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The New Rules of Retail in 2026: AI, Profitability & the Store's Comeback | World Retail Signals · The Retail Podcast

• 0:21
  Hello and welcome Music back to a fantastic issue of issue
• 0:25
  episode of World Retail Signals with my fabulous Co host Neve.
• 0:51
  Ian, tell us what's top of mind this week.
• 0:53
  Well, the Congress is getting very close, so that's very much
• 0:56
  top of my mind. But that does mean, and even I
• 0:58
  having lots and lots of conversations with our speakers
• 1:01
  and a couple of points I'd like to make in front of mind for me
• 1:06
  based on very recent conversations, ones about the
• 1:09
  people side of retail businesses, you know, a huge
• 1:12
  topic, which should be high on any any retailers list at any
• 1:16
  time. But we're hearing from retailers
• 1:19
  that this is, you know, as you know, AI as demographics change
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  within the business, you know, retail leaders are having to
• 1:27
  face up to the fact that their businesses need to change.
• 1:30
  The organisational structure needs to change because people's
• 1:33
  needs and wants within a a business and what their career
• 1:36
  aspirations are are very different.
• 1:38
  And business retail businesses are looking for obviously new
• 1:40
  skills to help drive their businesses.
• 1:43
  You know, AI, obviously one of them, but not exclusive.
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  There's lots of new skill sets required within that.
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  That just really made me think because we hear it a lot with
• 1:52
  how AI is changing the business model.
• 1:54
  But I think the retail organisation, you know, needs to
• 1:58
  embrace that change to be more dynamic and as they
• 2:02
  understanding what people coming into the business and are
• 2:05
  looking for. And these are the people that
• 2:06
  are going to help drive the business forward.
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  But sort of also related to that was really struck by
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  conversations because we have a session looking at the frontline
• 2:15
  of retail. So that's primarily people in in
• 2:17
  the stores. And again, that's changed an
• 2:20
  enormous amount. And in many cases,
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  unfortunately, stores have probably been under invested in
• 2:25
  in as they push to develop online.
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  But but I think that's now being looked at again.
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  But it's also raises that point about, you know, what does
• 2:34
  excellence look like in store? You know, what's what's driving
• 2:37
  great performance and therefore growth within within the stores.
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  And you know, people have been talking to us about the
• 2:43
  importance of the culture and the business.
• 2:45
  How can you empower people? You know, technology helps that
• 2:49
  certainly. And and also it was kind of
• 2:50
  interesting, maybe also refreshing to hear that the the
• 2:53
  best store surprise, surprise, you can relate that to having
• 2:57
  great managers who are running those those businesses and how
• 3:00
  do they motivate the people And you know, consumers are ever
• 3:04
  more unforgiving. So, you know, good service means
• 3:07
  many, many things, but you know, it's having motivated, empowered
• 3:11
  people who really want to be and enjoy serving customers, love
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  the product, love the brand that that's gonna deliver and make
• 3:18
  that real point of difference. That was the the keep the first
• 3:21
  point I wanted to make, OK. I presume that this is the get
• 3:25
  yourself to to the World Congress talks that you're
• 3:28
  having. Some people are going to be
• 3:29
  offering their you know, how have they done what you're
• 3:32
  talking about? Yes, yeah, very much so.
• 3:35
  Very much so. So the we have a panel on that
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  motivating that the kind of frontline of of retail chaired
• 3:42
  by him. Martin Newman, who's been a
• 3:43
  retailer and a retail consultant.
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  He's written several books on this very topic, but we've got
• 3:48
  Judith McKenna addressing this topic, who was president of
• 3:51
  Walmart International. So running business so can bring
• 3:54
  a real and will bring a truly global view of how Walmart
• 3:57
  motivates people and drives performance right around the
• 4:00
  world where Walmart are operating.
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  And we also have a retailer from Kenya, well, Kenya's biggest
• 4:05
  supermarket. So that's a very interesting
• 4:07
  perspective. You know, an emerging market.
• 4:09
  Yeah. And David Boynton, who now who's
• 4:12
  former CEO of Body Shop and he's now running Northern Europe for
• 4:16
  Pandora, but experience from from grocery through to well,
• 4:20
  now, now jewellery. And so I think those kind of
• 4:22
  touch points of retail in different parts of the world and
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  different types of retailer, I think that's going to draw
• 4:29
  together many, many things and leave the the audience with lots
• 4:32
  to think about. And I think, you know, so many
• 4:35
  things are critical in retail, but I think that people element
• 4:39
  is. 100% I think CEO's per cup when you mentor people, I think
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  everything else like they've got a CIO, he'll he'll take care of
• 4:46
  tech. My CEO will take care of
• 4:48
  operations. You mentioned people and I and I
• 4:50
  noticed when I've interviewed a couple of a shift in there.
• 4:53
  Oh, tell me more lease forward to know.
• 4:57
  OK, fantastic. Thank you.
• 4:58
  Ian Neve going on to you. Sure.
• 5:01
  And as Ian says, we've been very lucky this week.
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  We've been in all of these conversations with our global
• 5:07
  speakers as we start to prepare for the World Retail Congress.
• 5:11
  So there's lots and lots going on.
• 5:13
  But I guess from my conversations this week, there's
• 5:16
  two signals I wanted to talk about that really stand out and
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  they're really about reshaping how consumers are behaving.
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  And the first is, is about how consumer discover is
• 5:27
  fundamentally changing. I think it's come up in a
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  multiple of my conversations this week how that discovery
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  process is moving away from search and understood as a
• 5:37
  consumer. So I'm no longer necessarily
• 5:40
  just looking for a concealer. I'm looking for advice.
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  I'm looking for expertise and help making the decision in the
• 5:47
  products that I'm buying. And I think where that's really
• 5:51
  interesting and where that intersection is really sort of
• 5:54
  impacting retailers is how consumers using LLMS much more
• 5:58
  to turn that discovery process into a conversation.
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  So how we're asking consumers to work a little bit less so
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  they're not doing their own scrolling comparisons
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  researching. We're really outsourcing that to
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  to an agent or to it to an LLM. So how retailers are meeting
• 6:17
  them in those places, how they're driving those decisions
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  and also, you know, talking to consumers with confidence
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  through through the these new channels.
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  So I think for retailers, there's a, there's a real risk
• 6:30
  there that without understanding how there is new discovery
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  channels are working that they'll be outpaced by their
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  competitors that do. And it's a whole new, whole new
• 6:40
  world for retailers. But they're definitely from the
• 6:42
  conversations that I've been having this week, looking at it
• 6:45
  through that consumer centric lens, how it how is the consumer
• 6:49
  behaviour changing and how do they then adapt to meet that
• 6:52
  consumer in in these new places? OK.
• 6:55
  I mean, I have to say one of the things as an attendee I found
• 7:01
  interesting was when, you know, an American Eagle was talking
• 7:04
  about, for example, all the stuff that they're doing about
• 7:10
  listening to signals, how AI helping them be smarter.
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  But the the only challenge I had in my mind was there's like 5%
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  of retailers who have the budget and skill and teams to do it
• 7:22
  themselves. And then you have the vast
• 7:24
  majority, like 95% of retailers that will really be struggling
• 7:28
  because they don't have their in house coding team.
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  They don't have everything is with an agency or a platform or
• 7:34
  a or a supplier. So I mean, for me, it's always
• 7:36
  really interesting when you list their good up and you look in to
• 7:40
  see the how answer. So I love the fact that you
• 7:43
  really focused on those elements.
• 7:45
  Yeah. I think that's going to be
• 7:46
  really interesting, Alex, especially in that is there
• 7:48
  going to be a, you know, condensing of where people are
• 7:51
  going because there's certain brands that just come up all the
• 7:54
  time who, as you say, are dominating in this area.
• 7:58
  So yeah, I think it's going to be really interesting.
• 8:00
  Yeah. Ian, did you have a second one
• 8:02
  to come back to? Yeah.
• 8:03
  Just very quickly, I wanted to touch on another topic which is
• 8:06
  sustainability, which I mean I don't know 18 months ago when
• 8:11
  Neve and I will be putting together the programme, we will
• 8:13
  put that probably in probably the top three of issues that
• 8:16
  retailers were worrying about, focused on et cetera.
• 8:19
  And it is completely dropped down the the list of areas of
• 8:26
  concern for for retailers. And you know, there's lots of
• 8:28
  reasons why that, but, but you know, we are focused, we have
• 8:31
  got a certainly a session, at least one session on it in the
• 8:34
  programme. And just talking some fairly big
• 8:36
  retailers, we're going to be, we've got a session that's going
• 8:39
  to have H&M and Zolando involved and FMI, which is the big
• 8:44
  American food industry association that brings together
• 8:47
  American grocers and FMCG. And you know, and again, you
• 8:51
  would think the climate in America, sustainability is not
• 8:54
  something anyone talks about now.
• 8:56
  But the thread that runs through is how the whole discussion has
• 9:00
  now changed that people. Yes, of course they, they do,
• 9:04
  you know, business leaders do see sustainability and in a
• 9:07
  broader sense that's really important.
• 9:08
  But more importantly, they've come to realise and, and focus
• 9:11
  on initiatives and sort of ways of re looking at the, the
• 9:15
  business that will actually help the climate, help consumers, But
• 9:19
  they make good business sense. I mean, IE, there's, there's
• 9:21
  real business advantage and efficiencies and building
• 9:26
  greater resilience into the business by, you know, tackling
• 9:29
  things like the supply chain and packaging and food waste.
• 9:32
  And so you don't have to, you know, as retailers are learning,
• 9:34
  don't have to shout about these issues in terms of, you know,
• 9:37
  flag waving. And they're declaring what
• 9:39
  they're doing in terms of sustainability in a broader
• 9:42
  sense, but they are doing it because it makes, you know, for
• 9:46
  all the, all the reasons, but also makes good business sense.
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  And we'll be hearing from, you know, those those retailers and
• 9:52
  and others joining in with discussion how, you know, they
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  are rethinking supply chain, rethinking packaging and
• 9:58
  tackling food waste. And what was interesting hearing
• 10:01
  from FMI on the conversations we're having is that the
• 10:04
  American consumer is responding and they are expecting these
• 10:07
  things despite as the overall climate around a big topic, like
• 10:11
  a hot topic now about sustainability.
• 10:13
  But it's interesting. The consumer is, you know, it's
• 10:15
  as ever, it's the voice you should never ignore because
• 10:18
  people are vote, voting with their spending where they think
• 10:21
  this is, you know, the right thing and they can see a value
• 10:24
  in that. But it's, so I think it's really
• 10:26
  interesting how this discussion, this area of retail has has
• 10:30
  moved. But actually, you know, overall
• 10:32
  everyone is looking for growth and profitability.
• 10:35
  You know, this does feed into that.
• 10:36
  Yeah. I I.
• 10:37
  I mean, when I was when I've done the APEC show, the whole
• 10:40
  circularity and reuse and upcycle feels like there's a
• 10:44
  theme that retailers can tap into.
• 10:47
  But anyway, keeping us moving, Neve, what's your final one?
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  My final signal is, is really all around growth and and I'm
• 10:55
  going to stick to to Europe for, for this one because it is
• 10:59
  different across the globe. But here we're really seeing
• 11:02
  growth shift away from from more customers to how retailers can
• 11:07
  grab more value per customer and mature pressured markets that
• 11:11
  margin is mattering more and more and how retailers are
• 11:15
  finding that value is really shifting.
• 11:19
  So more selective promotions, better messaging, those
• 11:23
  reflections of what the customer is facing in a tough market and
• 11:29
  you know, a pressured market. So how that precision and
• 11:33
  understanding is becoming the growth lever rather than just
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  scale or which I think has definitely been the conversation
• 11:41
  up to this point is all about scale, scale, scale.
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  But we're really hearing how that profitable growth is coming
• 11:48
  from, from more relevant, not necessarily more volume.
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  And so, yeah, that's that's been my my growth story and what I've
• 11:56
  been hearing. Yeah.
• 11:57
  Well, listen, given we, we don't want to be naive, given the cost
• 12:00
  of living crisis, given the real challenges for AIPAC right now.
• 12:05
  I mean it goes across everything packaging more expensive,
• 12:08
  products are more expensive, logistics are more expensive.
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  And so how retailers are positioning themselves to to
• 12:15
  deliver value. Within that context.
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  Whatever that context is right is absolutely key.
• 12:22
  My final one to close us off on Bed Bath from beyond them, The
• 12:25
  Container Store. And I love the Container Store.
• 12:28
  They've just acquired them $150 million, which is quite
• 12:33
  interesting. Containers still have 100
• 12:35
  physical locations. And apparently the news is the
• 12:38
  the reason why has a few months ago, Bed Bath and Beyond have
• 12:42
  their own physical footprint, but they were struggling is the
• 12:45
  fact that they do want to learn more into physical stores and
• 12:49
  expand that store strategy, including home services, because
• 12:53
  they want this all turnkey of home services, which I find
• 12:57
  interesting in, in them in a market where IKEA and other
• 13:01
  brands have dominated and, and they're reformatting.
• 13:04
  I think I can't remember if you spoke about that last week, but
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  every folks, every formatting their stores.
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  So there seems to be a lot of focus on the home.
• 13:12
  And I think, you know, for the context, is this a sign of
• 13:16
  retail sector MNA that we should be expecting?
• 13:18
  Because, you know, as much as we talked about oil having an
• 13:21
  impact in, in the world, in the US, the fact that they're not
• 13:25
  dependent on global oil, Yes, there's an impact on pumps, but
• 13:28
  it's a little bit different little bit in yours.
• 13:29
  So are we going to see more MNA activity as the goes out?
• 13:32
  And with that, I will keep us on time.
• 13:35
  Say thank. You thank.
• 13:36
  You, Alex, last place 15 minutes and until next week.
• 13:40
  I look forward to speaking to you then.
• 13:42
  Yeah, next week, Alex, thanks very much.
• 13:43
  Thanks. Bye.