Hi Reader,

In the UK, inflation has fallen to its lowest point in three years, with official numbers for May recording a 2% increase over the past year. This trend in the UK mirrors similar patterns in other established countries like the USA, Canada, Germany, and France. Yet, significant portions of the world are still experiencing higher inflation rates, although they, too, are generally on the decline.

However, many consumers remain cautious, and price continues to be a key factor in shopping decisions, particularly for certain demographics and categories. In turn, this is still impacting companies. Decathlon, for example, has just announced challenging results for the UK business over the past year and is using this as the trigger point to drive their transformation plans forward with a major investment into modernisation, simplification and optimisation.

So, despite some challenging results, on balance, are we emerging from the latest financial crisis now? If so and more importantly, what can we learn from it? This is a vast topic with numerous micro and macro factors to consider... and far bigger than I can cover here, of course! But today, I aim to encourage you to take time to reflect on the lessons. There have been many challenges to learn from, including the supply chain strains, surging costs across the entire business and operating model and trying to appeal to customers facing an intense cost-of-living crisis.

These lessons present leading and progressive companies with the opportunity to build robustness and resilience during the next wave of growth and opportunity, better preparing them to weather future storms and challenges. Considerations around global vs local sourcing, agility and flexibility, customer centricity, colleague care, and more can offer meaningful transformation opportunities. Here are three questions to get you started:

1. How can we integrate greater flexibility and agility into our supply chain to better respond to future economic fluctuations?
2. In what ways can we enhance our customer-centric approach to maintain loyalty even during financial uncertainties?
3. What strategies can we implement to support and care for our colleagues, ensuring their well-being and engagement during challenging times?

Retail transformation news headlines

💡 Walmart is combining physical items and Roblox-based digital twins of selected summer lines. Customers shop in the virtual world, Walmart Discovered, and when purchasing, they go through a standard ecommerce checkout flow (name, address, payment etc). Once the order is complete, the digital product is immediately unlocked and the physical item will be sent out. This is a natural evolution of the metaverse in my view, and sets up the next stage of "omnichannel" and "unified commerce" evolution. Walmart continues to experiment with the Roblox platform and will naturally be learning loads about the next major commerce battleground.

🥽 In China, JD.com announced an Apple Vision Pro app that allows customers a more immersive shopping experience. It's named JD.Vision and allows customers to interact and understand products in a more natural way than the classic 2D images and text used for ecommerce shopping. JD is aiming to create "an experience that closely mirrors in-store visits and transcends the limitations of traditional shopping". It will also feature a virtual assistant, powered by ChatRhino, their own AI and large language model, which will help customers shop and make recommendations.

🤳 Currys is looking at shoppable video calls to improve service levels for online shoppers. The tech retailer is working with video commerce company, Bambuser to offer virtual consultations and calls so customers can engage with tech experts, ask questions and make more informed purchases. Currys CIO Andy Gamble has said "Video commerce presents a unique opportunity for us to engage with our customers in a more meaningful way and showcase our products to buyers one-on-one in a personalised and interactive way."

🥕 Aldi is looking to level up their store experience with a £90m refurb programme. Over 100 stores will be upgraded this year as they remain "committed to making sure that the shopping experience is on a par with the high-quality products and service we offer." The changes include the look and feel elements as well as a number of sustainability-driven initiatives, such as adding fridge doors to minimise energy usage. Fridge doors have typically been a friction point for customers compared to the ease of shopping open shelving, but with more retailers making the shift to reduce electricity costs and environmental impact, it may be time to consider if customers are starting to tolerate this change.

✈️ Decathlon is opening a pop-up store in Singapore's Changi Airport over the summer. The store will stock a range of sports items for travellers, including some exclusive products. Pop-up stores have been a big opportunity for seasonal brands for a while, but this move is particularly interesting as it presents a great way to target customers who are en route to holidays. However, the ranging will be important as customer missions are more likely to be focused on smaller purchases, rather than picking up essentials. Would you go travelling on adventure or sports-based holiday and leave it to chance to shop for your crucial kit at the airport store? Nevertheless, it still presents a great opportunity for inspiring and tempting customers on their way through the terminal.

🎞️ Netflix has announced two US locations for their "Netflix House" physical locations. Netflix's CMO Marian Lee says "At Netflix House, you can enjoy regularly updated immersive experiences, indulge in retail therapy, and get a taste - literally - of your favorite Netflix series and films through unique food and drink offerings." Netflix has experimented with physical, experiential sites before, but the more permanent nature of these two sites near Dallas and Philadelphia represents a significant step forward, and at a large scale, taking on former department stores with more than 100,000 sq ft of space.

🪀 And finally, adults are the largest customer group for toys. New US research by Circana showed that 43% of adults have bought one or more toys for themselves over the last year, and the segment growth now means they have overtaken pre-schoolers in the toy sector. We've seen brands like Lego steer intentionally into this market with more complex products for the AFOLs (Adult Fans Of Lego) and we'll undoubtedly start to see more adult-focused toys for collecting, social engagement and having fun!

New podcast episode: Why simplifying is hard (and how to approach it) - #299

Operational simplification is a goal for many businesses. But simplification projects are not necessarily simple by themselves. There can be big implications and it’s easy for the customer of the change to reject the new initiative altogether. Join Oliver Banks and discover the challenges of simplifying an operating model as well as five techniques to help you drive simplified operating models.

Listen to episode 299 of the Retail Transformation Show and discover:

• Why simplification is a valid form of transformation.
• The common challenges facing simplification programmes.
• And five approaches to drive your simplification forward.

Plus, check out these recent episodes:

​#298: Flagship stores: strategic play or vanity project​

​#297: The great workplace debate – WFH vs RTO​

​#296: Reimagining the role of the physical store ​

Look out for episode 300 of the Retail Transformation Show podcast which releases on Monday. And I'm also going to me making a special announcement with a few changes coming to level up your experience of the Retail Transformation Briefing.... stay tuned next week!

Keep transforming better,

Oliver