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The idea behind the FAB Talks is to combine refreshing fashion talks in an inspiring environment with business networking in an innovative way, in order to stimulate exciting discussions on the topic of fashion and have open questions clarified by experts. The vision is to build an interdisciplinary network and, in the long term, to initiate and implement projects together.

On July 5, 2017, the 11th FABTalks took place and we were once again drawn to Berlin. This time we teamed up with Green Showroom and Ethical Fashion Show and spoke about the future of retail at the Funkhaus during Berlin Fashion Week.

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Andrea Bury, organizer of the FABTalks, started the event with an exciting introduction to the topic. According to the Institute for Retail Research, physical retail has recorded a sales decline of 11 percent in recent years, and 45,000 stores are at risk of closing by 2025. The American department store chain Macy’s has had to close 68 of its stores in the last few years alone. These high numbers show that retail is going through a dramatic development. More and more people – especially younger ones – are shopping online, and physical retail will increasingly retreat.

At the same time, other trends in retail show that it is becoming increasingly important to create connections between the online and offline worlds. An example of this is online retailer Zalando, which has opened several outlet stores following many years of online success.

More developments were brought closer to us that evening by two experts: Nicole Srock Stanley, CEO and founder of the creative agency dan pearlman, and Corinna Umbach, who specializes in the interplay between brand and retail with her consulting firm CU Brand & Retail Spirit.

Summary of the key content from the presentations:

1. NICOLE SROCK STANLEY

As a retail expert at dan pearlman, Nicole Srock Stanley has been dealing with the topic of retail for 18 years and has witnessed the transformation from the classic format to the strong influence of digitalization. Just like with electricity, where it was still being debated 200 years ago whether it was even needed in rooms like the kitchen since one cooks with gas anyway, the internet is an omnipresent phenomenon and will increasingly take on this role.

How strong the influence of digitalization on retail really is might be questioned, because according to the motto “Retail is change, retail is detail,” the DNA of retail consists of constant development: new collections, new merchandising, new window displays. Should one not be prepared for the changes that are coming? However, change requires innovation, and innovation in retail faces entirely new challenges, namely the move away from the classic basic premise of revenue per square meter.

To underscore the necessity of real innovation, Nicole Srock Stanley gave us an interesting parallel: Siemens optimized the telephone by ensuring the best telephony with the best sound – albeit with a charging station – but mobile. Then Nokia came along and introduced mobile telephony, a development, but the devices were suitcase-sized and not particularly handy. No one thought that technology would develop exponentially – every year, technology becomes twice as fast and twice as small. Apple subsequently came along with a complete “nerd” and niche product: a small computer with everything you need in a handy size and so simple that you don’t need any programming skills – the smartphone. Nokia had started this concept too, but they rejected the idea and remained stuck on their innovation track.

Many companies will fail because of this problem and do not change. Another simple metaphor that illustrates this comes from biology: A frog placed in hot water jumps out immediately to save its life. However, if a frog is in warm water that is slowly heated, it stays there until it dies. Companies that are not spurred by a fatal mistake to take drastic measures to avoid failure, but are instead exposed to slow, progressive change (such as digital transformation), wait too long until they can no longer make the leap.

The problem that retail must face begins long before digitalization. Many of the core competencies of retail – service, advice, curation, human contact, and experiences – have been lost, and today retail sees itself as “I have everything and offer it to you for the best possible price,” governed by Amazon. At the same time, however, physical retail is in a transformation, moving away from satisfying needs toward the leisure industry. Leisure providers, however, have completely different premises than physical retail has had until now: Previously, optimization was based on revenue per square meter, but how can retail optimize for experience per square meter? According to Nicole Srock Stanley, this is the quintessence of the change.

2. CORINNA UMBACH

Corinna Umbach has been working in retail for over 20 years – first in the retail sector, then she experienced the developments of retail from various brand perspectives: Bräuninger, Schöffel, Adidas Eyewear, Silhouette, and Cecil were among them.

Corinna Umbach began her presentation with a definition, according to the motto “no origin, no future.” The word retail can be traced back to Old French: the words retaille or tailler stand for a piece, to cut, or to tailor. Retail therefore means “tailoring” something to the needs of the customers. It is primarily about the encounter with the customer and the interaction between customer, product or brand, and employee, regardless of the space they are in.

According to Corinna, the question of whether the online or offline share should be stronger is the wrong one. The question should be: How can I efficiently manage the encounter with the customer, regardless of the space, whether virtual or real. A customer has a need, a wish, a problem, and chooses the partner who fulfills their need in a very smart, intuitive, and solution-oriented way, via whatever platform.

Digitalization plays a clear role here – it is a means to an end, namely a means to meet customers. For the customer, digitalization facilitates access to the product, finding information, solving problems, and clarifying questions. At the same time, transparency increases, on the part of the customer, but also on the part of the retailer. Never before have there been so many points of contact and so many possibilities to learn information about the customer. At the same time, complexity increases. The question arises as to which option is the right one when there are so many possibilities.

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The core of every digital process and every innovation is user experience. When a product is developed, the vision aims to satisfy a customer’s need, and the core of retail is nothing else. Retail without digitalization is no longer possible, retail without user experience is no longer possible – ultimately, both retail and digitalization focus on what retail stands for: the encounter with people. This core only makes sense if there is a clear positioning and a clear added value for the customer. Retail has lost exactly this position in recent years and must regain a clear attitude for a successful future.

For the future of retail, Corinna Umbach sees three important As:

1. AUTHENTICITY

Authenticity means social genuineness, sustainability, and transparency. It gives the customer orientation and identification, and it simplifies many things, especially given the increasing complexity of the possibilities.

2. AGILITY

Agility means reinventing yourself again and again, testing new things, and learning from results and customers.

3. ALLIANCES

The important keywords for the future are networking, inspiration, and collaborations.

Finally, Corinna Umbach summarizes that retail, including physical retail, will always exist. Innovative store concepts provide a place where one likes to spend time, is inspired, networks, but above all a place that creates identification. And this is also what digital natives are looking for.

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