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Innovation in retail tech is happening

Jim Bilton introduced a panel discussion today at FIPP London, by citing Amazon’s recent opening of a physical shop in Seattle, and its ambitious plans to expand, as an example of where the retail industry is innovating - advising that publishers could learn a thing or two.

“They are following the consumer, not the other way round,” Bilton noted. “They obviously see a need for this - for giving people a space to browse, physically.” He went on to describe the store’s special features, such as online price matching, limited ranges organised by genre or demographic, and in-store tech such as using your smartphone to navigate the store or check prices.

Bilton identified three key sectors where retail innovation is happening: 

1.     Fashion - We are now beginning to see things like digitally-enabled shop and staff (and even basic robots) in fashion shops. Another smart feature is virtual/smart changing rooms, where shoppers can request to try an item in a different size or colour, and the screen takes a photo of them and changes accordingly.

2.     Groceries - Digital coupons and loyalty points continue to be used widely, with apps now able to pick up on past purchasing patterns and make suggestions for shopping lists. There are also innovations like in-store product locators.

3.     Magazines - Magazine finders, eg. Magzene (UK), Zeens (France), Magfinder (USA), with information about local stockists, are becoming more popular. Condé Nast has even teamed up with Amazon to trial same-day delivery of Vogue in New York City, proving the enduring appeal of print. Indeed, research consistently shows that people want digital and print editions, but at different times; most consumers are “channel-agnostic”, meaning they don’t care how they get it, as long as they get it in the form they want, when they want it. Other findings include the importance of the “try before you buy” method, and the ease and frequency of the payment method.

“My broad conclusion is that retail is the sector to follow for the funky stuff,” said Bilton. “The major grocers especially are doing loads of amazing things, and publishers could learn a lot from them. Retail offers many things that subscription and digital cannot: there’s choice, discovery, browsing, and exposure to new products - this is the way Netflix and Spotify operate.”

Panel discussion

FRANCES EVANS, Director of Licensing and Advertising, Burda International, Germany

NIKOLAY MALYAROV, Chief Content Officer and General Counsel, PressReader, Canada

CARINE NEVEJANS, International Director, Presstalis, and President of Distripress, France

JB: So what’s your take on all this?

FE: In terms of physical retail, the Burda take on it is that we’re active in 25 different markets so it’s very difficult to paint it all in one brush. What I can say is the total number of kiosks is going down everywhere (six per cent in Germany, 20 per cent in Russia and Poland) - it’s certainly much harder to get the reach we used to.

The traditional model of publishing has ads and distribution as the two main revenue streams. There’s been such a huge drop in revenues through this model; the change in consumer behaviour has had a big impact. It’s worth noting that none of our markets are really subscription-based markets - it’s not a business model for most of Europe. We’re locked into retail and committed to it, but retail differs in every market.

JB: Are you seeing the same pattern in France?

CN: Yes, definitely. There are 25,000 retailers in total in France, and small, non-branded retailers (less than 80 square metres big) have been hit the hardest. Chains, supermarkets etc. tend to do OK, and sometimes even grow. In France we have been so shocked by some big attacks recently (Charlie Hebdo in January 2015 and Friday 13 November 2015), and we’ve seen that the reflex of the public was to go and buy physical news in the aftermath. When there is a big event, it shows that people still demand that physical news, that connection. Non-traditional methods are being developed, but traditionally rules in France have been created to protect print - VAT was always higher on digital.

NM: Our take is that every consumer consumes content very differently - it all depends on time of day, where they are, what device they have, etc. None of the content distribution models we’re discussing are exclusive ones - they complement each other actually. Thailand, for instance, is a great market for print on demand, and this has something to do with its beaches - magazines can be offered to beachgoers (who are identified by their nationality), and printed in 10-15 mins for a couple of dollars. But when tourists go back to their hotels, they’re more likely to use an iPad, for example, and then they’ll want a digital edition instead.

FE: There’s no blanket policy for us; we have such a huge variety of products. Something like the Harvard Business Review charges the same for a print and digital edition, but we know this doesn’t work for everyone.

JB: On that note, have any of you reached any hard conclusions about business models. 

NM: We’ve found that the general expectation from the consumer is that the digital edition will cost less than print. You have to follow what consumers want to pay, not what publishers think they should pay. And another thing: the aversion for paying for digital content is waning year on year. In comparison to print, what consumers are willing to pay for digital content is pitiful.

CN: We’re working closely to provide some rebates on the cover price, for instance a one-day offer on Vogue for 50 per cent off. You get the barcode on your mobile, and you show it to the assistant in the store who then gives you the discount. This would be a good step for promoting magazines, and enables magazines to target specific regions too. We think this could be quite well received by everybody involved: the retailers, the publishers and the consumer can share in the good results. It’s that “phygital” model - the combination of physical and digital.

JB: Do any of you have specific examples of retail doing really well?

NM: I think that the retailer which does well in Canada and the US is Nordstrom - it’s a department store similar to Selfridges. They excel at customer service - each sales assistant is your personal shopper. They establish a personal relationship with you as a consumer and give you recommendations and follow-ups. 

On a smaller scale, I like niche, passion-based content, for example a clothing shop for the millennial male will have a broader approach with books, grooming items etc. which might appeal to that demographic.

CN: The best ones have a feelgood atmosphere and have a real relationship with client and retailer.

FE: There’s an amazing book and magazine retailer in Budapest - it’s small, and the guy who runs it knows every single book and magazine in the shop so he gives an amazing service. Americans tend to be service-first; in Germany it’s a different story! It’s the same in Eastern Europe; service is not the priority. 

Eataly is an Italian lifestyle brand that’s done well in the US. People like pleasant places to shop; they’re more willing to spend money. Just look at Wholefoods.

JB: To conclude, we’re at a very important stage in

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