Why retail will be less about you but what you can do for others

Sounds like something you read in a Chinese fortune cookie? What do you mean by that?

It means what it says. Successful retailers in the future are going to be less about building their own brands, but instead providing the right online and high street platforms for brands, and other providers, to present and promote their offer to your combined customers. You could argue that's what the best retailers have always done. Hire out their shelves for major brands to rent out and sell their products on. But we are now talking about the 2.0 version of that.

You and your platforms. OK, carry on.

You might scoff, but we now live our lives on a whole variety of platforms through which we can access the products, the films, the music, the services, we want to have. Be it Amazon, Twitter, Netflix or Spotify. Those platforms are not about making themselves the hero, but the content or products they sell. It is the fact they can offer you so many of the goods and services you crave that makes them a success. Not the fact that they are specifically producing those products themselves.

But what about all our retailers who do exactly that with their private label ranges?

They are going to have think differently. For now private label is still an enormously important category for retailers and consumers alike. Because we have grown up in a retail environment where it is all about Tesco, Sainsbury's or Asda and they are the brands that we have cared the most about. But that won't be the case in a few years' time. It's already not the case in China. A mass consumer market that has grown up with an internet and digital first approach to retail, rather than high street chains dominating how we think. In China is it the e-commerce giants that rule the retail world and dictate how and where products are sold.

So what's happening in China that is so interesting?

If you don't follow what Alibaba, China's biggest online retail player is doing, then now's the time. It is going to have a bigger influence over our lives than all the Tescos that have come before us. Here's how its founder, Jack Ma, describes what Alibaba is all about: “Amazon and eBay are e-commerce companies, [but] Alibaba is not an e-commerce company. Alibaba helps others to do e-commerce. We do not sell things.” Instead, through its online sites, Tmall and Taobao, it provides the retail space for major brands such as Nike, Apple and Coke to set up and operate their own e-commerce flagship stores on the Alibaba platform. Or as Chris Tung, its CMO, puts it: “We serve as a marketplace, a bridge between the seller and the buyer, through data.” So, yes, it is still effectively hiring out its retail space to brands, but it is doing so in a way that gives those brands all the power to make the most of what Alibaba can give them.

What else are they are doing?

Here's the really interesting bit for UK online and offline retailers. Alibaba is now, through its B2C site, Tmall, running what it calls “experience centres” in major shopping centres and retail sites across China. It invites the same major brands it works with online to then create their own pop-up shops to promote and showcase their products in an experiential way. Since starting these centres in 2017 it has already worked with over 200 brands from Bobbi Brown, to Abercrombie & Fitch, Oral-B and Scotch whisky brand Ballantine's. Interestingly Tmall sees this initiative as being part of how it can become even more of a “destination for brand-building” by offering “one-of-a-kind experiences to their consumers”. Tmall's general manager, Liu Bo, said it's vital brands build “experience” into the consumer journey. “By providing consumers the chance to engage with a brand offline, they can heighten their online engagement as well. These experiences ultimately lead to stronger brand loyalty and retention,” he said.

The show must go on?

Absolutely. This entertainment approach is something we are starting to see in the UK. Particularly amongst some of our luxury retailers. If you have not been to Harrods recently then it's definitely worth a visit to see what is possible within even our traditional retailers. It is investing over £200m into transforming vast swathes of Harrods shop floor to similar entertainment experiences for its customers. So rather than just offer the chance to have a free make-up session, Harrods' is now bringing in Hollywood make-up artists to give you the full Julia Roberts makeover. It's all part of what Amanda Hill, Harrods' first chief marketing and customer officer, sees as a “race to the top” in terms of retail excellence, in stark contrast to the heavy discounting, lowest common denominator retailing we see so much of in the high street wine aisle.

So how do you achieve a “race to the top”?

Hill describes Harrods passion to get to the “top” of what it can achieve from a consumer experience point of view and then, crucially, the need to “elevate everything even further” from there. To do so means thinking less about what you do and sell in terms of product, but what you can offer in terms of “fulfilling a lifestyle need” for its customers - some of whom visit the store a staggering 50 times a year. “I really don't believe in segmentation in the way marketers traditionally talk about it, because it can make you relatively lazy and actually it's impossible to lump our customers into any kind of bucket,” she told Marketing Week recently. “You have to think about Harrods from a product perspective like a collection of incredible niches and each part is so distinctive.”

But we don't have the kind of money that Harrods' has to transform our wine stores?

No, but that's missing the point. The opportunity is there for both online and high street wine players to turn how they operate on their heads. To look at their shop floor, or website, as a stage for brands, and partners to perform on. Imagine the kind of experiences you could offer a wine customer if retailers switched their focus from being 100% about the product, to offering the kind of lifestyle experiences that Harrods, Tmall and Alibaba are doing.