I find myself amazed at how a simple acronym like EMEA (Europe, the Middle East and Africa) so easily encapsulates such a potpourri of countries with vastly differing economic performance, retail maturity, and of course culture.
EMEA is a blend of emerging countries like Russia, whose retail metamorphosis will see it grow to dominate the region; and mature markets like the U.K., where retail is re-inventing itself to better serve omni-channel customers. Europe is finally seeing some light at the end of its five-year recession, with even hardline economic skeptics admitting to an upturn in GDP. Meanwhile, Russia and South Africa have largely avoided the downturn, and while growth has slowed from the dizzying heights of the past, their economies are still growing.
While the prospect of economic growth in EMEA seems to be driving new investment in software and services, the region should also continue to enjoy a helping hand from omni-channel retailing; without question, the most disruptive force seen in the evolution of retail.
With the emergence of omni-channel retailing, we are, at the moment, witnessing a perfect storm of consumers and technology driving change; change that no retailer can afford to ignore. If you doubt the impact of these powerful forces, simply ask those retailers now confined to the graveyard. Is it unreasonable for customers to expect to shop how, when, and where they like, and be treated as individuals whose personal preferences are identified and understood?
In my opinion, the U.K. leads in transforming its retail model to address these new consumer attitudes and behaviors, and is doing so with some unprecedented and eye-watering investments, often in excess of £100m. And where is this rich war chest being invested? In IT, the supply chain, and the reinvention of the store experience.
Mainland Europe remains behind the curve, but the omni-channel pressure is growing, with the likes of France and Germany responding first. Historically, these regions have failed to see software as a potential ROI or a catalyst for change. But to survive, they now see it as a necessary evil. Germany in particular will be challenged, as its retail model is built around cash generation, driven by volume as a result of very low prices. As a result, its retailers operate with wafer-thin margins. So how will that fragility cope with the costs resulting from picking and shipping individual orders? While German retailers sat contemplating the 44 percent growth in online sales since 2011, Amazon swooped in and ate their lunch – gobbling up market share and dominating the online channel.
Russia and South Africa are at the beginning of this revolution, with many retailers dipping their toes in the water with showrooms and non-transactional websites. But this will quickly change as they will be able to plan with the benefit of hindsight – cherry picking best practices from the other retail industry leaders and avoiding the costly mistakes many early adopters suffered.
Overall in EMEA, the pace of retail change shows no sign of slowing down. As online channels transition from basic e-commerce and basic order fulfillment, we will see a greater focus on efficiency, heightened service levels and ultimately profitability. It is here where a well-configured supply chain will be vital to those looking to be profitable.
With customers now demanding a seamless shopping experience across all channels and touch points; and retailers facing organizational, operational and technological challenges to bridge the omni-channel commerce gap, a perfect storm awaits companies rushing to stay relevant and profitable while making the transition.
This retail evolution will ultimately affect all of EMEA; the only question is, which retailers will quickly master omni-channel to better serve their customers, stay profitable and drive the brand loyalty they all desire? Let me know what you think of this EMEA retail evolution and the shopping experiences that have guided your opinion. I look forward to reading them.