Introduction

The Coresight Research team attended and participated in this year’s World Retail Congress, held on April 5–7, 2022, in Rome, Italy. The event featured retail leaders and industry experts from across the globe and was held in person for the first time since 2019. In this report, we present the key themes that emerged across multiple sessions and conversations during the three-day conference.

World Retail Congress 2022: Major Themes

Metaverse—Retailers Should Just “Get in” to the Metaverse with a Test-and-Learn Mentality Deborah Weinswig, CEO and Founder of Coresight Research, presented exclusive metaverse research to World Retail Congress attendees. Weinswig explained that it is imperative for retailers to “just get in there” with a test-and-learn mentality. For those unsure on where to begin, Weinswig detailed 10 things retailers need to know about the metaverse:

1. The metaverse is widely accessible to many who use the Internet.
2. Gen Z will be the first metaverse-friendly generation.
3. Established metaverse platforms have a global reach.
4. Demand for virtual land is rising, as land supply in the metaverse is limited and more brands attract consumers to buy.
5. Brands are creating immersive experiences within 3D games and the metaverse.
6. NFTs and other digital assets are a new retail revenue stream.
7. Cryptocurrencies enable buying and selling in the metaverse.
8. Immersive technologies can improve customer experience.
9. The metaverse can support retailers’ sustainability goals.
10. Virtual IP protection will be vital in the metaverse.

The metaverse represents a massive market opportunity for luxury brands. To that point, Cult & Rain is leading the luxury industry’s charge into the metaverse by becoming the first metaverse-born luxury brand. George Yang, Founder of Cult & Rain, proclaimed the metaverse as the definite future. Yang started Cult & Rain on instinct, noticing the large amount of time and energy Gen Z spends in the metaverse. Via metaverse avatars, consumers can express themselves in ways not possible in the physical world.

• Read Weinswig’s presentation and access more Coresight Research coverage of the metaverse.

Values—Purpose Was a Key Topic Among Retailers Retailers are increasingly being asked to play an ethical role in the communities they serve. According to Ron Johnson, Founder of Enjoy (and a former executive at Apple, JCPenney and Target), community, purpose and values comprise the glue that bonds employees and drives success. In response to a question from Walter Robb, Co-Founder of Whole, Johnson explained that “culture” is the key, comprising “a clear purpose and core values that employees can embrace, that together create community.” Echoing comments from other presenters, Robb said that the most important thing is for retailers to understand their purpose; making money will happen at the same time. He founded Whole Foods to “bring healthier choices to the world [and to] bring love and respect.” Robb claimed that Whole Foods achieved its success through adopting a stakeholder philosophy; listening to customers, team members and the environment; maintaining quality standards—“not all food is created equal”—and empowering employees. He stated that the role of company leadership is to support team members, who support customers. Looking ahead, retailers need to meet consumers where they are, and build on the one-to-one experience and the connection with the consumer and the community, Robb said. Sustainability—Retailers Offered Updates on Goals and Progress, and Students Offered Fresh New Ideas Sustainability is one of the four prevailing trends that the Covid-19 pandemic accelerated to the front and center of the retail C-suite, according to Chip Bergh, President and CEO of Levi’s, and Susan Hart, Co-Leader of Global Retail, Apparel and Luxury Goods at Spencer Stuart. Where it had been niche and a European-centric concern, sustainability is now a global topic, also spanning all generations. It is fast becoming table stakes, and climate change is top of mind for teens. For Levi’s, sustainability is a strategic imperative. Bergh explained that the company has built its innovation program around sustainability, looking to reduce its chemical, water and landfill footprint, doing what is in the company’s control and influencing what is not in its control. Levi’s is looking at fiber technology and alternative fabrics (such as hemp instead of cotton), and its Water Less program can reduce up to 96% of the water used in denim finishing. This year’s Future Retail Challenge (see our insights from day one of World Retail Congress) asked participants to rethink the business model of a fast-fashion brand, to “generate 25% of income from activities that reduce or replace the consumption of new physical products.” The winners, Delia Negri, Aurora Macchi and Diletta Sveva Tamagnone, students from the ESCP Business School’s Master in Management program, chose H&M. While their ideas were initially three distinct plans, they ultimately evolved into a cohesive, multifaceted sustainability solution, comprising “rent in-store,” “reuse in both worlds” and “buy in the metaverse.” For multinational retail company Ahold Delhaize, corporate objectives promote health and sustainability, helping customers eat well, save time and live better through the food they consume. These objectives are supported by the company’s environmental, social and governance (ESG) agenda, which focuses on reducing food waste and the use of plastics, selling healthy food and protecting the climate.

• Ahold Delhaize aims to reduce food waste by 50% in four ways: reduce (through technology, including electronic shelf labels), redesignate (through donation), re-energize (through new thinking) and rediscover (transitioning to healthier products that are also good for the planet).
• For plastics, the company aims to recycle (with drop-off bins at its stores), remove (ask CPGs and suppliers to discontinue the use of packaging) and return (eliminate redundant plastic internally).
• To promote healthy eating, Ahold Delhaize aims to reimagine food offerings to offer more nutritious food and redirect consumer habits by rating products on a scale of A to E in terms of healthiness.
• The company has set a goal of zero net-carbon emissions by 2040. It plans to hit the goal by evaluating carbon dioxide emissions from transportation, its suppliers and partners, and its own products.

Consumer—Today’s Tech-Enabled Consumer is a Cohort of One Nigel Verdon, Co-Founder and CEO of UK-based fintech firm Railsbank, unveiled new findings on changing consumer behavior from the company’s “The World View on Digital Retail's New Consumer Personas” report. The report identifies new consumer personas:

• Digital Arrivals—Forced into e-commerce because of the pandemic, these consumers now appreciate and expect convenience, as well as frictionless shopping experiences.
• The Subscribers—This group of consumers started with Netflix, but moved on to subscriptions based around food and even cars. The subscription model changed transactional events into repeatable sequences.
• The Ethical Consumers—These consumers look to align purchases with their environmental and social values. This persona started with increased education and is currently driving many younger customers.
• Thrill Seekers—Technology is second nature to this group of younger consumers, (aged under 25), who never knew a world without the Internet or smart phones. They expect retailers to serve them in all capacities: channel-online, in-store or within the metaverse.

To meet today’s consumers, Alex Genov, Head of Customer Experience Research at Zappos.com, said that the goal is to understand consumers as people on a deeper psychological level to build customer lifetime value. “Talk to customers, ask questions and don’t get blocked by the idea that something isn’t scalable. Balance the quantitative data with qualitative insights—the latter provide directionality to the former,” Genov said. Simona Maggini, Country Manager for Italy at WPP, joined the conversation via Zoom and said the blending online and offline retail presents real opportunity for a customer revolution. Genov, Maggini and Verdon all agreed that fundamentally, a better understanding of the customer is required. Removing bias and assumptions from the analysis and keeping an open mind that is critical of the data is essential. Joel Bines, Managing Director at AlixPartners and author of The Metail Economy, explained that retail changed in 2010, when technology put raw unadulterated power into the hands of the consumer. Consumers always had agency, they just didn’t have power because the friction was so great. Now, access to everything—retailers, information and one another—has created a “me-centric” world and the “metail” economy. To navigate this new landscape and re-establish relationships with consumers, Bines proposes six strategies for retailers, covering cost, convenience, category expertise, customization, curation and community (see our day two report for more on these strategies). Macro—Global GDP Will Decline in 2022 as a Consequence of the Russia-Ukraine War In a mainstage keynote, Simone Romano, an economist at the Organisation for Economic Cooperation and Development (OECD), presented the OECD’s 2022 global GDP forecast. For context, before the Russia-Ukraine conflict, global GDP was steadily recovering, with inflation rising largely due to global supply chain challenges. At the beginning of 2022, it appeared that global supply chain issues were easing, and global consumer demand was declining, albeit slightly. The combination of these two factors would have likely eased inflationary pressures. However, because of the Russia-Ukraine War, these inflationary and supply chain challenges have accelerated once more. The price of fossil fuels has risen dramatically. Furthermore, since Ukraine is a major exporter of wheat, inflation in food-at-home categories (such as bread) have vastly accelerated. As a consequence, consumers will have less money to spend on discretionary categories. In aggregate, the OECD predicts that US GDP will decline by 0.8%, Europe’s GDP will decline by 1.4%, and the world’s GDP will decline by 1.1%.