I had the privilege last month to spend half a day with some really great and prominent figures of the retail, technology, not for profit and academic worlds. What excited me the most was what we covered: the unique pace at which UK retailers are transforming themselves right now to reap the benefits brought by the Internet. The UK is beacon for multi-channel retailing. We may not have created companies like Google, Apple or Amazon but the way our businesses are adopting the Internet is the fastest and the best in the world – look at the stats in Professor Patrick Barwise’s blog post or some of the views of BT’s President of Global Services, Emer Timmons.
Despite this, none of the large supermarkets in the UK make much money – if any – with their Internet operation. Even John Lewis Partnership could not fuel growth without sacrificing profitability.
My belief is that most large UK retailers set up their online operation in the late 1990’s / early 2000’s as separate entities which have been using processes, technologies and techniques in constructions borrowed from the main ‘bricks and mortar’ part of the business. In doing so, the new online channels were a great source of ‘Like For Like Growth’ with the lack of profits being covered up by the main, larger traditional ‘bricks and mortar’ part of the business. This worked well until the losses could no longer be subsidised by the profits generated by the main business, until Amazon in the General Merchandise business offered a long tail of products at great price and convenience notwithstanding the exponential adoption of smartphones by customers, which made the Internet available anywhere and anytime.
This is why so many large retailers are transforming themselves in the UK to completely overhaul their distribution and fulfilment systems and processes. They’re scaling up their ranges by adopting a similar marketplace model of Amazon offering bigger ranges, better prices, great availability and convenience by leveraging the shops. This phenomenon is equipping the UK with the next wave of best multichannel capabilities and skills, from the shop floor to the executive and non-executive board members. In addition, some core enablers of the multichannel backbone are being built too, in the UK: look for new real-time big data providers, fulfilment optimisers and potential sharing of infrastructures. I’d rather be here than anywhere else in the world.
To view the full interview with JJ Van Oosten click here.