Large-scale retail trade, from opportunity to necessity

Nicola Giannuli
18 Sep 2020
Intervista a Nicola Giannuli, managing partner di Retex, sullo stato della GDO italiana e sulla nostra offerta di tecnologie e servizi al settore.

Q. COVID-19 had a strong and differentiated impact on the retail industry, on volumes and consumer habits. How has Retex responded to the sector’s crisis?

NG. We didn’t have to invent anything different from what we did before. After all, the advantage for those constantly working in an evolutionary logic is precisely this. Of course, we had to double our efforts to ensure, during the emergency, the same quantity and quality of services and we were rewarded for this perseverance. The nature of our work, however, did not change.

Q. What is today the state of the large retail sector in Italy?

NG. The unexpected interaction between the pandemic and the large retail industry has created a state of needs and opportunities almost unique in the history of our retail sector. This segment, together with the pharmaceutical one, has been the largest beneficiary in the world of the crisis induced by COVID-19. Now there is an obvious drop in sales rate, making necessary to capitalize on the experience gained.

Q. How?

NG. The consumption trends in large-scale retailing are often countercyclical. As shown by the past crises (not least that of 2008), purchases have always rewarded with significant growth rates those most agile and faster in intercepting change, especially if sudden. It is the large retail sector which has always been the most capable and reactive at maximizing its impact on the shopping cart and the orientations of those who buy. The new state of affairs will reward only those who have believed and invested accordingly, and within short times.

Q. Were there any significant signs in this area?

NG. Despite the exceptionality of the situation, not to the extent required. A mere image operation linked to the obvious concepts of solidarity and recovery is not enough to fuel innovation. Using as a justification for prudence and non-investment the uncertainty about future prospects is potentially a serious mistake. An example of this is the attitude shown by some retail operators when in the early 90s emerged in Italy the discount phenomenon, which they considered a business model that would never have worked, and we all know what that led to.

Q. Innovation as a necessity, in short.

NG. Indeed. Continuous and advanced technological innovation is a vital need for retail. It has been talked about for a long time, well before the health emergency, and the implicit risk is to lower the concept itself to banality. Innovation is the key to differentiation and explains much of the successes or setbacks of many market players.

Q. Let’s look to the other side of the field. How much, and how, has the demand changed?

NG. A lot. In addition to the unstoppable rise of e-commerce, what is beyond dispute is the increase in buyers who link their preferences in the store to the experiences made online in relation with the brand of interest, or even just for the comparison of prices and offers. For the retailer, it is therefore very important to organize at best access and exploration of the store, increasing, on the basis of knowledge, the time spent by customers in the shop and offering them additional services.

Q. What are the short-term goals?

NG. The primary objective for large retailers is the digital reform of the store, consistently with their online presence. For me, the new present must be built on the basis of relationship and loyalty with the customer before and after the purchase, with the relevant technologies and services.

Q. For example?
NG. With a determined approach towards self-equipment, from the shelf to the cash desk, to advanced analytics systems and loyalty programs. Not counting e-commerce consistent with physical sales, electronic payments, effective communication tools, services for home delivery and pick up from the point of sale. With a very careful eye, what’s more, on sustainability, which is a key aspect of innovation.

Q. And in the ‘backroom’?

NG. The accurate management of the supply chain, where every step is carefully monitored. The interoperability via the web allows better management of the orders, inventory handling and assortment of goods, supports the preparation of goods and enables information to the customer on the status and timing of shipment, collection and any changes, and provides the much needed continuity and consistency before and after the sale.

Q. Are there any important international references supporting this?

NG. In the Chinese large-scale distribution, the new retail has become a matter of course for two e-commerce giants such as Alibaba and JD.com, and the Hema and 7fresh retail stores are in fact the publicity banners of the integration of digital and physical commerce in a unique and engaging shopping experience. Furthermore, in the tumultuous events of American retail of recent years, it is this very change that has allowed the substantial strengthening of supermarket giants such as Walmart, CostCo and Target.

Q. What’s the definition of innovation, then?

NG. It is not an opportunity, but an unavoidable need. It has no point of arrival, it is a continuous cycle that originates in what is desirable by those who spend and aims to make it attainable, as well as improve it and anticipate it when possible. The driver of innovation is the desire of those who enter the store; technology is the means that must turn it into a reality. And with each delay there is penalty to pay.