Retail News May RI Conference

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Retail Ireland Conference

Recovery Well Underway at Retail Ireland Conference The country’s top retailers gathered in Dublin for the Retail Ireland MasterCard Annual Conference, which highlighted the country’s economic recovery and future prospects.

IRELAND is officially enjoying a firm economic recovery, but the Government needs to cut personal taxes to kick-start real growth. Such was the message at the Retail Ireland MasterCard Annual Conference, held in the Gibson Hotel, Dublin, on May 6.

The theme of this year’s Conference was Recovery and Renewal and it proved an apt subject. The event was expertly chaired by Norah Casey, CEO of Harmonia, Ireland’s largest magazine publishing company, and featured a stellar line-up of speakers, who provided a wealth of interesting insights into both the wider Irish economy, the retail sector and glimpses of what the future might hold for both.

Prioritising Retail at State Level Opening the Conference, An Taoiseach, Enda Kenny TD highlighted the importance of the provision of infrastructure, from broadband to water, to the Irish economy. He stressed the importance of the retail sector to the Government, stating that it was a priority and “essential for the social fabric” of the country.

On this note, he narrated the Government’s successes in reducing VAT rates, improving access to credit for business, establishing a commercial

An Taoiseach, Enda Kenny TD, addresses the Retail Ireland MasterCard Annual Conference.

leases database, introducing cheaper examinership for companies in the Circuit Court, and tacking the hidden economy. The next step, he admitted is to lessen the tax burden on working people and to loosen the bureaucracy around doing business in Ireland.

He highlighted the establishment of a Retail Consultation Forum and expressed a hope that it would be a vehicle for driving real change in

the industry and its relationship with Government in terms of finding “workable solutions” to challenges ahead.

The Taoiseach went on to highlight the growth of online shopping versus traditional shops, noting how there is billions of euro worth of goods coming into the country via the web that could be bought in our shops. He stressed the importance for all of us of buying Irish

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Retail Ireland Conference

Pictured at the Retail Ireland MasterCard Annual Conference in Dublin were (l-r): Baroness Neville-Rolfe, DBE CMG, House Of Lords; Frank Gleeson, Chairman, Retail Ireland; and An Taoiseach, Enda Kenny TD.

goods and services, where possible.

Acknowledging that the last few years have been “a long and difficult road for retailers”, he promised brighter days ahead.

Developing Your Blue Ocean IBEC CEO Danny McCoy described Retail Ireland as a “critical part of IBEC”. In a wide-ranging presentation, McCoy argued that “the narrative in retail about the consumer is too narrow”. Households, he stressed, have been spending, with retail making up 50% of their outlay, with innovation and value the key to their loosening of the purse-strings.

McCoy went on to note how the “paradox of thrift”, our new-found obsession with “keeping down with the Joneses” seems to be breaking.

Discounting, however, remains pervasive in retail, he warned, urging delegates to develop not a “blue sky” but a “blue ocean” strategy, a business development mindset that encourages companies to succeed not by battling competitors but by creating “blue oceans” of uncontested market space.

Highlighting the enormous footprint of the retail sector and its importance to Ireland’s economy, McCoy noted how we are on the cusp of a strong surge in recovery, but argued that this recovery must be sustainable. He called on the Government to reduce the tax burden on workers, with the corresponding increase in spending more than making up the balance in the Government’s coffers. “If we get a modicum of inflation, our economy will grow by 4% in value terms,” he argued.

“Innovation is at the heart of our business, but we need the freedom to be able to innovate, and that means not being burdened with red tape and barriers.”

The Innovation Station Shane Daly, Head of Retailer Services at Nielsen Ireland, discussed in detail the parameters that must be met for real innovation to succeed, highlighting 12 steps to success across the innovation process, from having a distinct proposition with a concise and persuasive message, through to effective marketing execution and ensuring your product is consumercentric and delivers on its promises.

Two thirds of products fail to achieve their first-year sales levels in year two, he warned. He encouraged entrepreneurs to look at each stage of the process, arguing that for a product to succeed, you must be successful in all 12 stages – you are only as strong as your weakest link.

Daly then went on to detail

the evolution of the Irish grocery marketplace over the last decade, noting in particular the rise and rise of the discounters, Aldi and Lidl, who now make up 15% of Ireland’s €15.1 billion grocery market, and are growing at 1920% per year.

Daly discussed the acceptance curve of the discounters in Ireland, as consumers increasingly trialled goods and started to spread the word. Indeed, one of the most interesting statistics from Daly’s wide-ranging presentation was the fact that in 2013, more than a quarter (26%) of Aldi’s consumers were recommenders (those who would recommend the store to others), the highest figure of any of the grocery groups, and one which has doubled in just two years.

Daly also pointed out that the discounters’ impressive growth rates are backed up by a high advertising spend, with both Aldi and Lidl amongst the biggest advertisers in the industry, particularly on TV. Daly finished up by showing a host of global retail innovations across the supply chain, including a whole foods store in Brooklyn who grew vegetables in greenhouses on their roof, a home scanner from Amazon and a smart shopping device that attaches to a trolley and guides shoppers to specific ingredients in-store.

Keynote Address The keynote address was provided by the Baroness Lucy Neville-Rolfe, current president of EuroCommerce and former UK senior civil servant and an Executive Director of Tesco

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Retail Ireland Conference plc. In a hugely entertaining speech, she explained how her own farming background and subsequent career in one of the world’s biggest retailers has given her a unique insight into both sides of the grocery supply chain.

She went on to discuss the European economy, praising Ireland’s “bravery” in dealing with the fall-out from the 2008 economic crash, before highlighting the importance of the retail sector across Europe. The retail and wholesale sector employs 13% of the European labour force, and together creates one trillion euro of gross value added.

In a sometimes grey world, she argued, retail is diverse, “in the sense that the locations are varied, the customers come from all walks of life and the recipes for success are very different.” It is also, she acknowledged, a “model of competition”, which is perhaps why it is so innovative.

“Innovation is at the heart of our business, but we need the freedom to be able to innovate, and that means not being burdened with red tape and barriers,” she warned.

She cited the advent of e-commerce as a prime example of retail leading and innovating. However, in more mature digital markets such as the UK and France, there are signs that the growth of pure e-commerce is not as steep as it used to be, and multi- or omni-channel retailing is rising as the way forward. “Bricks and mortar shops are still relevant and important,” she said. “Yes, the way people shop continues to change but the most important thing is still to provide a consistent and positive experience for consumers.”

A Healthy Obsession She went on to describe her long career in Tesco, where she joined as Group Director of Corporate Affairs in 1997, before going on to become Company Secretary and being appointed to the board of Tesco plc, where she was Executive Director of Corporate and Legal Affairs from 2006 until January 2013.

Praising Tesco’s “obsession with the customer”, she recalled the launch and huge success of the Tesco Clubcard, which was extremely innovative in terms of the electronic card itself, the use of vouchers and deals and not using customers’ personal data to exploit them in any way. She also pointed out the growth of organic food and subsequently wine, and, humorously, the correlation between first time nappy purchase and beer sales, before highlighting Tesco’s development of “the largest and most profitable online

Pictured at the Retail Ireland MasterCard Annual Conference in Dublin were (l-R) Garry Lyons, Chief Innovation Officer and Head of Labs, Mastercard, Norah Casey, Entrepreneur And Broadcaster and Stephen Lynam, Director, Retail Ireland.

grocery business in the world”.

A Symbiotic Relationship She went on to discuss relations between producers and retailers, having seen both sides of the supply chain. “Relations between producer and

“Bricks and mortar shops are still relevant and important. Yes, the way people shop continues to change but the most important thing is still to provide a consistent and positive experience for consumers.” retailer need to be strong,” she argued, noting, however, how this has not always been an easy area.

“Fair business practices are crucial to the symbiotic relationship between retailers and suppliers, as is the ability to address any disputes in a fair and transparent manner,” she noted, delighting in the fact that 105 companies across Europe have already

signed up to the voluntary supply chain initiative, the Principles of Good Practice In Vertical Relations in the Food Supply Chain.

She finished by describing the retail sector as “a beacon of innovation, customer focus and competition. This is good for Ireland, good for Europe and good for competitiveness, renewal and growth.”

When asked about her opinion on impending tobacco legislation, the Baroness argued that tobacco regulation should be a national rather than European policy: “what you do on sales of tobacco is better done nationally”. However, that when it comes to the proposed introduction of plain packaging for tobacco products, our politicians “need to think carefully on the impact of legislation”.

A question about proposals to introduce a sugar or fat tax on certain goods was met with a mixed response from the Baroness, who, however, feels that “it is right to engage at EU level on obesity.”

Another delegate questioned her on Scotland’s proposed introduction of minimum unit pricing for alcohol.

This, she argued, was a local or national issue and not something the EU should regulate. Describing it as “reasonable public policy”, she warned, however, that the level of the price is as important as the principle.

Watching His Figures IBEC’s’s Chief Economist, Fergal O’Brien sounded an extremely positive note about the Irish economy, which he stressed was in “firm recovery mode”. We don’t need more austerity to fix the public finances, O’Brien

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Retail Ireland Conference argued: Ireland’s economic growth should cover it. The policy challenge for Government now, he said, is to put cash into the pockets of consumers so they can become part of a “virtuous circle”, their increased spending in turn feeding the greater economy. The jump from welfare to work, he argued, is not currently putting enough cash in consumers’ pockets.

He commended Ireland’s success in putting people back to work, with employment growth of 3%, equating to 60,000 jobs, in 2013, with another 50,000 predicted to follow this year. This level of growth, O’Brien maintained, was spectacular, and he also noted both the broad spectrum of sectors, from food and hospitality to high tech and even a resurgent construction industry, and the geographical spread of the new jobs.

One warning note, however, was the lack of new job creation for 20-34 year-olds, although O’Brien mused that shrinking demographics and the emigration of recent years were big factors in this.

Our impressive economic recovery has not, however, translated to turnover and bottom line for the retail trade, O’Brien admitted. Retail businesses, thus, need to continue to focus their resources on cost control, including commercial rates, rents and utilities, as this isn’t going to change overnight.

On a more positive note, however, retail sales volumes are improving strongly and consumer sentiment is significantly up. Consumer spending forecasts are dependent on five things, O’Brien noted: the number of people at work; wage levels, with some wage growth coming back this year; inflation, which is expected to be 0.5% this year; consumer confidence, at its highest point since 2007; and taxation.

In order to help, O’Brien called on the Government to deliver €500m in income tax cuts in this year’s Budget, which could be achieved by amending the higher tax bracket so less workers fall into its net. Such a move would have a meaningful effect on consumer confidence and spending, the IBEC economist argued. Either way, he concluded, this year’s will be our last austerity budget.

The Tech Effect Garry Lyons, MasterCard Worldwide’s Chief Innovation Officer and Head of Labs, provided a fascinating presentation which saw him utilising a host of technology, including smartphone, laptop, tablet, smartwatch and even a Nymi, a smart wristband, which uses your cardiac

Frank Gleeson, Chairman, Retail Ireland, pictured with An Taoiseach, Enda Kenny TD.

rhythm to authenticate your identity, thus allowing the wearer to wirelessly take control of a number of devices, potentially even your car.

MasterCard, he explained, want to hold onto your financial transactions, whether a card is involved or not and thus, the company has gone beyond plastic in its thinking. With this in mind, Lyons was given carte blanche to investigate the commercial technologies of the future.

His presentation included a range of e-commerce solutions, including Shop This, a digital purchasing platform which allowed him to purchase a plethora of goods from multiple online retailers with one click, using the MasterPass digital wallet. Using his tablet to read a magazine, Lyons was able to click the Shop This logo on the digital advertisements or editorial pages to purchase said product immediately and easily – indeed, the app even scanned an editorial page and through image recognition, located a pair of runners and allowed him to purchase them online.

This kind of technology, Lyons mused, could in the future translate to consumers’ home fridge, scanning its contents and allowing them to order goods from multiple retailers in a single purchase.

Other examples of the latest technology at work saw MasterCard partner with a host of schools in Australia, whereby parents could pre-order and pay for their children’s canteen food online, thus eliminating the need for their kids to carry cash and giving the parents the security of knowing the children were eating healthily.

Another app allows the user to check-in to a restaurant or café, getting a unique code, which then enables

them to pay their bill wirelessly, without having to wait for a server to bring the bill to the table, a process which takes up to 12 minutes each time, according to Lyons.

He finished his hugely entertaining presentation with the statistic that only 23% of Irish businesses trade online. The future, he stressed, is about omni-channel retailing and MasterCard are working with businesses, through their Simplify Commerce software, that allows any retailer to be an online merchant in as little as three minutes.

Paul Neeson, Director of Retail at the Dublin Airport Authority and ARI, discussed the dynamic world of airport shopping and the significant opportunities in this niche but lucrative market. There followed a retail roundtable with Declan Ronayne from Woodies, Shirley O’Kelly, Timbertrove, and Frank Gleeson, Aramark, Retail Ireland Chairman.

Ireland’s Biggest Private Sector Employer The Conference was closed by Retail Ireland Director, Stephen Lynam, who noted how the retail sector is “overregulated, undervalued and underappreciated” but is also “full of people determined to grow their businesses, determined to innovate and bring new ideas, and determined to help their industry as it tries to pull out of this recession”.

Retail, he said, is “the biggest private sector employer in the country, with a presence in every village in the land, bar none. We employ more people than farming, finance and ICT combined. We generate five billion euro in taxes.” Retail Ireland, he stressed, will continue to highlight the strategic importance of the retail sector to “this country, this economy and this society”.