Romanian Distribution Committee Magazine, Volume 8, Issue 4, Year 2017 by Romanian Distribution Committee

EDITORIAL BOARD

Romanian Distribution Committee Magazine

Volume: 8 Issue: 4 Year: 2017 Scientific Review of the Romanian Distribution Committee

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Ion Ababii, Chişinău

Aurel Iancu, Bucharest

Constantin Roşca, Craiova

Nicolae Albu, Brasov

Mitsuhiko Iyoda, Osaka

Analisa Romani,Turin

Ruxandra Andreea Albu, Bucharest

Mohamed Latib, Gwynedd

James Rowell, Buckingham

Levent Altinay, Oxford UK

Dong II Lee, Seoul

John Saee, Virginia Beach VA

Kathleen Andrews, Colorado Springs

Min-Sang Lee, Gyeonggi-Do

Cătălin Sfrija, Bucharest

Virgil Balaure, Bucharest

Claude Magnan, Paris

Adrian Socol, Strasbourg

Dan Barbilian, Bucharest

Radu Titus Marinescu, Bucharest

Eliot Sorel, Washington D.C.

Riccardo Beltramo, Turin

James K. McCollum, Huntsville

Mihaela-Luminița Staicu, Bucharest

Richard Beresford, Oxford Uk

Nicolae Mihăiescu, Bucharest

Radu Patru Stanciu, Bucharest

Dumitru Borţun, Bucharest

Dumitru Miron, Bucharest

John L. Stanton, Jr., Philadelphia

Leonardo Borsacchi, Turin

Dan Mischianu, Bucharest

Peter Starchon, Bratislava

Mihail Cernavca, Chişinău

John Murray, Dublin

Felicia Stăncioiu, Bucharest

Ioana Chiţu, Brasov

Alexandru Nedelea, Suceava

Marcin Waldemar Staniewski, Warsaw

Doiniţa Ciocîrlan, Bucharest

Hélène Nikolopoulou, Lille

Vasile Stănescu, Bucharest

Tudorel Ciurea, Craiova

Olguța Anca Orzan, Bucharest

Filimon Stremţan, Alba-Iulia

Alexandru Vlad Ciurea, Bucharest

Gheorghe Orzan, Bucharest

David Stucki, Fribourg

Maria Negreponti-Delivanis, Thessaloniki

Elena Mihaela Pahonțu, Bucharest

Ion Voicu Sucala, Cluj-Napoca

Jean-Sébastien Desjonqueres, Colmar

Rodica Pamfilie, Bucharest

Kamil Pícha, Ceske Budejovice

Aurel Dobre, Călăraşi

Iulian Patriche, Bucharest

Laurenţiu Tăchiciu, Bucharest

Luigi Dumitrescu, Sibiu

Carmen Păunescu, Bucharest

Emil Toescu, Birmingham

Mariana Drăguşin, Bucharest

Mircea Penescu, Bucharest

Simona Ungureanu, Bucharest

Ovidiu Folcuţ, Bucharest

William Perttula, San Francisco

Vlad Budu, Bucharest

Luigi Frati, Roma, Italy

Virgil Popa, Targoviste

Eva Waginger, Wien

Petru FILIP, Bucharest

Marius D. Pop, Cluj-Napoca

Léon F. Wegnez, Brussels

Victor Greu, Bucharest

Ana-Maria Preda, Bucharest

Răzvan Zaharia, Bucharest

Bernd Hallier, Köln

Monica Purcărea, Bucharest

Gheorghe Zaman, Bucharest

Sang-Lin Han, Seoul

Cristinel Radu, Călăraşi

Dana Zadrazilova, Prague

Florinel Radu, Fribourg

Sinisa Zaric, Belgrade

Gabriela Radulian, Bucharest

Hans Zwaga, Tornio

YOUNG EDITORIAL BOARD MEMBERS REVIEWERS

SCIENTIFIC COUNCIL

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Andreea Apetrei, Iasi

Adrian Lală, Bucharest

Adalbert Lucian Banyai, Bucharest

Irina Purcărea, Bucharest

George Bobîrnac, Bucharest

Ivona Stoica, Bucharest

Roxana Codita, München

Dan Smedescu, Bucharest

Stefano Duglio, Turin

Constantin C. Stanciu, New York

Larisa-Diana Dorobat, Geneve

Radu Pătru Stanciu, Bucharest

Darius Ilincaş, London

George Cosmin Tănase, Bucharest Oana Patricia Zaharia, Bucharest

Alexandru Ionescu, Romanian-American University Adriana Bîrcă, “George Bariţiu” University Brasov Nelu Florea, “Alexandru Ioan Cuza” University Iasi Ana Ispas, Transilvania University Brasov Irena Jindrichowska, University of Economics and Management in Prague Costel Iliuţă Negricea, Romanian-American University Adina Negruşa, “Babes-Boyay” University Cluj-Napoca Anca Purcărea, Academy of Economic Studies in Bucharest Monica Paula Raţiu, Romanian-American University Gabriela L. Sabau, Memorial University, Sir Wilfred Grenfell College Andreea Săseanu, Academy of Economic Studies in Bucharest

Vlad Barbu, Bucharest Gabriel Brătucu, Brasov Ion Bulborea, Bucharest Mircea Buruian, Targu Mures Iacob Cătoiu, Bucharest Jean Constantinescu, Bucharest Beniamin Cotigaru, Bucharest Radu Diaconescu, Iasi Valeriu Dulgheru, Chişinău Constantin Floricel, Bucharest Valeriu Ioan-Franc, Bucharest

Gheorghe Ionescu, Timisoara Christophe Magnan, Montréal Pompiliu Manea, Cluj Andrei Moldovan, Bucharest Dafin Fior Muresan, Cluj Neculae Năbârjoiu, Bucharest Constantin Oprean, Sibiu Dumitru Patriche, Bucharest Florian Popa, Bucharest Dumitru Tudorache, Bucharest Ion Smedescu, Bucharest Victor Părăuşanu, Bucharest

YOUNG EDITORIAL BOARD MEMBERS REVIEWERS

SCIENTIFIC COUNCIL

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Andreea Apetrei, Iasi

Adrian Lală, Bucharest

Adalbert Lucian Banyai, Bucharest

Irina Purcărea, Bucharest

George Bobîrnac, Bucharest

Ivona Stoica, Bucharest

Roxana Codita, München

Dan Smedescu, Bucharest

Stefano Duglio, Turin

Constantin C. Stanciu, New York

Larisa-Diana Dorobat, Geneve

Radu Pătru Stanciu, Bucharest

Darius Ilincaş, London

George Cosmin Tănase, Bucharest Oana Patricia Zaharia, Bucharest

EDITOR-IN-CHIEF Theodor Valentin Purcărea

EXECUTIVE EDITOR Victor Lorin Purcărea

ASSISTANT EDITORS Dodu Gheorghe Petrescu Cătălina Poiană Raluca Gheorghe Mihaela Luminița Staicu

PUBLISHING EDITORS Petruţ Radu Ovidiu Călin

ART DESIGNER DIRECTOR Alexandru Andrei Bejan 8

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

EDITORIAL OFFICE P.O. Box 35-59, 35 Bucharest, România E-mail: office@crd-aida.ro, crd.rcdaida@yahoo.com Website: www.distribution-magazine.ro, www.distributionmagazine.eu Copyright © 2010 Romanian Distribution Committee, Bucharest, Romania Printed at “Carol Davila” University Press, 8 Eroilor Sanitari Blvd., 050474 Bucharest, Romania Tel/Fax: +40 21 318 07 59

Hello, reader. Our Readers are invited to submit articles for the 2018 (4) Issue of the Scientific Review of the Romanian Distribution Committee – „Romanian Distribution Committee Magazine”.

http://www.distribution-magazine.eu/submission

You can find out more about us just by clicking http://www.distribution-magazine.eu/about

Romanian Distribution Committee Magazine Volume: 8 Issue: 4 Year: 2017

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

CONTENTS

P. 12. From Keynes’s Predictions to the Second Economy and Chief Wellbeing Officer, Adequately Managing the New Distributive Era

Theodor Valentin PURCĂREA

P. 14. Information and Communications Technologies Drive Digital Disruption from Business to Life on Earth -Part 3Victor GREU

P. 24. Trends Driving the Future of the Retail Industry for the Next Decade George Cosmin TĂNASE

P.30. Competing, Connecting, and Winning in Today’s Distribution and Merchandising Theodor PURCĂREA

P.40. (by courtesy of) - What contribution of e-commerce to the development of franchising, “Distribution d’aujourd’hui”, 58ème année, Août 2017, Brussels Léon F. WEGNEZ

P. 42. (by courtesy of) - Esteemed Academia, Food Management/TUN EQA, TOP 500 Retailers/Wholesalers Asian Pacific Area, APRCE 2017, CZ Retail Summit, New Central Europe, and Riga Bernd HALLIER

P. 52. (by courtesy of) - Goal Health: A Competitor’s Course for All? “Distribution d’aujourd’hui”, 58ème année, Août 2017, Brussels Isabelle WEGNEZ The responsibility for the contents of the scientific and the authenticity of the published materials and opinions expressed rests with the author.

FROM KEYNES’S PREDICTIONS TO THE SECOND ECONOMY AND CHIEF WELLBEING OFFICER, ADEQUATELY MANAGING THE NEW DISTRIBUTIVE ERA Theodor Valentin Purcărea Adequately Managing the New Distributive Era We had recently the pleasure of reading with real interest an article of the former Romania’s Chief Negotiator with the European Union (EU), the reputed Professor Vasile Puşcaş, article published in “Piaţa financiară,” November 2017, and entitled “Romanians - from survival to competitiveness.” And as we have the honor and the pleasure to collaborate during the process of accession to EU, we have remarked the coincidence with an article posted by us also in November 2017, and entitled “The 2017Annual Activity Report of the Romanian Competition Council and the Need of History,” in which we provided clear evidence of our constant pledge over the years for competitive integration and solidarity in dynamic competitiveness. This also made us recall that in May 2009, two years and four month after our accession to EU, we remembered the need of acquiring wisdom of the policy of public choice, competition being the key leader of performance and innovation which feeds economic growth, showing that the signals regarding the changing of the nature of competition intensify (increasingly taking place inside corporate-controlled networks) in a global context in which it is considered that calculated dishonesty and the application of the double standard, characteristic to the unethical agreements, raise strong barriers to the responsible intelligent decisions. While in September 2011 we raised the question if we are really ready to create the „thick value” (as described by Umair Haque in his book “The New Capitalist Manifesto: Building a Disruptively Better Business”) and to use this source of next-level advantage which is „loss advantage”? A month later, in October 2011, W. Brian Arthur, an economist and technology thinker and a pioneer in the science of complexity, attracted our attention on the evolution of the vast, automatic, and invisible “second economy” created by the digitization (an economy of the digitized business processes, an economy being silently formed alongside the physical economy and surpassing the physical economy in size in two to three decades), arguing that the main challenge of the economy within this context is shifting from producing prosperity to distributing prosperity, a different world being created slowly, quietly, and steadily this way. He also confessed his surprise in relation with the accuracy of the predictions made by Keynes in his famous essay from 1930 - “Economic possibilities for our grandchildren.” At the end of October 2017, European Business Review presented an excerpt from Steven MacGregor’s new book, “Chief Wellbeing Officer: Leading in the Fourth Industrial Revolution,” co-authored with Rory Simpson and published by LID. Dr. Steven MacGregor, founder of The Leadership Academy of Barcelona [LAB] and author of Sustaining Executive Performance (Pearson 2015). We identify in this excerpt another arch over time refining understanding of the shift in mindset toward a more human organization, starting from the role of business while considering the presence of wellbeing at its top table, taking into account what the future of work must look like on the basis of good organisational practice, new challenges and opportunities. The new concept of Chief Wellbeing Officer is introduced here as a complement to the digital transformation and artificial intelligence, being highlighted that increasing organizations’ care for humans in the current age of talent attraction and retention as key differentiator and of learning as a lifelong on-demand process will allow organizations to thrive thanks to such a supportive environment characterized by a flourishing leadership at all levels and functions of a business determining a shift to exponential progress environment. This made us recall other four aspects: what we concluded in June 2011, that travelling through this time of paradigm change… to the destination where our judges are the future generations, we owe it

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

to them to find the appropriate answers in relation to the necessary result of successful creative work… working in concert to sharing, applying and even creating knowledge, and contributing to influence the change processes; what we underlined some months later, in February 2012, that as everything we do in our life represents a choice, it is important reducing together the discontinuity between our past and future (what presupposes to be really informed, smart, interested, engaged, and consulted), reviving the community spirit to transform public space (as described by Professor Vasile Stanescu, Honorary Member of the Romanian Academy) into a fertile ground for responsible investment in a predictable future, to reimagining the responsible teamwork crossing the often invisible boundaries that define public space, remanifesting the strong emotional attachment to our land and people, reconfirming the importance of the cultural compliance dimension of sharing by our people of the value systems and - within this context - the attitudes of consensus on common expectations and possible conflicts in the use and understanding of public space as normal and acceptable; the question raised by us in June 2012 in relation with who are those who have no respect for others’ perceived competence, who cannot distinguish the truth around or within themselves, but have as ideal the appearance and money, being full of uncontrolled ambition and intolerance, considering that they are not kept on earth by the same gravity as the others – of course, we have not forget, among other aspects, to quote Socrates: “The greatest way to live with honor in this world is to be what we pretend to be;” what we quoted again (in 2013 and 2014) from the wisdom of Professor Vasile Stanescu, Honorary Member of the Romanian Academy from : “…we cannot look towards the future without preserving, honoring and valuing the memory of the past, as the only way for continuation; there is a need for strategies and policies in all fields of activity, of a high professionalism and profound morality, of the restoration of the axiological scale, of models and reconsidering values.” After setting (by recalling) this landmarks we can come back to the above mentioned arch over time refining understanding of the shift in mindset (in other words a process of renewing, changing the odds) toward a more human organization, and make appeal to other lessons to learn, while we can try to identify what can be useful for such an approach from the viewpoint of the link between organizational health (defined by McKinsey as a company’s ability to deliver superior financial and operating performance over the long term) and performance (whose transformation involves making change happen at scale), knowing that the strategic clarity and shared vision are representing the starting points in a transformational approach which prioritizes the improvement of the organizational health by embracing fresh ideas. And the last but not the least better understanding that all of these are possible with the help of a strong operational discipline (clear standards of work), a sense of teamwork and concern for the welfare of employees (supportive leadership). Let’s finally come back to the same W. Brian Arthur, but this time in October 2017 (not in October 2011 as at the beginning of this article), when he expressed his belief that: << … we have reached the “Keynes point,” where indeed enough is produced by the economy, both physical and virtual, for all of us… Whether we manage a reasonable path forward in this new distributive era depends on how access to the economy’s output will be provided… All these challenges will require adjustments… The needed adjustments will be large and will take decades. But we will make them, we always do.” Theodor Valentin Purcărea Editor-in-Chief References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

*** http://www.crd-aida.ro/2009/12/in-ziua-de-17-decembrie-2009-in-aula-academiei-romane-a-avut-loc-ceremonia-de-decernare-a-premiilor-academiei-romane-printre-cei-premiati-se-numara-vasile-puscas-florian-popa-theodor-purcarea-mon/ Pușcaș, V., Românii - de la supraviețuire la competitivitate, Proiect de ţară, “Piaţa financiară,” Noiembrie 2017, pp. 68-69 Purcarea, T., Raportul anual al Consiliului Concurenţei 2017 şi nevoia de istorie, http://holisticmarketingmanagement.ro/raportul-anual-al-consiliului-concurentei-2017-si-nevoia-de-istorie/ Purcarea, T., From the challenge of ensuring the interface with the structure of capitalist economy to doing meaningful stuff that matters the most, to people, society, and the future, RDC Magazine, September 2011, http://crd-aida.ro/RePEc/rdc/v2i3/1.pdf Arthur, W.B., The second economy, McKinsey & Company, October 2011, retrieved from: https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-second-economy MacGregor, S., Chief Wellbeing Officer, European Business Review, October 27, 2017, an excerpt from Steven MacGregor’s new book, Chief Wellbeing Officer: Leading in the Fourth Industrial Revolution, co-authored with Rory Simpson and published by LID, retrieved from: http://www.europeanbusinessreview.com/chief-wellbeing-officer/ Purcarea, T., The challenge of the invisible revolution, right thinking about people, RDC Magazine, June 2011, http://crd-aida.ro/RePEc/rdc/v2i2/1.pdf Purcarea, T., Facing a paradigm shift, by choosing to fight against displacing human values, against the order out of the truth, RDC Magazine, February 2012, http://crd-aida.ro/RePEc/rdc/v3i1/1.pdf Purcarea, T., Refusing to be passive recipients as customers and striving to contribute to the courageous map of this new world of consumer space by encouraging authentic partners in great tasks of transformation, RDC Magazine, June 2012, http://crd-aida.ro/RePEc/rdc/v3i2/1.pdf Purcarea, T., Education and Communications within the Circular Economy, the Internet of Things, and the Third Industrial Revolution. Challenges ahead the“Competency based” Education Model , RDC Magazine, March 2014, http://crd-aida.ro/RePEc/rdc/v5i1/1.pdf Duan, L., Krishnan, R. and Weddle, B., The yin and yang of organizational health, McKinsey Quarterly, November 2017, retrieved from: https://www.mckinsey.com/global-themes/performance-transformation/ the-yin-and-yang-of-organizational-health? Arthur, W.B., Where is technology taking the economy? McKinsey Quarterly, October 2017, retrieved from: https://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/where-is-technology-taking-the-economy?

INFORMATION AND COMMUNICATIONS TECHNOLOGIES DRIVE DIGITAL DISRUPTION FROM BUSINESS TO LIFE ON EARTH -PART 3Prof. Eng.Ph.D. Victor Greu

Abstract

The paper details the analysis of the digital disruption (DD), in the context of the Information and Communications Technologies (ICT) exponential evolution as main driving factor of the progress of the Information society (IS) toward Knowledge Based Society (KBS). The analysis starts with DD/ICT premises in order to identify some of the most important useful rules and advices to face DD consequences/challenges. Among the most relevant premises, IoT, the number of people of Planet versus connected devices expansion and the complex impact of ubiquitous connectivity are included. A DD rules identification incentive is the fact that digitization is closely linked with disruptive innovation and consequently DD could have a significant impact on organization growth. From these basics, the rules follow the aim of maximizing the revenue growth in the dynamic DD/ICT context. This way, the general rule, also largely agreed by the literature, is to use the power of combining the main three directions of investments in digital skills, digital technologies and digital accelerators with the corporate strategy. A deeper approach reveals the useful and extended leveraging role of analysing and adapting organizations to new concepts/rules as interfacing, removing the friction, address non-linearity and transparent thinking. Last but not least, being open to news is crucial in the ever changing digital context. Linking these rules, author opinion is that Descartesâ&#x20AC;&#x2122; rule of methodical doubt is again relevant along with the surgical precision of the new ICT. The DD/ICT analysis included, beyond their support for digital economy, their possible leveraging influence exceeding the direct benefits for economy, along with some limits and undesired effects. Most of these unwanted effects could unfortunately come just from ICT exponential pace of expansion at Earth scale, in all areas of activity, as mass products and services. The main causes of such withdraws include climate changes and Earth resources fading, but on the other hand some less visible issues, like the long term effects on humankind behaviour, thinking and evolution.

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

A relevant example is the education area, as the skills and knowledge required of people to perform their jobs could further raise the general level of technical or general education of individuals, useful in life outside the job. On this line the paper revealed the ICT power to penetrate all humankind activity fields, by indirect ways (outside ICT main applications), due to the impact and multiplication power ICT products and services have by their logical, digital and optimized models which are present everywhere everyday ... in every person mind. The indirect consequences lay in the processes of modifying humankind personality and adapting capacity, as a highly skilled person could have less capacity/chances to adapt and do other job or personal activities (from health or other reasons) if his personality is too much modified in the way of thinking. Similar influences could be produced on life beyond human beings, affecting Earth environment including fauna and flora. All DD/ICT applications with mass proliferation (like IoT) could bring, along obvious huge benefits, possible challenges addressing issues like energy/materials consume (Earth resources fading), wastes, recycling, intensive exploit of Earth (soil, water, air) and natural habitat modifications. All these challenges must be linked with the fact that ICT carbon footprint has an important rate of annual increase (exceeding aviation), which is highly linked with ... ICT exponential Planetary development, Big Data, IoT etc. The main conclusion of the paper is that such challenges should not stop the general technological progress, but it is important to watch DD/ICT pace and evolutions in order to minimize these and other similar undesirable effects, by carefully timely evaluating them. In other words, we have to think deeper on present short term, in order to avoid less thinking on future long term.

Keywords: Digital Disruption, Internet of Things, information society, knowledge based society, digital skills, digital technologies, digital accelerators, digital abstraction.

JEL Classification: L63; L86; M15; O31; O33

1. Digital Disruption could still have rules and ... limits

Rene Descartes: Dubito, ergo cogito; cogito, ergo sum.

When complex processes have to be analysed, a systemic approach is mandatory and this is more than appropriate observing the Digital Disruption (DD) in the context of the Information and Communications Technologies (ICT) as the main driving factor of the progress of the Information society (IS) toward Knowledge Based Society (KBS). The known exponential dynamic of ICT needs also a continue re-evaluation of their processes and complicate consequences at Earth scale [4]. The literature largely confirms these challenges of DD/ICT, as DD generates, on short and medium term, some of the most important consequences by its potential impact on every industry and generally on humankind life and even evolution [1][2][3][5][4][7][11][12][14]. For the DD systemic approach, the ICT context premises are crucial and a very relevant observation is given by [2]: ”We claim 2016 to be the year of singularity. The year when the number of digitally connected devices equals the number of people on the planet”. We have already presented the emergent context of IoT [10], but here the point is on the significance of the number of people of planet versus connected devices expansion, as this confirms our above opinion on “complex consequences at Earth scale”. To be more specific, it is important to imagine how the ICT instruments could “explode” when every human could access their huge potential of changing ... the World (not only business!). In fact, the mentioned premises are more complex that we could ever imagine, as they are very fast growing, being leveraged by the exponential ICT development. Consequently, as we have already presented [13] we have to generally expect both positive and negative consequences, but the news is that it is more and more difficult to distinguish these sides! Confirming this point, the above example [2] could be completed as: ”Digital connectivity is facilitating the process of digital disruption by reducing access to market barriers and reducing the cost of client or customer acquisition. Word of mouth becomes word of byte... There is of course a downside. Product life cycles become more truncated as the life time values fall in periodicity and value. ” Now it is the time to recall our motto, as the Descartes’ methodical doubt is more actual than ever. As a matter of fact we consider that, in addition to the systemic approach, the methodical doubt is needed in order to deeply analyse and validate the DD/ICT complex trends and potential consequences. Step by step we have just arrived to the conclusion that even for the unpredictable DD we need some ... rules! Naturally, to be useful, these rules must be more specific that the good old Descartes axiom. Fortunately, this approach found much attention in the DD literature, although the problem is far from being simple, with these fast changing evolutions and consequences of DD/ICT, covering all industries and further all human activities. A good approach of DD must recognize, as we have already presented [4], the role of digitization or the reality of digital economy emergence [3]: “For companies responding to the threat of digitization, an offensive corporate strategy with coherent digital actions has by far the largest pay-off and may potentially offset the depressive effect of digital

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

disruption ...The best strategic reaction should either be no reaction, or one driven by offensive strategies embracing the disruptive innovation (Christensen, 1997). “ Since these rules could seem to be too general, their detailed mechanisms are also important to be noted as [3]: “First, digitization is consistent with the concept of disruptive innovation ... On average, we find that digital disruption exerts a negative and economically significant impact on growth. For instance, profit growth is cut by 5 percentage points on average, and can be as dramatic as a drop of 15 percentage points in revenue growth for the weakest, non-reacting firms.... Second, bold at scale, offensive, strategic reactions, aimed at developing or acquiring new products or services rather than at defending legacy business lines, and complemented with larger investments than competition in digital technology, generate the most promising growth trajectory... Third, such offensive reactions maximize returns when there is strong consistency, i.e. digital strategy and investments need to be strongly aligned and integrated with the corporate strategy and be placed at its heart rather than at its periphery.“ From this almost comprehensive approach it is clear that digital investments focused on disruptive innovation of corporate strategy could be the best way to react to actual DD challenges. Because the real world is always more complex than the theoretical approach, the rules must be refined and carefully updated. More than these, humankind has priorities beyond revenue [5]: “While organizations are taking advantage of digital technologies, many economies remain digitally immature...Understanding where to make those investments to realize the greatest improvement in gross domestic product is the subject of recent analysis by Accenture Strategy and Oxford Economics. We found that high-performing economies could realize better returns from the optimal combination of investments in digital skills, digital technologies and digital accelerators... “ It is obvious that generally the rules could be further detailed, but it is also well known that always the best practice rules must keep a reasonable level of generality in order to let enough space for the diversity of concrete approaches and innovations. Still, we consider that the last quotation includes the roots for an even more general context when promotes the essential role of the mix of those three ingredients: digital skills, digital technologies and digital accelerators. Before pointing the mentioned more general context, we consider that digital technologies were largely presented, so the relevance of digital skills and digital accelerators must be further discussed with priority. When we are facing such huge picture, as digital disruption from business to life on earth, it is necessary to also consider those potential rules which fit as much as possible with it. A step further seems to be presented when the rules are in fact some well-designed metaphors which cover a larger and deeper reality (again just like the iceberg we often recall [5] for today’s signs versus tomorrow’s size of ICT development), which is the brilliant case when Nigel Moulton focussed on transforming for the future[1]:  The interface is everywhere  Remove the friction  Embrace non-linearity  Prepare for abundance  Be honest  Be curious We consider in fact that some of these six well designed metaphors, brilliantly commented by Moulton, offer reasons for discuss beyond DD and even ICT as they are relevant for IS toward KBS.

When pointing to interface we have to recall that much of recent evolutions of ICTare focusing about creating new interfaces between man and machine, but this is only an iceberg tip if we think, for example, about what IoT will be [10]. This does not reduce the relevance of Moulton examples, showing the impact on user experience of the transitions from “keyboard to touch and swipe, pointing that Apple made a very significant interface change - Siri“. Perhaps one of the hardest challenges of DD comes when “A number of organisations that are going through digital transformation are doing so because their competitors are easier to do business with than they are” and that is why the Moulton rule comes very simple: “Remove the friction externally for your customers, and internally for your own employees“. The metaphoric perception seems to increase with the rule number in the above column, as starting from fitness trackers, when referring to non-linearity, a subtle and complicate advice to embrace deep analysis of the complex context of DD/ICT is given as [1]: <<“There are hundreds and thousands of people wearing these devices which are all sending data and generating noise. But out of this noise, I have to find the signal because the signal is the business process “... He says [Moulton] that we need to have algorithmic and data science approaches to how we figure out finding the signal that is buried in all of the noise. “We need to embrace non-linearity. We’re very good at straight lines; we’re not very good at exponential curves. “>> That is why we have above mentioned that some of Moulton rules invite to discuss beyond DD and even ICT, being relevant for IS toward KBS, i.e. he is confirming our repeated opinions [13] [15][22] that ICT/ IS/KBS evolution is such a dynamic and complex context which is changing too fast, as we cannot evaluate all its consequences (finding the signal that is buried in all of the noise) even by deep and continue multicriteria analysis and new models/algorithms (but we have to try and obtain the best!). The idea of preparing for abundance covers an even more large sphere of IS/KBS, although it is linked with an old alarm flag about Earth resources fading (issued from consumer society features) - which was recalled by us in [13], it has here a positive message towards the necessity of new approaches to manage the data deluge we have to face along with the huge offer of ICT products and services [1]: “Just think about the amount of data these cars will generate. You’re going to need a principle to define the signal from the noise. Look at the industries that you’re involved in - what are the fundamental changes that are happening? Because when you information-enable a technology, you fundamentally change its nature. We’re not going to build that world based on the principles of 20th-century industrial thinking“ Again the needed new models/algorithms for such complex challenges are confirming our proposals [19] [24] of adapting our approaches to the fast and profound changes induced by ICT in all IS/KBS areas and beyond ...in humankind life and Earth ecosystem. It is obvious that any system of rules has to keep the perennial values of humanity, including to “Be honest - Be curious”. Of course, these value principles must be applied in the actual IS/KBS technological conditions, where transparency and curiosity could mean traceability and connectivity, but the practical rule issuing from them is again covering more than the actual case: “See it as an opportunity to educate yourself.” This last indirect rule could lead us to a higher level versus DD approach, pointing the role of education, but more than this it is a confirmation of the fact we repeatedly presented [15] [22], i.e. the multiplying role ICT have in IS/KBS when they are lending their efficient and efficacious principles and models to all areas of humankind activity and ... thinking. Here we have to observe that the opportunity to educate yourself is just the result of DD/ICT context, i.e. it is an indirect offered service/model (beyond the apparent role of best practice rule for DD approach), with benefits exceeding the proper reaction to DD. Although it could appear too far, here we may observe a good start for identifying some of DD ... limits. First of all, although indirectly, when influencing education DD is revealing one of the highest limits or areas of impact, with consequences so complex that exceed paper space and objectives, but relatively easy to approximately evaluate as social importance.

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Another limit, this time a lower one, is reflected by the fact that one of the above mentioned options for DD were to “be no reaction”. This could mean a good solution for some concrete cases and ... moments in time! Here both area and time opportunities could reflect the DD/ICT coverage and dynamic, in combination with company/organization strategy, but it is difficult to forecast areas where DD/ICT, sooner or later, would not penetrate, considering either private or governmental entities [16]. Perhaps the most relevant DD limits lay in the amount of potential impact in function of the industry/ activity area, as also resulted from the same above reference – where limits of profit growth cut between 5 and 15 percentage points in revenue were exemplified. Coming back to the mentioned starting point, it is necessary to further analyse how far DD could influence humankind activity and ecosystem, beyond education and sometimes ... beyond our expectations.

2. How deep the Digital Disruption is transforming life Life on Earth is a wonderful intersection of some incredible conditions that Planeth provided and what evolution made in thousands of years providing the ecosystem where humankind was struggling first to survive and lately to faster progress. Now we are in the most tremendous phase of this progress, as if this should continue with the same premises, many people believe that it could remain an apogee phase. We also presented some analyses [13][24], showing that trends like climate changes and Earth resources fading could be considered real signs of a near decline. There are studies that even try to evaluate how many years we would have before the point of no return of this phase, so any disruption, including DD, must be carefully analyzed from the point of view of its impact on humankind and Earth progress/apogee. Normally, the actual DD/ICT evolution and its consequences appear, including the elements presented in the first section, to be globally positive for humankind, but only from the industry/economy point of view [23]. If we should analyze all the DD/ICT consequences it is possible to also find negative implications. Most of these unwanted effects could come unfortunately just from ICT exponential pace of expantion at Earth scale, in all areas of activity, as mass products and services [13][15][22]. Notice that the unwanted effects, i.e. the unsustainable development, could appear because of the too fast pace of development in combination with the lack of responsible analysis/decision, only partially justified by the too short time left to foresee all the consequences of such complex evolutions. The arguments for a such worry lay in issues like climate changes and Earth resources fading, but on the other hand in some less visible zones, like the long term effects on humankind behaviour, thinking and evolution. Perhaps it is time to return to some concrete examples in order to confirm and quantify these opinions. Coming back to the mentioned relevance of digital skills and digital accelerators, we should connect them with the education impact of DD and with other new products or services DD could bring. Indeed, beyond usual benefits, DD (when successful embraced) has the potential to indirectly provide for economy, along with challenges to be faced, added value in all areas of humankind activity by some subtle ways we intend to reveal through some examples. In order to accurately assess the global values provided by the digital technologies (ICT), an updated approach/methodology is proposed in [5]: “Our basic premise is that the value of digital technologies is not confined to any particular sectors, but pervades the entire economy. Our model recognizes digital goods and services add value not just

at the point of production, but all the way through the supply chain. ... Our methodology takes into account the value created by the indicators related to: Digital skills: the digital nature of occupations and the skills and knowledge required of people to perform their jobs. Digital technologies: the productive assets related to digital technologies (hardware, software and communications equipment). Digital accelerators: the environmental, cultural and behavioral aspects of digital components of the economy that support digital entrepreneurship or activities.” Here we can observe the three mentioned indicators details, but beyond their support for digital economy it is natural to further imagine their possible leveraging influence exceeding the direct benefits for economy. Now we can easier see the link with education, as the skills and knowledge required of people to perform their jobs could further improve the general level of technical or general education of individuals, useful in life outside the job. This way we have just arrived to an older observation, we presented in [8] [15], which referred to the ICT power to penetrate all humankind activity fields, by indirect ways (outside ICT applications), due to the impact and multiplication power ICT products and services have by their logical, digital and optimized models which are present everywhere everyday ... in every person mind (way of thinking). Although these benefits are only a part of DD/ICT potential (we can add for example the contribution of digital skills in scientific research etc.), it is important to observe that exactly on the same indirect but ubiquitous ways some negative effects could influence humankind life and personality. Starting with the digital dependence, the lack of physical movement or the decrease of intellectual/ creative potential, we could add many others, but some still could remain unobserved yet – all generated by the excessive usage of ICT benefits, from computing to artificial intelligence (AI) and robots unprecedented proliferation and support. Perhaps another example, which presents a higher level of the same trend of having impressive benefits for DD/ICT evolution, will bring light to deeper and deeper consequences which are not always desirable, or at least difficult to differentiate in the too fast pace of changes [6]: “We experience the results of digital abstraction whenever search engines and websites tailor their content to customers’ past preferences. At one level the tailoring can be humorous — for example, purchasing a copy of Neil Stephenson’s book, , to give to a friend and suddenly receiving a recommendation from the website of every other book by that author, even those it should know you already own! At a deeper level, the reality is clear: digital technologies enable organizations to know more about customers and their own operations. As a result, they can build an increasingly complex and sophisticated situational understanding of behavior, preferences, conditions and intelligence. A range of technologies supports the Abstract model, including business intelligence, big data and predictive analytics. Incorporating digital resources into any business generates information that represents a source of insight and value.” In fact authors point the ways to reach a new edge for DD by using the incredible power of new ICT as: “A digital edge based on abstracting information relies on sets of techniques and technologies that incorporate statistics, advanced mathematics and artificial intelligence with data management to determine the probability of a future outcome that may drive a business decision.” If a shadow of doubt could still remain, it is sufficient to observe the privacy, security or ethical implications consequences of such “benefits”. More than this, the next example leads us in a similar zone but with new implications [9]: “There’s never been a better time to be a worker with special skills or the right education, because

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

these people can use technology to create and capture value. However, there’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots and other digital technologies are acquiring these skills and abilities at an extraordinary rate.” –Erik Brynjolfsson and Andrew McAfee, MIT Initiative on the Digital Economy (quote from their book The Second Machine Age).” Of course, the first message is that DD/ICT are stimulating the digital highly qualified workforce and this is the main and positive trend of our days. The challenges for this trend arise from the Planetary and social imbalance, because both could remain little changed over decades – but this could be considered a natural World evolution, eventually ignoring that the fast speed of DD/ICT amplifies the imparities. The indirect consequences lay in the already mentioned processes of modifying humankind personality and adapting capacity, as a highly skilled person could have less capacity/chances to adapt and do other job or personal activities (from health or other reasons) if his personality is too much modified in the way of thinking. In such scenario we have already ignored, as exceeding paper space and aim, the recognized modifications of humankind traditional values and ideals linked with humanism – using too much ICTwe tend to behave like robots. Last but not least we have to mention similar influences on life beyond human beings, affecting Earth environment including fauna and flora. Also in these areas, DD/ICT provide amazing new applications and benefits, mainly by environment monitoring (flora, fauna, soil, water, air, wastes areas etc). One of the most impressing monitoring examples include Internet of trees [17][10], rare species, agricultural plants optimization [4], without counting “industrial”cases of fruits/aliments, cows farms etc. Globally, all these applications with mass proliferation (like IoT) could bring, along obvious huge benefits, possible challenges addressing issues like energy/materials consume (Earth resources fading), wastes, recycling, intensive exploit of Earth (soil, water, air) and natural habitat modifications. It is also well known that some of the above main challenges could be approached by green ICT [20] [21][24], but it is essential to mention that ICT carbon footprint has an important rate of annual increase (exceedingaviation), which is highly linked with ... ICT exponential Earth development, Big Data, IoT etc. Although it is clear (and we also consider so) that such challenges should not stop the general technological progress, it is important to watch DD/ICT pace and evolutions in order to minimize these and other similar undesirable effects, by carefully timely evaluating them. In other words, we have to think deeper on present short term, in order to avoid less thinking on future long term!

3. Conclusions The paper presents an analysis of the DD/ICT premises and then identifies some of the most important useful rules and advices to face DD consequences/challenges. Among the most relevant premises, IoT, the number of people of planet versus connected devices expansion and the complex impact of ubiquitous connectivity are included. For DD rules identification it is important that digitization is closely linked with disruptive innovation and consequently DD could have a significant impact on organization growth. From these basics, the rules follow the aim of maximizing the revenue growth in the dynamic DD/ICT context. The general rule, also largely agreed by the literature, is to use the power of combining the main three directions of investments in digital skills, digital technologies and digital accelerators with the corporate strategy.

A deeper approach reveals the useful and extended leveraging role of analysing and adapting organizations to new concepts/rules as interfacing, removing the friction, address non-linearity and transparent thinking. Last but not least, being open to news (curious) is crucial in the ever changing digital context. Linking these rules, author opinion is that Descartesâ&#x20AC;&#x2122; rule of methodical doubt is again relevant along with the surgical precision of the new ICT. As a consequence, the DD/ICT analysis included, beyond their support for digital economy, their possible leveraging influence exceeding the direct benefits for economy, along with some limits and undesired effects. Most of these unwanted effects could unfortunately come just from ICT exponential pace of expansion at Earth scale, in all areas of activity, as mass products and services. The main causes of such withdraws include climate changes and Earth resources fading, but on the other hand some less visible issues, like the long term effects on humankind behaviour, thinking and evolution. A relevant example is education area, as the skills and knowledge required of people to perform their jobs could further improve the general level of technical or general education of individuals, useful in life outside the job. On this line the paper revealed the ICT power to penetrate all humankind activity fields, by indirect ways (outside ICT applications), due to the impact and multiplication power ICT products and services have by their logical, digital and optimized models which are present everywhere everyday ... in every person mind (way of thinking). The indirect consequences lay in the already mentioned processes of modifying humankind personality and adapting capacity, as a highly skilled person could have less capacity/chances to adapt and do other job or personal activities (from health or other reasons) if his personality is too much modified in the way of thinking. So, using too much ICT we tend to behave like robots. Similar influences could be expected on life beyond human beings, affecting Earth environment including fauna and flora. All DD/ICT applications with mass proliferation (like IoT) could bring, along obvious huge benefits, possible challenges addressing issues like energy/materials consume (Earth resources fading), wastes, recycling, intensive exploit of Earth (soil, water, air) and natural habitat modifications. All these must be linked with the fact that ICT carbon footprint has an important rate of annual increase (exceeding aviation), which is highly linked with ... ICT exponential Earth development, Big Data, IoT etc. The main conclusion is that such challenges should not stop the general technological progress, but it is important to watch DD/ICT pace and evolutions in order to minimize these and other similar undesirable effects, by carefully timely evaluating them. In other words, we have to think deeper on present short term, in order to avoid less thinking on future long term!

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

References

[17]Kathy Pretz, Environmentally friendly Information and Communications Technologies, IEEE The Institute, Mar.2016.

[1]Ilse van den Berg, The six rules of disruption (Nigel Moultonkeynote address at the Dell EMC Forum on Thursday, 9 March 2017), 10 March, 2017, http://www.bizcommunity.com/Article/196/379/158887.html. [2]John Ashcroft, Six Things Everyone Should Know About Digital Disruption, six rules of

things-

[18] Mark Harris, The Internet of Trees, IEEE Spectrum, Mar.2014. [19]Victor Greu, Context-aware communications and IT – a new paradigm for the

2),

disruption, Published on Jul 6, 2016, https://www.slideshare.net/jkaonline/six-

everyone-should-know-about-digital-disruption-pdf

Romanian Distribution Committee Magazine, Volume 5, Issue4, Year 2014. [20]Prechi Patel, Building a more eco-friendly telecom industry, IEEE The Institute, Mar.2016.

[3]Jacques Bughin, Nicolas van Zeebroeck, The case for offensive strategies in response to digital disruption , 2017.

[21]Ana Carolina Riekstin,Bruno Bastos Rodrigues,Viviane Tavares Nascimento, Claudia Bianchi Progetti,Tereza Cristina Melo de Brito Carvalho, Catalin Meirosu, Sustainability Information Model for Energy Efficiency Policies, IEEECommunications Magazine, November 2016.

[4]Victor Greu, Information and communications technologiesdrive digital disruption from business to life on earth -(Part 1), Romanian Distribution Committee Magazine, Volume 8, Issue 2, Year 2017.

[22]Victor Greu, Tomorrow’s paradox: refining knowledge by smarter information and communications technologies while humans tend to become a limited factor of

[5]Mark Knickrehm, Bruno Berthon, Paul Daugherty, Digital disruption: The growth

performance, Romanian Distribution Committee Magazine, Volume 7, Issue1, Year

multiplier Optimizing digital investments to realize higher productivity, Copyright © 2016 Accenture, https://www.accenture.com/_acnmedia/PDF-4/AccentureStrategy-Digital-Disruption-Growth-Multiplier.pdf

2016. [23]*** More Than 30 Billion Devices Will Wirelessly Connect to the Internet of Everything

[6]Mark P. McDonald, The digital edge,© 2012 Gartner, Inc, http://www.gartner.com/books [7]Rita McGrath,Fast Thinking: Reinventing Strategy for a DigitallyDisrupted World, Interview with Rita McGrath,Digital transformation review, no.07 february 2015,

assets/

http://ebooks.capgemini-consulting.com/digital-transformation-review-7/files/

basic-html/page12.html [8]Victor Greu, Developing information and communications technologies with more artificial intelligence, using artificial intelligence, when internet of things is ’’intelligence everywhere’’-(Part 1), Romanian Distribution Committee Magazine, Volume 7, Issue 4, Year 2016. [9] ***World Economic Forum White Paper Digital Transformation of Industries: In collaboration with Accenture, Digital Enterprise January 2016, http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/ files/ pages/files/digital-enterprise-narrative-final-january -2016.pdf [10]Victor Greu, The information society towards the knowledge based society driven by the information and communications technologies - from the Internet of Things to the Internet of …trees (Part 1), Romanian Distribution Committee Magazine, Volume 6, Issue1, Year 2015. [11]*** Digital transformation: online guide to digital business transformation, https://www.i-scoop.eu/digital-transformation/ [12]***What Is Digital Disruption?, Oxford College of Marketing, http://blog.oxfordcollegeofmarketing.com/2016/02/22/what-is-digital-disruption/ [13]Victor Greu, Searching the right tracks of new technologies in the earth race for a

balance between progress and survival, Romanian Distribution Committee Magazine,

Volume 3, Issue1, Year 2012.

[14]Gareth Cuddy, Digital disruption and innovation in brief, 2015 Digital Book World. [15]Victor Greu, The Exponential Development of the Information and Communications

Technologies – A Complex Process Which is Generating Progress Knowledge from

People to People, Romanian Distribution Committee Magazine, Volume 4, Issue2, Year 2013.

[16]Mike Shaw, Digital disruption impacts every industry. Here’s how to win in an era of constant change, enterprise.nxt, 2016 Hewlett Packard Enterprise Development LP, https://www.hpe.com/h20195/V2/GetPDF.aspx/4AA6-7153ENW.pdf

optimization of the information society towards the knowledge based society (Part

in 2020, ABI Research,London, United Kingdom - 09 May 2013, [24]Victor Greu, Information and communications technologies go greener beyond IoT - behind is all the earth - Part1, Romanian Distribution Committee Magazine, Volume 7, Issue 2, Year

TRENDS DRIVING THE FUTURE OF THE RETAIL INDUSTRY FOR THE NEXT DECADE Cosmin Tănase

ABSTRACT

The next decade is expected to be the age of the consumer, with shoppers having more choices and control than ever before. They will be presented with a growing array of products and services, often personalized to their specific needs and wants. Consumers will continue to demand price and quality transparency along with a wide range of convenient fulfilment options. Overall, the retail experience is poised to become more inspirational, exciting, simple and convenient, depending on the consumer’s ever-changing needs. The evolution in consumer demand, combined with transformative technological innovations, will continue to drive fundamental changes. The boundaries of “retailer” and “manufacturer” will continue to blur, as companies evolve to meet their customers’ needs. These forces will cause the retail and consumer packaged goods (CPG) landscape to change more in the next 10 years than it has in the past four decades. Keywords: Consumer, Connections, Technology, Digital Space, Mentality, Experience, Business Models, Retail, Innovation, Organizational Capabilities, Opportunities, IoT, Autonomous Vehicles, AI, AR

JEL Classification: L81, L86, M31, Q55

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

The key drivers of success over the next decade will be centered on building a deep understanding of and connection to the empowered consumer, promptly incorporating disruptive technologies, embracing transformative business models in both the offline and online space, and establishing key capabilities. With this transformation, there will also be challenges to solve by proactively readying organizations for change and implementing the required technologies to address issues related to store closures, employment (job loss/reskilling) and potential adverse environmental impacts. This insight report focuses on digitally developed markets and represents a call to action to stakeholders across the private and public sectors. Retail and CPG incumbents need to address the accelerating opportunities and challenges to their current business strategies and operating models. Moreover, in collaboration with policy-makers, regulators, and in some cases, educators, it is critical to take clear positions on the societal implications of the industryâ&#x20AC;&#x2122;s transformation to ensure positive outcomes.

using technology to increase the value added to consumers. They must, however, do so with a realistic assessment of their costs and benefits. The following eight disruptive technologies are critical for transformation: the Internet of Things (IoT), autonomous vehicles (AV)/ drones, robotics, artificial intelligence (AI)/ machine learning, augmented reality (AR)/virtual reality (VR), digital traceability, 3D printing and blockchain. Over the next 10 years, all of these technologies will come of age in the retail and CPG industries, creating an unprecedented level of disruption. In particular, IoT, AVs, drones, robotics and AI are predicted to be most transformational for retail and CPG industries due to their widespread applications, ability to drive efficiencies and impact on labour. 3. Unlock the power of transformative business models in physical and digital spaces

Over the next decade, the line between online and offline will continue to blur. Emerging business models will continue to proliferate, gaining scale and momentum. With slow-growing incomes in most digitally developed countries and a shift in consumer spending from products to services, Drivers of success the retail industry is likely to see greater value To succeed over the next decade and beyond, migration (from one company or business model both retailers and CPG organizations will need to another) than value addition. to: In the future, e-commerce penetration is projected 1. Build a greater understanding of and a to grow from approximately 10% today to greater stronger connection to increasingly empowered than 40%. Averages, however, can be deceiving, consumers Empowered by technology, the and some product categories are likely to register hyper-connected consumer is redefining value. penetration rates of 50% or more, while others The traditional measures of cost, choice and may not grow beyond 20%. Despite growth in convenience are still relevant, but now control e-commerce, the physical store will continue and experience are also important. Globally, to be the channel that contributes the most consumers have access to more than 1 billion revenue for the majority of large multichannel different products offered by a wide range retailers. However, its value proposition will of traditional competitors and dynamic new evolve from being a distribution channel to entrants, all experimenting with new business that of a platform for discovery, engagement, models and methods of customer engagement. experience and interaction. This will be done As choice increases, loyalty becomes more through leveraging technology for differentiated fragile, and the consumer becomes more customer experiences, developing new empowered. Businesses will have no choice technology-enabled frontline engagement with but to remain agile, and constantly innovate shoppers and new collaborations to repurpose and disrupt themselves by embracing new the stores and hubs for social interaction. technologies to meet the high standards and expectations of consumers. 2. Rapidly adopt game-changing technologies

The empowered consumer

Technology will be the key driver of this industry A new breed of consumers is shaping the transformation. Industry participants will only industryâ&#x20AC;&#x2122;s future, where incumbents must adopt succeed if they have a relentless focus on disruptive technologies and business models to

cater to them. Increasingly empowered consumers will have ready access to information, which means they will make decisions differently. They will use technology, especially mobile devices, in day-to-day decisions and tasks. They will also be hands-on, creating and controlling unique, personalized experiences. Across the value chain, the consumer has traditionally been involved in purchasing the product and follow-up servicing. That is now changing as the consumer takes on new roles, actively participating in every step of the journey. Consumers will soon be involved in: – The creation process for companies (R&D, financing), as well as marketing content and product sales (marketing and sales) and products (sales) – Personalizing their own products (innovation, manufacturing) – Working as contractors for companies (distribution, store execution) As a result, companies will need to open up their value chains and find ways to partner that further enhance the dimensions of the consumer value equation. As the retail and CPG industries revolve around the empowered consumer, organizations will have to focus on certain critical priorities: – Consumer-first mentality. Companies must embed a consumer-first mentality even deeper into their corporate cultures. Consumers must be the focus as business strategies and initiatives are developed. Organizations must understand their end consumer in terms of demands, expectations and pain points. They also need to know how their products and services meet these demands and expectations, while solving the pain points. – Agile consumer experience. Companies must stay on top of rapidly changing consumer preferences and expectations. They need to be agile in order to continue shaping and enhancing consumer experiences. Successfully understanding the future consumer and enabling a competitive consumer experience means incorporating new, disruptive technologies throughout the value chain. These technologies will provide both the data to develop consumer insights and the direction to optimize consumer experiences. They will be a critical means to attract, engage and retain consumers. Transformative business models A range of new business models have already blurred the boundaries between online and offline retail. Over the next decade, as new models proliferate in the online space, physical stores will continue to exist, but will require an evolved value proposition for consumers. For large multichannel retailers, the brick-and-mortar store will continue to make the largest revenue contribution, partly thanks to evolved value propositions that include offering services outside their traditional scope (e.g. healthcare or financial services). However, stores will transition from distribution channels through which they merchandise products, convey information and process purchases, to places that tell stories and are platforms for discovery, engagement, experience and interaction. At the same time, digitally enabled models will emerge that can be adopted into current business models – both offline and online – to better serve consumer needs and create the next frontier of digital retail.

From stores to stories: The evolution of physical retail spaces Retailers will place a premium on personalized services and experiences that requires high levels of interaction with products and staff. Stores of the future will be smaller, carrying streamlined inventories that mix in-stock product and the ability to manufacture customized products on site. This transformation has three key enablers: 26

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

1. Differentiated customer experiences. Tomorrow’s physical stores will offer rich, dynamic interactions and virtual experiences. They will become more like media platforms or flagship showrooms where consumers go to interact with products and expect hyper-personalized services. For example, by combining IoT and data analytics with AR/VR, “smart fitting rooms” can predict consumer preferences using knowledge of the customer gathered through previous interactions. This innovation helps customers envision (digitally) how items of clothing will look on them via interactive screens. 2. A new frontline workforce. Many of retail’s traditional human interactions will be taken care of by a digital workforce. This will further differentiate and enhance the customer journey from discovery to purchase. For example, customer interactions could be through IoT-enabled personalized messaging and promotions throughout the store, or robotics-enabled shopping assistants and payment processing. 3. New collaborations to repurpose physical stores as hubs for social interaction. Physical retail spaces will be centres for community building and communal experiences. To appeal to local communities, stores will have a strong local flavour, complementing their core business proposition with ideas, themes and events designed for the local consumer base. In addition, stores can be repurposed to serve previously unimagined dual business and social needs, e.g. offering lifestyle services, do-it-yourself training classes and health check-ups. This will help differentiate in-store experiences, supplementing the product exploration and experimentation component. E-commerce’s next frontier: Emerging business models Over the past five years, new players with different models, fueled by emerging technologies, have challenged what and how goods and services are consumed, disrupting the industry’s demand and supply sides. For traditional retailers – both offline and online – there are key elements in these transformative models that could be merged with current business models to better serve the needs of the consumer and reach the next frontier of e-commerce. Four new business models, in particular, show the strongest potential to take the retail and CPG industries to the next level. They can add value for the end consumer across the dimensions of price, assortment, convenience and experience. These four business models are directly related to new models of consumption that have emerged over the past three to five years: 1. Next-generation sharing economy (rental and secondary markets) 2. Personalization economy (curated subscriptions) 3. On-demand economy (auto-replenishment or smart reordering) 4. Services economy (“Do it for me”) The business models will impact the CPG industry’s subcategories to varying levels, mainly due to consumer trends and differing consumption patterns of high- and low-engagement products. For example, home and personal care will be directly impacted by auto- replenishment/smart reordering whereas apparel and hard goods will be the two sub-industries primarily impacted by the rental and secondary market model. For industry players, depending on which sub-industries they participate in, it will be critical to consider how components of these newer models can be leveraged to create business value.

Considerations for business, regulators and policy-makers As organizations evolve their business models, it will be critical that they have the appropriate foundational capabilities in place to serve new models. These capabilities will require willingness

for companies to innovate, collaborate and disrupt themselves. In particular, companies will have to consider the following: – Reimagining the physical store. Businesses will have to evolve the retail space ecosystem to optimize the return on asset, and to maintain shopper loyalty. Retailers should think about repurposing their physical stores, and collaborating with CPG companies to enhance the pleasurable, social aspect of shopping in order to redefine the value of the physical asset from a revenue standpoint. Innovation and collaboration will be key here. – Strategic fit of offline-online models. Businesses will need to determine which one – or more – of the various new offline-online models best fits their strategic priorities and will help them maintain a competitive edge. Even within the same product categories, different models might be better for different companies, depending on the individual organizational capabilities that exist or could be developed in the short to medium term. Again, it will be vital for companies to be collaborative and open to disrupting themselves when necessary.

Conclusion Consumers will be central to shaping the future direction of the industry. As their expectations around cost, choice, convenience, control and experience continue to climb, they will challenge the industry to keep up. At the same time, new and disruptive technologies will fundamentally impact the end-to-end industry value chain, benefitting both the industry and consumers. Business models will also transform to accommodate these consumer and technological evolutions. The traditional retail model is quickly being replaced by brick- and-mortar stores with evolved value propositions and transformative business models in the online space. To thrive, organizations will need to aggressively pursue innovation and be willing to disrupt themselves. Industry players will need to build the right capabilities to ensure they are ready for success in this new world. Societal challenges – such as the impact of physical retail on communities, the impact of new technologies on the industry’s workforce and the implications of last-mile delivery on sustainability – need to be tackled head on. To overcome these hurdles, partnerships (intra-industry, extra- industry and public-private) will be critical. Collaboration among stakeholders will also be crucial to ensuring that the digital transformation of retail benefits everyone: the industry, consumers and wider society. References [1]

Banjo, Shelly and Rani Molla, “These Malls Didn’t Get the Memo They’re Dying”, Bloomberg, 23 December 2015, https://www.bloomberg.com/gadfly/articles/2015-12-23/high- endmalls-defy-death.

[2]

Jarboe, Michelle, “Transformation of Collinwood big-box store highlights a trend”, The Plain Dealer, 12 November 2011, http://www.cleveland.com/business/index.ssf/2011/11/ transformation_of_collinwood_b.html.

[3]

Lutz, Ashley, “These Malls Didn’t Get the Memo They’re Dying”, Business Insider, 3 September 2016, http://www. businessinsider.com/what-will-happen-when-malls-shutdown-in-america-2016-9.

[4]

Nielsen Analysis for the World Economic Forum, December 2016.

[5]

Thau, Barbara, “Why A Store You’ve Likely Never Heard Of Hints At Retail’s Future”, Forbes, 8 July 2015, http://www.forbes.com/sites/barbarathau/2015/07/08/ bonobos/#6056f4687977.

[6]

Wahba, Phil, “Struggling malls to fall further behind in 2015 – outlook”, Fortune, 28 January 2015, http://fortune. com/2015/01/28/2015-mall-outlook.

[7]

Schmitt, Angie, “Repurposing Malls and Big Box Retail in Cleveland”, rustwire, 22 March 2012, https://rustwire. com/2012/03/22/repurposing-malls-and-big-box-retail-in- cleveland.

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

COMPETING, CONNECTING, AND WINNING IN TODAY’S DISTRIBUTION AND MERCHANDISING Theodor Valentin Purcărea Abstract While being in a hurry to complete tasks, both customers and customer professionals are valuing when things are done better and quicker. The necessary data science skills of the customer professionals have become a must have, their operations and future strategies being guided through the application of analytics on these data, the challenge remaining to translate customer insights into business operations. Retailers are seeing how the less distinct line between online and brick-and-mortar is becoming more and more evident, and how Amazon is putting more pressure on traditional retail than ever, while Walmart is working on the way of bringing the physical store directly into consumers’ homes. And facing the continuous challenge of building brand loyalty and advocacy retailers are also focusing on improving their stores’ value proposition and their stores’ merchandising, on enhancing Omni channel customer experience by defining accordingly their digital supply chain vision, without forgetting to successfully managing collaborative initiatives to improve shared supply chain processes that benefit all members. They really need to struggle to prevent friction in their customers journey, to identify where breaks are in this journey and to make consumers seen the benefit in having a personal link with a brand, what involves, among other aspects, to know the most critical brand equities and touchpoints for that battleground called the “moment of purchase”, making distinction between the initial consideration and the final consideration, having actionable data (pre-store, in-store, and post-store). Keywords: Distribution and Merchandising; Stores’ value proposition; Omni channel CX JEL Classification: L81, L86, M31, Q55 While being in a hurry to complete tasks, both customers and customer professionals are valuing when things are done better and quicker. The necessary data science skills of the customer professionals There is a real need today to build decisions on top of Big Data insights (this kind of analysis allowing a better understanding of the customer base and a better focus of the marketing efforts accordingly) so as to better identify the audience, connect to it, affect their opinions, and communicate with to reach the company’s desired goals (that is why the prestigious Forrester, for instance, build connections between the data-enabling technologies, the data and the applications for it). (Piletic, 2016) Even more so people are today in a hurry to complete tasks, rushing from one task to the next, valuing when things are done quicker (see below, for example, what happens on Internet every 60 seconds with so much social media activity).

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Figure 1: Things That Happen On Internet Every 60 Seconds, Go-Globe, 21 Aug 2017 Source: https://www.go-globe.com/blog/things-that-happen-every-60-seconds/

A report conducted by Forbes Insights and Criteo revealed that over 70% of top brand and retailer executives saw pooled data as a way to compete, connect, and win. (Cheng, 2017) It is known that if panel data are referring to samples of the same cross-sectional units observed at multiple points in time (a paneldata observation having two dimensions -Xit, where i runs from 1), pooled data are occurring when it is used a “time series of cross sections,” the observations in each cross section do not necessarily referring to the same unit. (reed.edu/economics/parker/) In other words, while panel data are corresponding to data with large numbers of cross-sections (with variables held in single series in stacked form), pooled time-series/ cross-section data are referring to data with relatively few cross-sections (where variables are held in crosssection specific individual series). (eviews.com, 2017) According to Criteo (which built a powerful and open Commerce Marketing Ecosystem) there are three trends which make necessary for brands and retailers to innovate and collaborate in order to successfully navigate in “The #VibrantFuture”: the connected shopper (knowing, reaching, and inspiring shoppers it is essential); the collaboration imperative (accessing more and current shopper data, intelligent technology, and large scale becoming imperative); the offline advantage (linking store experience to the web and mobile and winning the hearts and minds of shoppers as a favoring circumstance). (www2.criteo.com, 2017) This picture below from Criteo is relevant in this regard:

Figure 2: Trends of the vibrant future of commerce marketing, Criteo Source: Welcome to the vibrant future of commerce marketing, retrieved from: http://www2.criteo.com/vibrant-future?

In the U.S., the less distinct line between online and brick-and-mortar is becoming more and more evident, recent research from Slice Intelligence (which tracks online receipts from a panel of 5 million shoppers) showing a significant % change in the 2017 holiday season retail ecommerce sales growth by retailer compared to the same period of 2016. The physical retailers such as Costco, Target and Kohl’s have recorded consistent results, as shown in the figure below (but the combined market share of the nine major online retailers is still more than 12 points below that of Amazon): (Cheng, 2017)

Figure 3: Holiday season retail ecommerce sales growth by retailer, Activity on Slice Intelligence platform, Nov 1-Dec 1, 2017 Source: eMarketer, cited by Cheng, A., in Brick-and-Mortar Retailers Score Holiday Online Gains, December 6, 2017 (cited work)

It is also worth mentioning within this framework that – according to an analysis of the acquisition, investment, and research strategy of Amazon (nearly 90 business entities held across the world) made by CB Insights – Amazon, which is involved in retail (accounting for 5% of all retail spending in America), logistics, consumer technology, cloud computing, and media and entertainment, could be help to provide more frictionless commerce by fintech (the experiment with Indian market expected to become the world’s fastest-growing e-commerce market; the launch of Amazon Cash allowing users to add to their Amazon. com balance by showing barcodes at brick-and-mortar checkout locations) and augmented and virtual reality (“virtual machine” being the top key phrase in both 2010 and 2016 within the top patent keywords). Already a leader in consumer-facing AI and enterprise cloud services, Amazon is putting more pressure on traditional retail than ever, having its own shoe lines, apparel brands, consumer goods grouped under its Amazon Basics label, and opening brick & mortar bookstores, and launching its Amazon Go (which could become a licensable white-label solution for retail tech), check-out free, convenience store concept. (CB Insights, 2017) This analysis revealed among other aspects: ▪ the significance of Amazon’s new B2B products (such as AWS, the newest pillar and AI-as-a-Service), and presented a graphic with Amazon’s open jobs listing which allows to see where Amazon is adding human capital:

Figure 4: Amazon’s open jobs listing as of 4/11/2017

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Source: Amazon Strategy Teardown: Building New Business Pillars In AI, Next-Gen Logistics, And Enterprise Cloud Apps, CB Insights, April 2017 (cited work)

▪ that if a large part of Amazon’s strategy to expand its Prime Air logistics network are the aerial drones (announced by Jeff Bezos in 2013), a recent application for a patent called an “Airborne Fulfillment Center” (AFC) and described as “an airship that remains at high altitude” is suggesting the intention of creating a flying warehouse that would dispatch package-laden drones to the ground, while details about a drone mesh network which alerts all other drones about their surroundings or about the use of robotics by the Amazon’s fulfillment centers to assemble orders by tossing items through the air are appearing in other patents. Coming back to the expertise of data it is useful to show that through the application of analytics on their data companies are trying to achieve better results, by guiding day-to-day operations and future strategies, creating a competitive advantage (as shown in the figure below). Bob E. Hayes, PhD introduced in September this year the new customer analytics survey “State of Analytics in Customer Programs” conducted by “Business Over Broadway” (which surveyed 80+ companies), and revealing, among other aspects that customer professionals (who are competent in business knowledge and technology) are unable to translate customer insights into business operations (because of lack of proficiency in or access to programming, mathematics, and statistics; their teammates also lacking this expertise). (Hayes, 2017)

Figure 5: Creating a competitive advantage using analytics, Business Over Broadway, 2017 Source: Hayes, B., State of Analytics In Customer Programs: Customer Loyalty Focus, Machine Learning Adoption and the Data Science Skill Gap, Sep 21, 2017 (cited work)

Hayes explained how: to deliver automated insights less than half of the respondents used a customer data platform (even fewer reporting that they are using machine learning to gain insights); in order to improve how companies govern, collect and analyze customer data (from customer surveys, CRM systems, Web analytics and support systems etc.) customer programs need to include this type of efforts, what involves the analytical rigor in extracting insights from these customer data; a customer program has to start with understanding the specific practices that define the program (by incorporating practices moving this program and the company involved forward). The store’s value proposition and the importance of store merchandising, while facing the continuous challenge of building brand loyalty and advocacy. Enhancing Omni channel customer experience by defining accordingly the digital supply chain vision In November 2017, McKinsey’s representatives argued that shopping trends and consumer spend still favored the brick-and-mortar stores, retailers having the opportunity to find growth by focusing on the battlegrounds which are still up for grabs. (Gregg, Robinson, Huang and Kohli, 2017) McKinsey’s representatives identified many areas where stores can still compete and win, starting from the specific reasons why customers go to a store, as shown in the figure below:

Figure 6: The store’s value proposition: Shifting battlegrounds Source: Gregg, B., Robinson, K., Huang, J. and Kohli, S., Where stores can still compete—and win, McKinsey, November 2017, p.2 (cited work)

According to the opinion of these McKinsey’s representatives retailers have to keep pace with the wave of innovations in the digital age (not just to respond to Amazon), building up specific capabilities, partnering with vendors and businesses to build new capabilities and access new markets. And in order to improve the value proposition of the store itself retailers need to articulate a committed strategy and take adequate actions such as: focusing on continually optimizing their stores’ efficiency (analyzing in-store customer experience); differentiating their offering (on the basis of a deep understanding of their customers’ needs); doubling down on the open battlegrounds of the value proposition (product vetting/touch & feel; consultation, advice, authority; experience and community). Keeping customers coming back is not so easy in our days, taking into account the various experiences which can alienate a customer from a brand in this age of social media full of pitfalls necessary to be avoided by brands by preventing friction in the customer journey, as documented by Euclid. The recent Euclid commissioned consumer survey underlined the importance of store merchandising, revealing among other aspects that: over 50% of respondents (1,500 U.S. consumers who own smartphones - surveyed in September 2017) don’t buy in-store unless they find what exactly they want; consumers sometimes (46%) just browse or wait for the product to go on sale (what presupposes for retailers to know who visits their physical locations and try to influence their purchase through more personalized marketing); other time consumers (almost 2/3 of respondents) even if they did not make a purchase during a store visit (which is likely to be an influential step in their customer journey) were “very” (25%) or “somewhat” (41%) likely to buy from the brand (what involves for retailers to better understand how to maintain the relationship and nurture the path to purchase by adequately engaging with their customers and prospects). According to the above mentioned report retailers also need to pay a special attention to the relation between the online shopping and the customer experience which may be not positive, considering respondents’ several complaints about online shopping, such as: too high shipping and delivery fees (55%); 34

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

the fact that returning a product was a “hassle” (45%); the products they received did not look like what they saw online (30%). All of these can be remedied (learning from the Amazon Prime, offering free or reduced shipping while taking a page from Amazon’s book etc.). But either online or offline shopping finally what matters for retailers is knowing where breaks are in their customer journey and ensuring the “getting personal” with a brand by making seen for them a benefit to doing so, such as: deals and coupons, loyalty programs and product updates (considering of course the differences between men, women, and younger consumers to provide personal details to get product updates). There is no doubt that today’s retailers are challenged to enhance Omni channel customer experience by defining the supply chain vision in relation with their customers’ first visit to a store or digital channel to the moment when these customers receive exactly what they ordered, and the last but not the least when retailers promised it. On the way of their digital transformation planning (considering how digital applications can improve service, cost, agility, and inventory levels, and driving operational excellence by implementing process and organizational changes which use these technologies), retailers should articulated their vision in terms of business and technical capabilities (including machine-learning systems, automated operations, end-to-end customer engagement, innovation and talent) and should provide a comprehensive assessment of the supply chain’s business and technical capabilities (identifying capability gaps in: data, analytics, software and hardware, talent, processes). And finally, retailers need to identify operational improvements and digital solutions (which will build on its existing capabilities so as to produce the capabilities described in the above mentioned vision), prioritizing the established possible changes (while weighing, for example, the expected value of a change – in terms of agility, service, cost, and capital – against the ease of implementation), and organizing them into a multiyear road map, updating of course the vision according to the complexities of digital transformations, and never forgetting that the supply chain management (SCM) is a collaborative endeavor. (Gezgin, Huang, Samal, Silva, 2017) Starting from the reality that SCM is a collaborative endeavor, it is worth remembering a recent interview conducted by Barr Seitz (global publishing lead for McKinsey’s Marketing and Sales and Digital practices) with McKinsey’s partners Dave Elzinga and Bo Finneman (we already had the opportunity to approach the McKinsey’s research into shifting behaviors of the consumer decision journey/CDJ presented in February this year in the article entitled “The new battleground for marketing-led growth”) (Court, Elzinga, Finneman and Perrey, 2017) about the most important battleground for companies trying to win over customers and drive growth. McKinsey’s researchers, who looked at data from more than 125,000 consumers, across 350 brands in about 30 categories, have observed that only three of the 30 categories considered were “loyalty driven” (repurchasing the same brand without really shopping for others, when there is a purchase occasion), consumers shopping were primarily/switching brands, what means that the battleground where the brand that is most often selected enters is the “initial consideration set” (ICS - approached for the first time in 2009; consumers having most often about two brands in this ICS, drawing on their past biases and experiences and what other people have told them, advertising they have seen, then adding and subtracting brands as they move through the journey), as shown in the figure below: (Seitz, 2017)

Figure 7: The four key battlegrounds of the consumer decision journey Source: Seitz, B., Driving business growth by zeroing in on the consumer decision journey, McKinsey Podcast December 2017, interview with McKinsey’s partners Dave Elzinga and Bo Finneman

McKinsey’s partners explained: how much harder it is to get initially considered beyond just having a consumer be aware of a brand, and how they developed the “customer growth indicator” (CGI), by taking the percent of time that a brand is in that ICS, then dividing that by the brand’s current market share, and multiplying by 100 to create the CGI (as they did this in about 17 categories they found that ten of those categories had a 60 percent of the variance in growth, meaning a very strong relationship with future growth); that a brand cannot lose sight of the other parts of the CDJ (getting into ICS doesn’t mean a brand stay there, because brands come in and out of the consideration set as consumers go through the active part of the shopping process), in order to avoid to be vulnerable it needs having the right kind of messages and experiences, both online and in store; even after being purchased a brand needs to continue to do the right job in the post purchase experience so as to be putted back into ICS and to can drive growth; that it is important to make distinction between the initial consideration (the collection of brands that are there when the marketer experiences a trigger) and the final consideration (the final group of brands, often two brands, that the marketer is actually going to make a decision between as he make the purchase); that the only way to make sure that the marketer experiences that purchase and drives growth is making sure that you know what brand equities and what touchpoints are most critical for that battleground called the “moment of purchase”; that the metric proposed by McKinsey is useful in managing a brand portfolio to understand where it is necessary to invest. A physical store built right in your home? On November 30, 2017, CB Insights let us know that the physical store is brought directly into consumers’ homes (the delivery gaps being eliminated entirely) thanks to the newly published patent by Walmart (see the figure below) which allows: the access to buyable goods from the “retail-access portal” installed in a consumer’s home wall (an end-to-end system for an unattended retail storefront that would be restocked by a retail establishment or delivery service/drone/ “unmanned motorized transport unit”); the loading of goods into the machine from outside the consumer’s residence through an “inventory-loading portal”; the working in tandem with other Walmart’s connected home and e-commerce innovations to date; consumers both to submit choice and preference data to the retailer regarding desired goods, and to return items by placing unused goods back on the shelf; the replenishment of a stock of desirable inventory without ever clicking a button.

Instead of conclusions In the previous 2017 issues of our journal we underlined the obvious transformation of managing 36

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

and organizing distribution within the business context’s changing conditions, supply chains needing to master micro segmentation in order to excel in individualization and customization, and brands needing to focus more on overall experience (both online and in store), listening and pro-actively adapting to the customer’s expectations of fulfillment and delivery options, better understanding the difference between unified commerce and Omni channel, recognizing the need for a holistic customer experience that transcends channels. We show that there are significant priorities for retailers facing both customers’ more pressing expectations and their unmet buyer journey needs, retailers being forced to constantly innovate in providing a better shopping experience, faster adopting digital strategies while giving their customers a strong sense of value within the context of trying to choose the best experience of the digital and brick-and-mortar environment. We also highlighted retailers’ need of bringing continuously in-store innovation, of investing in CX and Omni channel efforts, giving more attention to the entire shopper journey, adequately matching their customers’ expectations across key areas. A review of the above lines made us recall other relevant things, such as: ▪ the invitation – for working together to build the foundation for the “Road Map for the Store of the Future” Project (see the figure below) – launched by us at Expo Milano 2015, as a Speaker to Shop 2015: The Store of the Future between connectivity and convergence; Technological innovation, applications and success stories in retail; (Purcarea, 2015)

Figure 9: Road Map for the Store of the Future Source: Theodor Purcarea, Road Map for the Store of the Future, World Premiere, May 4, 2015, at SHOP 2015, Expo Milano 2015, Romanian Distribution Committee Magazine, Volume 6, Issue 2, Year 2015 or Theodor Purcarea, Shop 2015, Il Negozio del Futuro Oggi, Atti Dei Convegni

▪ Accenture’s “2016 Global research: Customers are shouting, are retailers listening?” (a survey of global shoppers underlining, among other aspects, that: retailers capabilities which were nice to have are becoming must haves, shoppers want an improved CX without being invade in their privacy, and that their lifestyles have been influenced by only a few brands); ▪ the innovation consulting firm PSFK’s 10 pillars for leveraging technology to create a seamless journey, putting the consumer back in the middle of the experience (create confidence, eliminate obstacles, democratize access, recognize and personalize, promote transparency, perfect partnerships, optimize ownership, cultivate community, encourage advocacy, deliver delight); (Berry, 2016) ▪ even Airline Distribution systems are challenged to be configured to interact with natural language

interactions, to program apps to understand various gestures for “hands free” (also considering both initial and post-booking purchases), to evolve their user interfaces and commands to accommodate interacting with wearables etc. - because of technologies playing key roles; it is considered that by 2021 the current era of rigid distribution will be replaced by “Active Distribution” (which will ensure more flexible flight shopping experiences and more personalized results), airlines’ desires to become true retailers being supported by “Full Retailing Platforms” (airlines adding a “Distribution Channel Manager”); (Harteveldt, 2016) ▪ if retail execution starts with setting a solid retail merchandising foundation, addressing store execution (recognized as the Achilles heel of the category management) involves to add to the store-management teams a manager of merchandising execution and to know including to apply digital in merchandising, considering shopper monitoring and category performance; (Deloitte, 2015) ▪ as consumers’ behaviors and preferences (considering also how, when, and where consumers make purchases) are shaped by disruptive forces, retailers are challenged to offer product uniqueness, feeding instant gratification, utilizing analysis of the in-moment engagement to improve the customers’ journey, reduce friction and enhance the brand experience, pulling shoppers via engagement techniques, enhancing the customer’s brand experience by targeting relevance, selection, convenience and enjoyment; online may be disrupted by the social networks which are expected to evolve to retail channels, retailing being more than brick and mortar, click and mortar, and point and click; (Deloitte, 2017) ▪ the critical first step to a winning retail customer experience is to have actionable data: pre-store, in-store, and post-store (as confirmed by a recent study of retail decision makers issued by Velocity Worldwide and Sapio Research, and shown in the figure below); (McShane, 2017)

Figure 10: How brick-and-mortar retailers are engaging with their customers, Velocity Worldwide Source: McShane, E., Are Retailers ‘Retail Revolution Ready’? My Total Retail, October 23, 2017 (cited work)

▪ Zappos, the leading online retailer for shoes and clothes, launched in November 2017 “The_ONES”, a new retail concept (a way to create a community of people who celebrate the classics) partnering with Curalate (on-site) a new online hub featuring galleries of shoppable lifestyle content (allowing to easily find Instagram content tagged with #WeAreTheOnes, make a request for rights, bring the content on site and make it shoppable); the new account The_ONES on Instagram dedicated to classic sneakers shares inspirational imagery and engages with fans, who have the opportunity to easily discover new products and shop great with the help of a so-called “Curalate Like2Buy” converting the “link in bio” into an intuitive, shoppable experience; (Shelly, 2017) ▪ the “Global Mystery Shopping Study” of Astound Commerce, a global digital commerce agency, 38

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

uncovered the online and in-store features dominating the market, common pitfalls in shopping experiences, and the brands that are coming out on top (ranking brands by 206 metrics across customer service quality, ease of purchase, availability of information and more), and revealed, among other aspects, that merchandising is improving (86% of brands highlighting products with “what’s new” features; 54% using themed/seasonal promotions; 40% showcasing top sellers; 22% offering loyalty programs – as more brands prioritize retention’s role in revenue generation this percent is likely to grow). (Freedman, 2017)

References Berry, A., 10 pillars of the new digital shopping experience, September 28, 2016, retrieved from: https://nrf.com/blog/10-pillars-of-the-new-digital-shopping-experience Cheng, A., Brick-and-Mortar Retailers Score Holiday Online Gains, December 6, 2017, retrieved from: https://retail.emarketer.com/article/some-brick-and-mortar-retailers-make-online-gains/5a28772eebd4000570c897fd? Court, D., Elzinga, D., Finneman, B. and Perrey, J., The new battleground for marketing-led growth, McKinsey Quarterly, February 2017, retrieved from: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-new-battleground-for-marketing-led-growth Freedman, L., Top Performing Brands in the Eyes of a Mystery Shopper, November 20, 2017, retrieved from: http://www.mytotalretail.com/article/top-performing-brands-in-the-eyes-of-a-mystery-shopper/#ne=c4e4aa 5148bbd545a29a454a970be8d3&utm_source=total-retail-report&utm_medium=newsletter&utm_campaign=2017-11-16&utm_content=top+performing+brands+in+the+eyes+of+a+mystery+shopper-1 Gezgin, E., Huang, X., Samal, P., Silva, I., Digital transformation: Raising supply-chain performance to new levels, McKinsey & Company, Operations, November 2017 Gregg, B., Robinson, K., Huang, J. and Kohli, S., Where stores can still compete—and win, November 2017, retrieved from: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/wherestores-can-still-compete? Harteveldt, H.H., The Future of Airline Distribution, 2016 – 2021, International Air Transport Association (IATA) 2016 , Atmosphere Research Group, ndc-future-airline-distribution-report, pp. 25-28, 44, 56-57, 59 Hayes, B., State of Analytics In Customer Programs: Customer Loyalty Focus, Machine Learning Adoption and the Data Science Skill Gap, Sep 21, 2017, retrieved from: http://customerthink.com/state-of-analyticsin-customer-programs-customer-loyalty-focus-machine-learning-adoption-and-the-data-science-skill-gap/? McShane, E., Are Retailers ‘Retail Revolution Ready’? October 23, 2017, retrieved from: http://www.mytotalretail.com/article/are-retailers-retail-revolution-ready/ Piletic, P., Big Data, Big Impacts: What It All Means for Marketing, Sep. 30, 16, Big Data Zone, retrieved from: https://dzone.com/articles/big-data-big-impacts-what-it-all-means-for-marketi Purcarea, T., Road Map for the Store of the Future, World Premiere, May 4, 2015, at SHOP 2015, Expo Milano 2015, Romanian Distribution Committee Magazine, Volume 6, Issue 2, Year 2015 or Purcarea, T., Shop 2015, Il Negozio del Futuro Oggi, Atti Dei Convegni https://drive.google.com/file/d/0B5SO_08sNOZtTEx4ak8xVEM3MW8/view Seitz, B., Driving business growth by zeroing in on the consumer decision journey, McKinsey Podcast December 2017, interview with McKinsey’s partners Dave Elzinga and Bo Finneman, retrieved from: https:// www.mckinsey.com/business-functions/marketing-and-sales/our-insights/driving-business-growth-by-zeroing-in-on-the-consumer-decision-journey? Shelly, J., How Zappos, Dune London and Sperry Use Imagery to Inspire … and Sell, November 20, 2017, retrieved from: https://www.curalate.com/blog/instagram-inspiration-zappos/ *** www.reed.edu/economics/parker/s10/312/notes/Notes8.pdf *** Panel And Pooled Data, 25 Oct 2017, retrieved from: http://www.eviews.com/help/helpintro.html#page/content/sec_panel.html *** Welcome to the vibrant future of commerce marketing, retrieved from: http://www2.criteo.com/vibrant-future? *** Amazon Strategy Teardown: Building New Business Pillars In AI, Next-Gen Logistics, And Enterprise Cloud Apps, April 2017, retrieved from: https://www.cbinsights.com/research/report/amazon-strategy-teardown/? *** Evolution of Retail: Bad Moves: What Kills Customer Loyalty, A Euclid Commissioned Consumer Survey Report – December 2017 *** Forget Online Shopping. Walmart Patents A Store Built Right In Your Home, CB Insights, November 30, 2017, retrieved from: https://www.cbinsights.com/research/walmart-home-shopping-physical-retail-patent/ *** Accenture-Adaptive-Retail-Research-Infographic-PDF *** Deloitte, us-cb-shopper-centric-retailing-vision.pdf *** Deloitte, us-cb-retail-distribution-outlook-2017.pdf

LÉON F. WEGNEZ (BY COURTESY OF) – WHAT CONTRIBUTION OF E-COMMERCE TO THE DEVELOPMENT OF FRANCHISING, “DISTRIBUTION D’AUJOURD’HUI”, 58ÈME ANNÉE, AOÛT 2017, BRUSSELS Léon F. Wegnez Sharing with our distinguished Readers a wellknown source of usable and useful knowledge… Prof. Dr. h. c. Léon F. WEGNEZ is an Honorary Member of the Romanian Distribution Committee, and distinguished Member of the Editorial Board of our “Romanian Distribution Committee Magazine“. He was honored by the European Retail Academy (ERA) as the 2015 “Man of the Year” (the distinguished personalities who have been honored by ERA in the last six years were: Philip Alexander Nobel, John L. Stanton, Léon F. Wegnez, Romano Prodi, Klaus Toepfer, and Robert Aumann). Knowing our distinguished readers’ thirst for knowledge, we offer you, by courtesy of this remarkable personality, the above mentioned article published in the prestigious “Distribution d’aujourd’hui”.

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

ESTEEMED ACADEMIA, FOOD MANAGEMENT/TUN EQA, TOP 500 RETAILERS/WHOLESALERS ASIAN PACIFIC AREA, APRCE 2017, CZ RETAIL SUMMIT, NEW CENTRAL EUROPE, AND RIGA Bernd Hallier

Prof. Dr. Bernd Hallier, President of the European Retail Academy (ERA), an Honorary Member of the Romanian Distribution Committee, and distinguished Member of the Editorial Board of “Romanian Distribution Committee Magazine” (he is also Honorary Member of the Romanian Scientific Society of Management - SSMAR) attracted our attention on great events happening in the fourth quarter 2017, and allowed us to present them. It is also worth remembering that: immediately after visiting Romania for the first time on the occasion of the 24th International Congress of the International Association for the Distributive Trade (AIDA Brussels), Prof. Dr. Bernd Hallier sent us, in May 2008, a memorable letter we have referred initially in the Journal of the Romanian Marketing Association (AROMAR), no. 5/1998, and also later, in 2010, in the first issue of the Romanian Distribution Committee Magazine; the RomanianAmerican University has awarded Prof. Dr. Bernd Hallier a “Diploma of Special Academic Merit”; the “Carol Davila” University of Medicine and Pharmacy , Bucharest, has awarded Prof. Dr. Bernd Hallier a “Diploma of Excellence”.

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

Esteemed Academia ERA let us know on Octomber 6, 2017 that even in today’s money-driven world Academia Celebrations are still received with high respect by the public as two examples of partner universities of the European Retail Academy show: Prof. Dr. Th. Purcarea from the Romanian American University (RAU) reports on Twitter about the Opening of the Academic Year at his university in presence of the Rector, the faculties, the administrative staff, representatives of business partners and even members of the diplomatic corps (see also Rector at his speech).

A second example comes from VSE Prague when Prof. Dr. B. Hallier was awarded “Doctor oeconomiae honoris causa” (watch on YouTube). This ceremony is reserved for important Czech and international economists. Among others VSE Prague awarded in the Post-Socialist time the Nobel Prize laureates Gary S. Becker, Milton Friedman, Robert A. Mundell and Douglas North. Hallier was honored for his activities in applied sciences especially in permanently promoting innovations for the micro development along the Total Supply Chain which in the end accumulates on the macro level of a sector as well as in the long-run in the wealth of a nation.

Food Management On October 16, 2017, ERA informed us that according to international research in 2040 the population of the globe needs about 40 percent more food. “Food Sustainability and Health are basic for physical and mental survival in a Global House of Harmony based on Ecology, Economy and Ethics” Prof. Hallier stated at many Conferences around the world. The European Retail Academy started therefore already in 2005 its AgriBusinessForum (Link), in 2008 the Environmental Retail Management (Link), in 2013 its Global Green University (Link) which now will be enriched by a joint platform with the EQA Education Qualification Alliance under the name Thematic University Network (TUN) and be pushed internationally by www.european-retail-academy.org/TUN .

The Umbrella-MOU between EQA and ERA was signed during the ANUGA Food Exhibition and immediately endorsed by bi-lateral signatures from Chapingo University/Mexico and Debrecen University/ Hungary. Other universties are already in the pipeline to join. The new Site was designed by the longstanding ERA-trainee Alina Pukhovskaya from Russia being at the moment PhD-candidate of CIRCLE International (Link CV A.P.) and will be helped in the Site-management by Trang Pham from Vietnam. The TUN-Site will become step by step a multi-lingual Site. Selamat Datang I ERA let us know on October 30, 2017 that since 2004 NYCU Media/Retail Asia is publishing together with partners like Euromonitor and KPMG data about the TOP 500 retailers/wholesalers in the Asian Pacific area. Each year rotating within Asia is its TOP AWARDS Dinner where an international jury is announcing the Best of the Best ; in 2017 in alphabetical order the following companies had been selected by the jury : AEON / Malaysia, Indomarco Prismatama / Indonesia, Luk Fook International / Hong Kong, Mercury Drug / Philippines and Mobile World / Vietnam.

Important for the flair of the AWARDS always was also the choice for its location starting in 2004 in Marina Mandarin/Singapore followed by Shangri-La Hotel/Beijing , Intercontinental/Singapore , Palace Hotel/ Tokyo , Venetian Macau Resort/Macau, COEX Intercontinental/Seoul ,The Regent/Beijing, Four Seasons/ Singapore, Club Shanghai/Shanghai , Ritz-Carlton/Istanbul , Marina Bay Sands/Singapore , Solaire Resort & Casino/ Manila, Sofitel Sentosa Resort & Spa/Singapore and now finally in 2017 at The Westin/ Kuala Lumpur. Selamat Datang II On November 7, 2017, ERA informed us that since 1983 the Asian Pacific Retailers Association is organizing bi-annually three-days Congress/Exhibition under the logo of APRCE. While APRCE 2015 was hosted by the Philippines in Manila - APRCE 2017 was in Kuala Lumpur/Malaysia: “Selamat Dantang –Welcome”. APREC 2019’s destination will be China. “The topic of the Conference – Transformation, Creativity & Beyond – reflects very well that we live in a permanent changing world and that retail is not just selling products but that retail concepts have also to reflect social values and are benchmarked by Economics, Ecology and Ethics as a triangle of parameters” Prof. Dr. B. Hallier said visiting APREC.

CZ Retail Summit ERA let us know on November 15, 2017 that the CZ Retail Summit is the biggest conference player for trade within all Central Europe. It is linking retail/wholesale, politicians and research . (Program available by Barbora.Krasna@blueevents.eu). For Prof. Dr. B. Hallier the Prague Retail summit is a “Lighthouse for the Transformation from Socialism to Market Econom”. The topic “Balance” could be understood according to him as a topic for the Sector from farm to fork (Total Supply Chain) but also in global macro-economic as an add-on of Ecology and Ethics to Economics. Hallier was honored in 2011 by VSE Prague.

New Central Europe On November 25, 2017 ERA informed us that Romania organized in Targoviste the SCM 4 ECR Conference addressing topics like Digital Supply Chain and Consumer Engagement as well as Future Value Chain Rethinking Networks through Omni-Channel for Consumers; at the photo ERA’s longstanding friend from RAU/Bucharest Prof. Dr. Theodor Purcarea together with Ruediger Hagedorn from the Consumers Goods Forum. Also presenting at SCM 4 ECR was Matei Purcarea – “a good benchmark for the young academic generation!” Prof. Hallier claims.

SCM 4 ECR was already initiated in 1996. In 2017 the organization partners had been the Valahia University, Czestochowa University, Romanian American University, Politehnica University Bucharest, Bucharest University of Economic Studies, Pitesti University, UPC Ploiesti, the Consumer Goods Forum 50

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu

and E2E Paris ( see also Link www.european-retail-academy.org/EUCVOT).

Riga ERA let us know on December 2, 2017 that Riga/ Latvia has a historical role in the Baltic Sea. In 2014 it had been the European Cultural Capital. - Old Riga with its historical HQ of the Schwarzhaeupter Guilde from the times of the Hanse-Trading-Pact is UNESCO World Heritage since 1998: including also Riga’s Central Market which is Europe’s largest bazaar being constructed in the 20th century.

The revitalization of the Baltics in the Post-Soviet time is driven by the Scientific Institution “Business Competence Centre” together with the ISMA University within a Trio of Conferences. Prof. Dr. Hallier was speaking at all of these events - see more also at www.european-retail-academy.org/EUCVOT and www. european-retail-academy.org/ERM .

GOAL HEALTH: A COMPETITOR’S COURSE FOR ALL? Isabelle WEGNEZ

We offer you, by courtesy of the Director of Editorial, the above mentioned Editorial published in the prestigious “Distribution d’aujourd’hui”, 58ème année, Août 2017, Brussels

Romanian Distributtion Committee Magazine / December 2017 / www.distribution-magazine.eu