The Future of Retail

The “Future of Retail” conference organized by Partech, brought together over a hundred attendees to share insights with a selected panel of retail and e-commerce experts at Unibail-Rodamco's headquarters in Paris.

For the 15 retail, e-commerce and marketplace companies in Partech's portfolio, the conference was also the final act of a half-day seminar with workshops on topics such as online/offline strategies, how to build online brands, leveraging social media and how to compete against Amazon. In addition to peer to peer best practice talks, speakers came from Twitter, CDiscount and Unibail-Rodamco which, being one of Partech’s corporate partners, kindly let Partech use their venue.

To kick things off for the conference, Bruno Crémel, General Partner of Partech and former CEO of Fnac and Darty, started by mentioning the long-standing partnership between Partech and Unibail-Rodamco and went on to highlight Partech's vast portfolio in consumer and digital brands. Bruno mentioned how Partech believes this is a unique moment in time when there is plenty of momentum to create new digital brands and to digitize existing ones.

The following co-founders and CEOs of successful companies in the retail ecosystem joined the round-table discussion:

·        Enrique Martinez, CEO of Fnac-Darty

·        Filip Dames, Founding Partner of Cherry Ventures and co-founder of Zalando  

·        Philippe de Chanville, founder of ManoMano

·        Philippe Chainieux, CEO of Made.com,  

·        Jarno Vanhatapio, CEO and founder of NA-KD  

Omri Benayoun, General Partner of Partech and former deputy CEO at CDiscount, moderated the roundtable discussions and what follows is a summary of the key takeaways. 

Retail champions know their sectors inside out... 

ManoMano has succeeded in sustaining a three-digit growth since 2013. Philippe de Chanville explained that, together with his co-founder Christian Raisson, they were first and foremost “DIY fans, really frustrated with their experience as consumers” of brick-and-mortar retailers as there was no serious online offer at the time. Another trigger that pushed them towards launching their business was the size of the DIY market (€1000bln for both B2B and B2C targets), but they had to be really passionate to reinvent the consumer journey. Filip Dames took from his experience with Zalando to describe what a successful company in retail needs to get right: “Obviously, there is not just one factor; we started in Berlin in a very different time, when the entire industry was at the bottom of its potential. We spent the first couple of years trying to understand the core of the business”. He considers this phase of analysis to be absolutely essential to the success of the business, sharing this conviction with Philippe de Chanville.

...and hire the right people for their well-defined corporate culture. 

When the panelists were asked about the reasons for success in the retail industry, the human factor was of course underlined as a key component. Philippe de Chanville insisted on the predominant part of the human dimension and claimed that the value delivered is directly correlated to the fact that working at ManoMano has been turned into a fulfilling experience for every employee. Filip also considers that Zalando’s success relied on the fact that they were able to employ very good people from the start. Omri underlined that humans are at the heart of companies based on communities: customers, designers and influencers.

Everything is about understanding consumer behavior...  

All the speakers shared the opinion that consumer behavior was currently changing dramatically. For example, Jarno Vanhatapio built NA-KD addressing millennials, whose characteristics as consumers are very clearly defined: very low attention span and lack of any patience whatsoever! In this situation, being unclear, not very relevant or unable to differentiate means losing the customer’s interest almost instantly. That’s why NA-KD is meant to be « simple, uncut, raw ». Jarno also mentioned that in developed countries there was a growing tendency to be post-materialistic, opinion shared by Filip Dames who noted the rise of different and new ownership models, such as re-commerce. Even as a fast-fashion brand, NA-KD sees this coming. New and seemingly contradictory behaviors tend to coexist: post-materialistic attitudes appear together with a fast growth of extreme low AOV (average order value) brands in Europe and China for example. Ownership still matters but for less valuable items. 

Understanding the big shift and weak signals in consumer behavior was unanimously considered as a challenge, and a crucial one at that.  

… and the best tool for this is data. 

Data is gaining more and more importance in tackling this challenge: Philippe Chainieux thinks that Made.com’s strength is to be able to identify trends early on and connect them to a supply chain that allows the company to very quickly commercialize and reduce the risk associated to developing a new product. This is inspired by fast fashion and data is key to having this ability to inject what we understand from trends into a product, and to test. Philippe De Chanville says that in a vertical such as DIY, where people need advice, data also enables ManoMano to better understand the consumer and to offer a solution to a specific problem. Once the need is identified, ManoMano can offer inspiration, help people choose, provide advice, help share consumer experience. That’s why ManoMano invested in building a strong data scientist team from day one. 

As for Fnac, Enrique explained that data is more than available and that the real challenge for his company is to leverage it in the best possible way. The main goal is to “reduce the paradox of choice for consumers”, stressed Filip Dames: if you offer a choice of 10 products to consumers, they will buy more; but give them 100 and they will buy less. Data enables you to deal with this more efficiently.

Online or Offline? Each component enhances the other.    

Made.com was designed to be a fully online business, that’s why 100% of their sales are made online. But they now have showrooms in Paris, Berlin, London, Amsterdam and more will come, where you can come and see examples of what is sold online. NA-KD products also have 700 points of sale across Europe. In both cases this is meant to provide a brand experience and engage consumers. Jarno even admitted that he saw this as an almost pure marketing investment. Though analyzing the direct effect on sales is very hard, Made.com clearly noticed that it was good for awareness, brand-building and ultimately for conversion rates and repeat sales. The offline experience quite clearly enhances online sales therefore. Enrique Martinez confirmed the importance of synergies between online and offline sales as a CEO of a company with a large network of big stores; Fnac.com was first developed as a disconnected business unit and it hadn’t been working as well as it is now that it has fully merged with all the other Fnac activities. Offline sales benefit from online presence too.

Rejoice, the future of Retail is not just an Amazon world!

The panelists agreed that Amazon is a very powerful player taking over a lot of verticals in retail through radical innovation, huge investments and brave strategies, but Filip shared a positive opinion about the future of the industry. He is convinced that there’s always room for billion-dollar companies focused on well-defined sectors. He highlighted three main trends for the coming years: direct-to-consumer (DTC) brands, retail-enabling technologies (“tech companies bringing people from offline to online are very exciting”), and companies offering different ownership models such as Drover (car subscription service for new and used cars).

Enrique spotted innovation methods as the major challenge for well-established brands such as Fnac to fight back against Amazon and other new comers. These companies have money to invest in innovation but need to find the proper strategy to go about it, one of the options being partnering with or acquiring start-ups. One of the relevant indicators of the status of innovation for offline retail is the level of online sales. For verticals in which online sales are now relatively low, such as DIY for ManoMano and furniture for Made.com, both Philippe de Chanville and Philippe Chainieux expect them to grow and quickly catch up. As early as 2022, online sales should be around 20% for furniture, which means double what they are now at 10%. In the fashion industry, change should take place on a different dimension; Jarno Vanhatapio believes that people are turning away from glossy supermodels and are more interested in seeing consumers such as themselves carry the brand in a more authentic way.

Conclusion — Partech has great hopes for the panelists' companies! 

Omri concluded by giving his views on the future of the panelists' businesses. He started acknowledging Fnac Darty's capacity to adapt: " 5 years ago, some people thought you were going to go down very quickly, now we've seen you've been able to find your way and keep competing". As for ManoMano, NA-KD and Made.com, Omri predicted they'd be worth a billion; but couldn't predict which one would get there first!