The Fresh Face of Retail: it’s all change at the checkout

I was intrigued to see recent news headlines regarding Ikea’s decision to start allowing customers to lease rather than buy furniture. Ikea are not the only business to be experimenting with new business models. To keep up with the pace of change, retailers and businesses alike must be prepared to trial new models much more frequently if they are to meet changing consumer needs. More than ever, it is a critical component to succeed in the radically progressing and fragmenting retail landscape.

Despite the alarming headlines regarding the consumer retail sector during the last quarter of 2018, I see many reasons to be positive about the environment in which our businesses are operating now.

This optimism comes from paying close attention to the trends relating to consumer behavior and from remembering that for every action there is a reaction. Without question, the traditional High Street is facing significant challenges. At the same time, smart phone shopping (whilst it is not new), is on an even sharper trajectory than thought. A predicted 66% increase in shopping via smart phones in 2019 should be focusing many business minds! Especially as the forecast has already been borne out by recent reports in the UK that for the first time smart phones have overtaken shopping centers as the most popular place to shop.

Personalization key to building a relationship

Quartz magazine’s recent study on the 21 biggest retail trends to look out for in 2019 also gives some useful pointers on where consumer shopping is headed. ‘Personalization’ is a key word in the outcomes and it is said to have “clear, understandable value that lots of retailers have already put into place and shoppers are actively using”. At Philips, we are heavily invested in personalization across innovation and marketing.

We strive to build a long-term relationship with our consumers, to be able to surprise, delight and satisfy their ever-changing needs and help them lead a happy and healthy life. The steep adoption rate of mobile technology is enabling us to increasingly personalize our consumer health solutions, think about the Philips Sonicare Teledentistry Service which gives access to personalized, same-day professional dental advice via your mobile device.

Personalization means we also want to be where our consumers want to buy. When it comes to global shopping trends, we have to be right at the heart of the action. In China it’s all happening at WeChat, in other places selling via Instagram is the way to go. Over the past few years, omni-channel has got a whole new meaning!

In smart phone shopping, in-App purchases remain popular. Our global number one pregnancy app, Pregnancy+, is one of the platforms we use to tap into this potential with in-app purchasing of mother and child care related products, from baby bottles to personalized soothers.

Staying on the baby topic, the sharing economy has triggered several retailers to come up with a new businesses model. For instance German retailers Kilenda, Otto and Tchibo who have launched rental services for baby and children’s clothes. I get inspired by these type of new business models and can especially relate as at Philips we are also exploring different avenues to meet consumer needs. Take for instance our Philips Lumea Try & Buy service, whereby consumers have access to our most premium beauty device and expert advice at a monthly fee, providing an alternative to a single product purchase. We also recently launched Philips Sonicare subscription, delivering a power toothbrush as well as new brushheads to the consumers’ doorstep at a monthly fee.

Taking the direct route to consumer satisfaction

Perhaps the biggest trend of all is for brands to go direct-to-consumer. In the fashion industry, we already see leading brands reserving their latest or most special collections for their own channels, before offering it via retailers.

For Philips, direct-to-consumer means first and foremost that we care about consumers’ health and understand to how they want to access these products and solutions. It means experimenting with new channels and new ways of selling like some of the initiatives mentioned here. But it also requires engaging and interacting with our consumers like never before. As long as our products continue to surprise and delight them – and in our case, meet their need to manage their own health and live healthier and happier – I believe we will still succeed whatever the upheavals in the retail sector.