdowns eased saw a surge in demand for formal wear last year.
Two years on, while we’re still learning to live with the virus, consumers are unlikely to let go of some habits. Comfort will no longer be compromised for style, with consumers shifting to more casual outfits at work – and even traditionally formal employers becoming less stringent about dress codes. Outdoor gear is no longer being reserved only to countryside walks, with city-dwellers discovering the joy of spending more time in parks and urban gardens.
Retailers who can understand the shifting demands of customers are the world continues to evolve post-pandemic will be best placed to thrive. Working with Tesco, Re_Set saw this first-hand. Last year, we provided its Group Innovation team on an ‘unconstrained innovation scan’, to help them to understand the challenges and opportunities facing them in the immediate and longer terms future. Because this team had the foresight to recognise there were ‘unknown unknowns’, the supermarket has been able to effectively position itself for the months and years ahead.
3. Get up to speed on v-commerce
You must have heard about the metaverse by now. (No? Read the primer over on Springwise.) But what does it mean for the retail industry? In a nutshell: the metaverse offers the ultimate opportunity for combining two of the most powerful customer engagement tools – extreme personalisation and gamification.
At a time when customer engagement is the most valuable currency, ‘v-commerce’ (virtual commerce) offers a tantalising new way of doing things. The traditional online shopping experience is transformed into a something akin to a video game. Consumers can move around a virtual space, via a personalised avatar, and explore ‘shops’ in a way that’s more exciting than just seeing pictures on a screen.
While the metaverse is still in its infancy, additional platforms and games built there are emerging. These will increasingly enable consumers to transition between one virtual world to another, using the same avatar. Consumers can now buy one item they like in one world and still wear it in another world, making it more attractive to purchase items that enhance their avatar’s appearance. This represents an exciting opportunity for brands.
The metaverse also enables brands to collect richer data about their customers – allowing them to push highly personalised offerings, unique to this space. By combining this with gamification (including virtual-store rewards), this will provide a bespoke, enhanced experience to each customer, increasing the likelihood of repeat purchases.
4. Close the ‘say-do’ gap
Sustainability has been viewed as a differentiator for too long. Today, every business that wants to be seen as a player in the market is loudly committing to bolder ‘green’ targets. Yet, while it’s encouraging to see businesses moving in the right direction, the journey to becoming net zero is neither clear, nor quick.
Becoming a truly purpose-driven business is a transformative process, that cuts across every area of the organisation. It requires detailed planning. The expectation is shifting from consumers and employees to regulators and investors. This means that in the UK the Treasury will require listed businesses to release their net zero plans by 2023.
These are clear signs the regulatory environment is shifting. Soon there will be a requirement for businesses to bring a plan of action to substantiate their ambitious statements. The only way for businesses to drive any value from their net zero pledges is to transform these into detailed plans and engage their leaders early.
5. Shockproof your supply chains
The end of 2021 was shadowed by supply chain challenges and shortages caused by a combination of pandemic-related factors and geopolitical instability. Brexit had already given retailers a taste of what supply chain challenges could look like – but the pandemic really underscored the importance of supply chain security and de-risking global operations.
Although some immediate challenges have been addressed, supply chain pressures are set to continue to disrupt the retail sector at least until the end of 2022. Retailers are also pressured to rethink their supply chain strategies considering sustainability concerns of highly distributed, global operations.
Regulatory pressures are increasing due to the recent IPCC report and some targets are crystallising as early as 2025. Retailers who want stay ahead have already started scrutinising their operations. Strategies to manage these pressures include simpler, more resilient supply chains, with trusted new partners that share the same values. Implementing modular operating model that can provide both resilience and agility will be key, as will embracing innovation.
Sophia Ambrono is a Consultant at Re_Set. Want more insights from the Re_Set team? Follow us on LinkedIn, or sign up to our newsletter for our latest thinking. Want to find out how Re_Set is helping businesses like yours stay competitive in 2022? Get in touch.
