WRC 2023: Retail giants share the industry's key insights

For yet another year, this week the World Retail Congress brought together some of the world's most important leaders in fashion and retail as drivers of consumer trends and representatives of the current state of retail. The 2023 edition of the WRC took place in Barcelona.

Experts from retailers such as Mango, Primark, Zalando, Sephora, Spanish fashion group Tendam, and the Spanish concept store Wow, shared key insights about the sector. Technological sustainability, purpose as the new benchmark, AI (artificial intelligence) and the role of the consumer are some of the major themes that have been the focus of the latest edition of this international congress.

Sustainability as a technological key

Until now, the discourse of fashion companies in terms of sustainability has largely been linked to concepts such as proximity, ecological fabrics, circularity, carbon waste... However, at this year's congress, a new variable has appeared: technology. Technological advances thus take on a more important role when it comes to responding to the environmental, social and economic challenges faced by fashion companies.

In this respect, Deloitte has produced a report in collaboration with the World Retail Congress, which explores how the fashion industry is using technology to drive quick wins in sustainability that can translate into long-term benefits, both inside and outside the industry.

"It's no secret that the retail industry has long been criticised for the toll it has taken on planet earth, from production processes to consumer behaviour," Karla Martin, global fashion and luxury leader, Deloitte DTTL said.

“Progress in creating more planet-friendly practices has not been made fast enough, perhaps in part due to a lack of tools that can help bring about meaningful change. However, new cloud-based technologies are beginning to help retailers drive sustainability with best practice and bottom line results,” she added.

Burberry, for example, aims to make 100 percent of its key raw materials traceable by fiscal year 2025/26, which means greater visibility of risks and opportunities at the sourcing stage. In Deloitte's Global Powers of Retailing 2023 report, Caroline Laurie, Burberry's Vice President of Corporate Responsibility, said that having ambitions on the sustainability front is no longer enough: it's time to make them operational.

That sustainability is a major concern for consumers is no secret, especially among younger consumers. The Savvy Consumer Study by Samy Alliance underlines this issue.

It is this ever-growing concern that has led retailers to seek new technologies that enable better data collection, tracking and tracing, and supply chain visibility. But beyond this, the retail industry is also using technology to drive entirely new circular business models, such as apparel rental and resale.

A good example of how technology can work in the service of sustainability is Mango's 'sustainability passport'. As Luis Casacuberta, (general manager of Mango Woman, Kids & Home) described it: "We are working on a passport so that people can know the traceability of the product".

According to a recent report by Think with Google, 72 per cent of UK consumers say that when making a purchase they consider whether the brand's values reflect their own beliefs a crucial factor, so for businesses, the success of a sale can effectively come down to whether a consumer feels they can trust what a company says.

Purpose as a key priority

Throughout the 3 days of the congress, the different leaders who participated in talks and interviews insisted on the responsibility that companies have not only towards the environment, but also towards society.

Having a purpose beyond profit, prioritising sustainable measures that are good for the planet and for people helps companies connect with their customers in a more authentic way and build trust through greater transparency.

"We must humanise products and empathise with the people who work with us," said Selvane Mohandas du Ménil, Director of the International Association of Department Stores, at one of the many panel discussions at the congress.

Millennials and Generation Z continue to increase their purchasing power and influence the consumer landscape. Despite the increasingly inflationary economy, 47 per cent of consumers continue to choose to spend more on sustainable goods and services, even though they know that sustainable alternatives are often more expensive. They have also taken to demanding transparency around companies' carbon footprints.

Ian McGarrigle, president of the World Retail Congress, said: "Consumers today expect retailers and the brands they buy from to genuinely care about sustainability and their impact on the environment. It is now becoming a non-negotiable demand. A retailer must work towards net zero emissions and refocus their supply chains to offer more sustainable products.”

AI revolutionises supply chains

While AI has been in development for several years, its implementation in the day-to-day operations of companies is one of the most revolutionary changes that organisations are currently undergoing.

It is precisely in line with these technological advances that the importance of applying AI to the supply chain, with algorithms that improve processes by making data-driven decisions, is bursting onto the scene.

AI is able to monitor the supply chain and provide valuable information, allowing it to respond to problems quickly, one of the key issues for Dimas Gimeno, CEO of fashion concept store Wow.

AI can track shipments and pinpoint any problem that may arise. It can also predict any potential problems based on previous data. For example, if there is a pattern of shipments being delivered late, AI will be able to pinpoint the problem and take action. It can also collect data and make predictions about demand, supply and other factors that affect your business.

Until now, stock used to be stored in warehouses and allocated to different teams who, in turn, distributed to the physical store, the webshop and the wholesaler. But this approach no longer fits the omnichannel world. AI can help improve demand forecasting, pricing, multi-level inventory optimisation, and intelligent stock allocation, control and replenishment.

During the conference, Scott Galloway, professor of marketing at NYU Stern Business School, said that the big disruptor in the global economy and the retail sector will be AI, and that companies that don't follow it will be lagging behind: "AI is not going to take your job, it has nothing to do with that. The reality is that if you are not already experimenting with the potential of this technology, you will be left behind. Galloway said AI is set to revolutionise merchandising and shop design.

In this sense, AI in the fashion sector is estimated to be worth more than 4.4 billion dollars (about 3.5 billion pounds) by 2027 according to The Insight Partners.

AI will also play a key role in the way consumers search for information about products and services, speeding up and improving this process. Chat GPT is showing increasing interest from users, posing a scenario where younger consumers no longer see Google as their only source of information search, but where it co-exists with others such as Chat GPT or TikTok.

"The new post-pandemic retail environment is more challenging, complex and competitive than ever before," Tiffany Yeh, managing director at BCG, said. "The vast majority of retailers are overlooking the opportunity to adopt AI-powered solutions. We must act today to take advantage of this advantage and drive the business into the future.".

Consumer over technology

Another major takeaway from the event was the relevance of the consumer. Technology sure, but not at any price.

The consumer experience is an intangible value that goes beyond the purchase of a product or service, and is made up of countless interactions, moments and points of contact between consumers and brands. It is also key to customer brand loyalty.

Stuart Machin (CEO, Marks & Spencer), Ying Xu (CEO, Wumart), Jennifer Foyle (President and Executive Creative Director, American Eagle & Aerie) and Marcella Warternberg (CEO, AWWG), all agreed at a panel discussion and all considered that: "technology is an essential component to the success of retail today, but it cannot be implemented without considering whether my brand's consumer is ready".

Knowing the market and knowing the consumer is vital information for companies because markets are increasingly changing and increasingly demanding, and consumers have diverse preferences and multiple wishes. Therefore, offering value propositions that are disruptive and innovative will make the difference in the face of increasingly fierce competition.

One of the other variables that were discussed when it comes to achieving greater engagement with consumers is the implementation of specific local actions, which may also be sustainable.

In this sense, Juliet Anammah, former president of Jumia, told the industry how they tested a small campaign aimed at a specific segment of consumers, in which they donated money to plant a tree with every purchase made during Black Friday. The result was spectacular and sales increased exponentially.

In this way, and despite technology, the consumer remains the fundamental pillar of success. It is no longer about the product; retailers focusing all their efforts on an attractive product if they have not listened to the needs of their customers will be a guaranteed failure.

This article was originally published on FashionUnited.ES. Translation and editing from Spanish into English by Veerle Versteeg.