Shoptalk Europe returned to Fira Gran Via in Barcelona, bringing together more than 3,000 attendees and 175+ industry experts to learn, network and collaborate on shaping the future of retail.
Here’s a roundup of the top takeaways for retailers and consumer brands from this year’s sessions:
1. Generative AI is on everyone’s minds, but no one is quite sure how to realize its full potential.
Almost every speaker mentioned generative AI, but retailers and consumer products brands have yet to discover an ironclad use case for the new technology. However, many are still in the experimentation phase, focusing on how it can simplify, speed up and enhance experiences, but not necessarily reduce headcount.
Among the many ideas discussed, one particular concept struck a chord: “Winning the share of search is as important as winning the share of shelf,” a quote from Neel Arora, the global head of e-commerce at Nestle.
In order to win share of search, generative AI quickly creates product descriptions by writing hundreds of different product variations for different platforms and regions using important keywords. This new practice can be decentralized and performed by brand teams, rather than with a central e-commerce team.
Balakrishnan Subramanian, vice president of digital demand at Mars, echoed this idea, calling it “democratizing the simplicity of creativity,” empowering those with limited writing or tech skills to create more.
2. While sustainability is a top priority for brands, consumers still prioritize value, quality and convenience.
Sustainability is of paramount importance to every brand and retailer. However, it’s still not a significant factor at the point of sale, with value, quality and convenience being the predominant drivers of purchasing decisions for consumers.
Even still, brands and retailers remain committed to achieving net zero goals. For instance, Danone is working to reduce methane production in its dairy supply chain by 30% by 2030 by pursuing innovative approaches to methane reduction, such as collaborating with animal feed suppliers in Belgium. Diageo has also declared that it will invest $1 billion in sustainability and circularity initiatives in partnership with retailers and the on-trade industry over the next decade as part of its 'Society 2030' strategy.
Ahold wants to use their size and influence to help reduce food waste, plastic use and encourage healthy eating. Bubble Skincare highlighted the history of greenwashing in the beauty industry and the need to be authentic and transparent about the environmental impact of their products. Many retailers such as Printemps, H&M, Bike Club and Zalando all highlighted their work to build and scale circular business models. The conversation on ‘greenwashing’ has now flipped to ‘greenhushing,’ with retailers preferring to act rather than talk.
Overall, retailers agree that sustainability should not be pursued at the expense of taste and quality, as emphasized by European President of Diageo, Soraya Benchikh.
3. COVID-19 shifted shopping habits to more frequent but smaller purchases and a focus on value and reward.
Post-COVID-19, Macroeconomic conditions, including universal price inflation, have further impacted the way retailers operate and the way consumers shop, which has major implications for brand owners.
Firstly, consumers are shopping more frequently but are buying fewer items each visit. In Morrisons, a major U.K. retailer, frequency of purchase (FOP) is up, meaning shoppers are buying more often (+6.1%) but the average basket size is down (-7.2 items). As a result, efficiency savings in replenishment inevitably means SKU reduction is taking place, removing significant costs from the retailer supply chain, but this will have an impact on CPG companies. Conversely, online shopping allows for a greater SKU count and assortment.
Secondly, shoppers are now buying for value or for rewards/treats, leading to buoyancy in the value and premium subcategories and a squeeze on the middle mass-market brands. Finally, the consumption of products has also changed, with consumers drinking "better but less.” According to Benchikh, consumers prioritize moments that matter and want them to be fabulous.
A common theme for many retailers facing economic headwinds was to remember where they come from, and what they are great at. They need to nail the basics first, then invest further in cutting-edge innovations. Understanding consumer journeys has never been more important for providing the right product to the right consumer at the right time.
4. As channels converge, brands that create value exchanges through personalized experiences can increase customer lifetime value (CLV).
As channels and points of engagement continue to proliferate, retailers and brands need to meet consumers where they are and create a ‘unified experience,’ a statement echoed by Neil Reynolds, Mars’ vice president of global digital commerce. According to Carrefour’s Chief Digital Factory Officer, Valérie Legat, their shoppers who shop both online and in-store deliver 20% more value on average through increased frequency and average order value (AOV).
Unified experiences require deep connections with the consumer at every moment of engagement through a value exchange—trading personalized content or offers for first-party data.
One fast-growing type of value exchange, retail media networks (RMNs), dominated the conversation. While there’s a strong focus on collaboration and partnership through RMNs to create personalized experiences, they’re still uncharted territory that brings challenges of transparency and consistency in measuring effectiveness.
Another challenge in creating RMNs and other unified experiences is adapting to new operating models and investing in technology and processes to get a well-functioning operating model in place, which can take 3-5 years, according to retailer John Lewis. Organizations need to focus on attracting, engaging and retaining talent to create great employee experiences so associates can bridge the gap between consumer touchpoints.
5. Companies are embracing emerging technologies, even if there are no clear revenue streams today.
Fear of missing out (FOMO) has become a driving force behind the examination, experimentation and evaluation of all new emerging tech. For many organizations, the key to success lies in a test-and-learn approach, allowing them to quickly assess the potential value of new technologies, even if there are no immediate revenue streams associated with them.
To facilitate this experimentation, companies are setting up specialized teams, such as Unilever's Experiment Factory, which provides a systematic approach to rapid testing and learning. Others are leveraging their internal talent pools with 'Communities of Practice,’ where like-minded employees or associates come together informally to explore new technologies. Mars and E.L.F. Cosmetics are two examples of companies that have successfully implemented this approach.
Regardless of the approach, the primary objective is the same: to build muscle memory in the organization to play with, test and learn about new technology as soon as it emerges.
This allows companies to get a head start on the competition, positioning themselves to take advantage of new opportunities as they arise. By embracing a culture of experimentation and test-and-learn, companies can position themselves to drive innovation, create value and stay ahead of the curve.
From generative AI to sustainability, post-COVID-19 shopping habits, channel convergence and emerging technologies, Publicis Sapient helps top consumer products companies and retailers stay ahead of the curve by prioritizing experimentation and focusing on the consumer journey.