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Unified Commerce is the Future of Retail – Futurum Tech Podcast Interview Series
by Daniel Newman | September 8, 2020

On this special episode of the Futurum Tech Webcast – Interview Series, host Daniel Newman welcomes Maria Morais, Global Industry Director – Consumer Industries at SAP to discuss retail and the shifting forces that are having an impact in the industry, including the technology behind it all.

Maria and I explored the trends that retail companies are watching and implementing as things return to normal in the post-pandemic era. The biggest trend is focusing on digital maturity. Companies that were already customer-centric, digitalizing processes across the organization have been able to embrace the unknowns brought about by COVID so much better than the companies who were stuck in the old way of thinking. We are living in an era where companies that embrace digitalization throughout all sides of business, not just customer-facing commerce, will be more efficient and better positioned for success.

Preparing for disruption. Maria shared how COVID-19 disrupted the retail industry and easily showed which companies were agile enough to handle the changes. Many larger companies were able to quickly adapt, but smaller companies struggled. This has to change. Companies, regardless of size, need to be prepared for disruption. Maria shared one great example of a small florist in London that started selling farm-to-table vegetable boxes during the quarantine shut down. This quick pivot allowed the company to stay afloat until lockdown restrictions were relaxed.

Unified commerce is the future. We discussed that omnichannel experiences are not customer-centric enough to be sustainable for the future. Unified commerce, which completely reimagines the way retail companies operate. It’s commerce everywhere. It’s bringing digital into every part of a brick and mortar location and empowering sales associates to better serve customers. It’s connecting every store and the website together no matter the location. Each retailer may be different and have different pain points, but the technology is the same.

Working toward sustainability. Lastly, Maria explored the demand for increased sustainability in retail. One of the main problems in retail is a lot of garments end up in landfills because it’s unclear what they are made of. How can you reuse something if you’re not sure what it is? Companies should work toward extending the product lifecycle through recycling initiatives and other business model changes. But this will take transparency in the supply chain. Some companies like L’Oreal and Nike are leaders in the space, but there is still room for growth.

This was a fascinating conversation and one you don’t want to miss. Watch it here:

Or grab the audio version here:

If you’d like to learn how SAP is using technology to help retailers make these changes, be sure to check out their website. Don’t forget to subscribe so you never miss an episode of the Futurum Tech Webcast.

Disclaimer: The Futurum Tech Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Welcome to the Futurum Tech Podcast, the Interview Series. My name is Daniel Newman, and I am your host. I am excited today about this interview that we have going on. We have Maria Morais joining me from SAP. We’re going to talk a little bit about retail, the impacts that the pandemic and that the changing forces of our global economy have had on it. A great discussion coming your way, but, without further ado, Maria, welcome to the Futurum Tech Podcast Interview Series. How are you today?

Maria Morais: Daniel, thank you so much for having me. It’s my pleasure to be here today. I’m really excited about talking to you about retail and the shifting forces that are having impacts in the industry, but also the technology that is behind all of that. I’m an industry principal at SAP for retail and fashion, and we’ve been seeing a lot of shifts recently.

Daniel Newman: I bet. It’s been a really interesting time. I’ve done a lot of interviews here on the podcast, had people from different industries, different spaces, different technologies, and, listen, if there’s one thing that’s been consistent across almost every conversation, it’s that people are dealing with change, and that chaos has almost replaced normalcy. I just feel that people and companies that are doing really well have become really well-acquainted with this chaotic shift that we’re in, and they’re embracing it and they’re using it to create new products, new services, new business models. We’re going to talk about all of that today, so welcome to the show, Maria. I’m really happy to have you here.

Where are you, by the way? I used to ask people where you were because we would talk about travel and events. No one travels anymore, so where is your base? Where are you quarantining, locating, or keeping yourself occupied?

Maria Morais: I’ve been in London quite a lot recently. I used to travel all the time, but since the beginning of the year, and as things slowed down with travel to completely stopping, yeah, I’m in London.

Daniel Newman: Great, I like London. I used to travel too, Maria. That was something I used to do. I like to kind of keep these conversations not too long, because I want to make sure all of the people that are listening listen all the way through, but, at the same time, I do have a bunch of questions I want to ask you. The overall state, as I sort of alluded to, of retail has been impacted tremendously by COVID-19, by the pandemic, by the lockdowns, by the economic situations that we’re in right now. We’ve seen a few commerce giants like the Amazons of the world explode, and sort of be seen as the beacons of the future of shopping, but you work with a lot of companies. You work with a lot of great companies that are successful, that have continued to be successful, that are adopting and adapting and changing, so I want to lean on that a little bit, because I want to make sure that, yes, while we have seen some of the giants grow even larger and been imperative, in the retail space, there’s still room. There’s still a lot of multi-billion dollar and large companies that are doing really interesting things.

I think there’s a lot of trends going on, so I’d love to get your take on what some of the hottest trends are in retail right now that companies are paying attention to, implementing, leveraging, utilizing, in order to prepare their businesses to become both steady and stable and growth-oriented as we start to return to a little bit more normalcy.

Maria Morais: Yeah, sure. The trends can be defined as digital maturity. Are you digitally mature enough, yes or no? One of the trends that we see across the board is becoming super evident, the companies that were not investing in becoming customer-centric yet. For all of the retailers that are still driving their digital transformation based on what they think they need to solve as a specific problem without having that holistic view about digitalization everywhere, it’s more difficult for those companies. The companies that were already customer-centric, digitalizing, they are able to embrace the unknown much better than companies that are still thinking in the old ways.

We don’t talk about SAP about digital transformation only, we’re really talking about an era of digital acceleration, where companies need to embrace digitalization. It’s not enough to have just a commerce website anymore. The B2B side of things, everything that the consumer doesn’t see, that’s fundamental. We’ve been seeing a lot of companies that were running with spreadsheets and on the phone to run their businesses, in everything that is supply management or wholesale management, that is the part that has been digitalized. I’m very, very hopeful that that trend continues, because this is what is enabling retailers to become more efficient, and I believe that efficiency is possible in big, big companies.

You were saying about Amazon and the big retailers doing really well during this phase. Why is that the case? Because they were digital mature. But, at the same time, let’s not fool ourselves. Grocery just exploded. We couldn’t buy groceries online during lockdown, so there were not enough slots available. How is that possible? That is possible because suddenly you had 30, 40% more people buying online that were buying in traditional channels. Those people will continue to buy online, and suddenly, oops. Retailers have a problem. How do we make sure that we continue with this volume? Even Amazon struggles. I don’t know, I’ve tried to buy food from Amazon Fresh and I couldn’t during lockdown period. Am I going to think about them again when I think about grocery? Not really. I’m going to think about who solved my problem.

Daniel Newman: It’s very interesting that you point that out. I don’t think there was a company on the planet that didn’t deal with some disruption in supply chain at some point during this pandemic. I think you make a great point, there was digital maturity and there was sort of born to be in this moment companies, companies that were just always kind of waiting for that moment when everyone had to do everything online. That’s why your Netflix and Spotifies and social media platforms, it was like we were already using these too much, and then you take most of the global population and tell them they can’t leave their house, but these people remain well-connected, what did they do? They went on social media. They went on streaming apps. They shopped online. All those things that, I think, people have been telling us as advisors and tech companies have been telling our customers about optimizing your websites, building your search engine visibility, increasing your marketing and your customer data platforms and 360 degree view of customers.

All of the things we’ve been saying for a long time came to fruition. The problem was we were planning to develop these and build these things out with our customers over three, five, seven, ten years, and we saw ten years of acceleration happen in like ten weeks. So companies that were really doing this, you kind of alluded to when you were talking about trends, but things like companies that had already started accelerating workloads with AI and being able to process greater volumes of data, being able to identify patterns and trends, putting the right opportunity in front of the right customer at the right time, were at a distinct advantage over small retailers or retailers that had not invested and embraced these transformations, because these companies were dependent on more traditional commerce, people walking through a mall or traveling, visiting a certain location.

I think about tourism, and all the retailers in tourism. These small little boutiques. There was no technology. It was 100% dependent on a traditional supply chain. Last summer, when I visited Spain, we were walking around Barcelona, these little, small merchants. They’re used to millions of Americans and visitors from across Europe and Asia coming into the city every year with money. These business were wildly disrupted because there was no plan. These were, obviously, exceptions, Maria, but then you have the bigger companies that are just starting to deploy. You kind of saw the digital haves and the digital have-nots, and then everything in between, and that brings me to my next question for you is, this really has to mean for SAP, as you’re advising and working with customers in your role, you have to be talking about changing processes now, because all the technologies I alluded to are only going to be implemented with new platforms, new processes, new service models. Talk a little bit about what you’re doing and how you’re proposing these things to your customers today.

Maria Morais: Yeah, so disruption is definitely something that retailers need to be ready. Some of them have been doing excellent work in terms of making their infrastructure quite flexible, moving to the cloud, having a micro service type of structure, being really able to design services around what can be useful for their customers or consumers, as opposed to just think about themselves and how they want to put their service for customers. If you really are customer-centric, as a retailer, you would not be developing requirements based on what do you think it’s useful. You really incorporate that data in your requirements gathering. Continuous innovation or continuous deployment of innovations is something that some retailers were able to achieve now.

If we look at the segments that were doing this really, really well, I think retailers that tend to, like department stores, or retailers that sell multiple brands, somehow have their supply chain a little bit more agile than the ones that are direct to consumer, also manufacturing. When there is an attempt from a consumer brand to go direct-to-consumer, we still see some challenges there. It’s not like we see this completely easy for all of them, because the customer-centricity means that you really need to have a culture of bringing data to your discovery meetings, data about what it is that your consumer wants, and then, how you make an interpretation of that around service design. How do you create a service for this person, and the journeys I see.

We’ve been talking for years about seamless journeys. There are a lot of friction points for journeys, and what we could see was that, unfortunately, with all the negative things that COVID-19 brought, with the lockdown and all of that, you suddenly saw creativity around technology services that, they’ve been available for years and years and years.

I’ll give you two or three simple examples. There was a florist in the UK, they sell flowers. During COVID-19 lockdown, they thought, “Why are we not selling vegetable boxes then?” And they’ve created an entire service of selling vegetables directly from the farms to consumers. They could only serve the London area, but great idea, good usage of creativity. As we start to open, and we see the fashion stores opening again, all of them have now booking services where I can book a specific time where I go to the store. So I book online to go to the store at a specific time. This is not new technology. This was completely available before, but people were not adopting. The big change is behavior in the way you set up your projects, is thinking about, creatively, how can you help your consumers to interact with you in a more engaged way, as opposed to just think about big, big projects that, at some point, will bring you the benefit? You don’t know how the market will look like in one year, so you need to think about what are the quick things? How can you empower your people with digital tools that help them to serve customers better?

Of course, that means the store associate, that, for years, is expected to be doing a job by looking at a POS system that was designed back in the ’80s or ’90s or something like that, more often than not, using their own mobile to look into things. Why are we not equipping this sales force to be digital and to run simple?

Daniel Newman: I think you bring up a lot of great points. I like what you said, though. Frictionless makes for great marketechture. I use “marketechture,” because that’s what we talk about when we make something very difficult sound easy, but it is actually very difficult. To do 360 customer, to do seamless, to build systems that have no friction from your service and marketing and supply chain and sales is not easy. If it was easy, we would be in a very different situation, and more companies would be able to compete on these unbelievably well-run and well-designed systems, but that’s also where companies like yours need to come into play, need to come in and provide the advisory, the visibility, the common data models and customer data platforms that can connect to all the different systems that are running concurrently, provide everything from a call center to a customer on eCommerce in realtime information and access to data and availability and product and shipping information in a very seamless manner.

It is done. Some companies do it very well. Some companies do it very well. Some companies do it very well, and maybe it’s very complicated on the back end, but the beauty is, on the CX level, the customer level, it’s not difficult, and I think, for most companies, that’s what I always sort of say. What’s first is make it really easy to the outside world. Even if it’s a bunch of people in the background moving the levers, don’t let the customer know. Obviously, if you can create the automation and put the tool sets in place where it’s being done correctly, that’s even an up-level. I think one of the worst things, obviously, if the experience that’s seen to the outside world is bad. That’s the first thing I always say. We’ve got to fix that. We’ve got to fix bad CX in this age.

We’ve got a few minutes left, and I’ve got one more question sort of about this retail, and then I’ve got a question about kind of a broader global effort that’s going on. You use a term, and this term is starting to gain momentum, called unified commerce. Talk to me a little bit about this. Is this a fad? Is this going to stick around or should retailers really be getting behind this unified commerce movement?

Maria Morais: I think so, because, if you think about omnichannel or multi-channel, it tends to be centered on the channel, and that’s not customer-centric enough. When you think about unified commerce, you think about commerce everywhere. There’s a change in the way you think about digitalizing the store, for example. You don’t digitalize the store by bringing some digital into a physical space, what you actually do is you consider that a web shop can be anywhere, and that may also include a physical space, and it’s about what, picking a little bit on the point I was bringing before, this idea of empowering the store assistants to be digital enough to serve customers. A must-have in all retailers at the moment should include their workforce with a product catalog in their hands, where at least they, they may not have all the omnichannel services, but if you go to a store and they don’t have your size and they are not able to find your size somewhere else and ship to your home address, or whatever address you give, wouldn’t you be disappointed with this? It’s like, really?

Or if you want to return an item you bought in one store in New York and suddenly you’re traveling and you go to LA and you decide, “Actually, I don’t want this anymore, can I return here?” And nothing is connected, the systems are not connected, and they don’t even recognize you as a customer, how many times have you called to a customer service agent that had to pass on to someone else who asked you the same questions again and the same questions again? That’s not useful for customers, and that’s not the expectation that retailers should be meeting these days. So yeah, definitely a lot of space for improvement here, but I think there are quick wins. and by thinking about how to best serve the customer, you are able to find those quick wins.

In each case it’s different. There are no two retailers that are the same. Technology may be the same, we provide technology for all of them, but the way we assemble, and the way that needs to be, if there is a differentiation in a specific retailer, we should know about that, because technology can help you to broadcast your reason to exist in a wonderful way. That’s what I would like to see more discovery sessions be all about, and not really trying to boil the ocean too much. At the beginning, trying to do everything. “We have a digital transformation use case, so we want to bring all of these new things, not even being aware if they have the team to deliver on that. There’s so much about people and processes that counts, and this is where I think, at SAP, we’re really good at. It’s defining those use cases, those processes, and really advice on what’s the right team structure to deliver quality and innovation.

Daniel Newman: Yeah, I think you bring up a lot of great points. I think, deep down, trying to simplify your message, it goes back a little bit to what I said. All the technologies underpinning can be similar or different, depending on the vendor and the selection. You work with many of them. But, in the end, it’s experience-driven. How do these companies package up all these technologies and make sure that the customer is really getting a world class experience from the first moment they engage with the company to the completion of every sale? And then, in many cases, because retail is circular, it continues on. It can’t just be the end. It can’t just be, “Oh, we had a great experience and now we’re done with that person.” It’s “How do we keep that person in the queue, how do we provide new offers? Get them back online, into our stores?” Hopefully both, as we start to return to more normal. And that’s making sure that the commerce experience is unified.

You use that term, and there’s a few different terms out there, but I think it is important that retailers are thinking about this. You heard me say the word “circular,” and that sort of brings me to my final topic. I couldn’t have planned that any better if I’d have tried. One of the big kind of underlying topics in our world right now has been CSR, corporate social responsibility, doing good for the environment. We hear about it from some of the big companies. We’ll hear things about carbon neutrality and ambitious goals and big investments being made, and retail has some very large companies. What is going on in the retail space? How are retailers getting involved in circular sustainability goals that are really needing to be focused on by every industry, but since you work so closely, I’d love to hear what you’re hearing from the retail industry?

Maria Morais: Yeah, I’ve been working closely with a think tank in the UK called Circlo. We’ve ranked the biggest 50 companies in the world in consumer industries. So retail, CPG, FNCG, fashion, a group of companies in consumer industries. They were ranked with regards to their ESGs, the non-financial metrics, but also digital transformation and performance, financial performance. It was interesting to see who ranked better, and why they’ve ranked better. Quite different profiles. L’Oréal did really well. Inditex and Nike, LVMH, and Amazon did okay, but not better than these companies. There are a few things here that were quite intriguing. Why? I think, if you look at the accounts and reports from Inditex in 2018, 2019, or even before that, they say something that, I think, it’s critical. They say every single dollar that we spend in digital transformation is towards circular economy and towards sustainability. Wow.

Now, what does this mean? This means transparency of your supply chain so you can extend the product life cycle, for example, as a business model. It’s not just a program you want to have where, yeah, I take your clothes back and we do something with it. If you really extend the product life cycle, you are able to re-commerce some of these products. You are able, and recycling. Let’s talk about recycling. I don’t know anyone in the world who wants to put…We all agree that landfills is not a good end of life for fashion products, but the reason why that happened is because the majority of recyclers don’t understand what the garment is made of, therefore they cannot recycle it.

The same with plastics. Let’s think about packaging. You cannot recycle all of the plastic, and the plastic you can recycle, not all of it follows the same process, so you need to be sure about what you’re doing. This digital identity of products, I think it’s fundamental. There are a couple of companies trying RFID tagging to create digital identity. A company like A-1, for example, that it’s doing some pilots with H&M, PVH, and Target, but we need more initiatives like this. We really need to make sure that all retailers in 2025 have transparent supply chain so that they can measure how efficient they are with CO2 emissions, waste management, but also how they can enable business models like extension of product life cycle.

I agree with Inditex, and I see that all the companies that are doing well and ranking well, in terms of sustainability, what they’re doing different from others is it’s not about press releases and about innovations that you are interviewed about. It’s really about this. It’s digital transformation towards circular economy projects. If things are not hand-in-hand, those companies tend to struggle more than the others in terms of profitability as well, so there’s a correlation between both things.

I think, as the future, in 2025, 2030, I would not be surprised if we would start seeing high taxes coming for non-sustainable products. If that really happens, and there are some indications, particularly in Europe, that’s a path that we may see happening, if that happens, then it will become more expensive for consumers to buy non-sustainable products than to buy sustainable, and that will start to bring things into balance. Some retailers already got it and are working towards that. I think Inditex, L’Oréal, Nike, they’re really good examples of what good looks like in this space.

Daniel Newman: Well Maria, I want to say thank you so much. I have 100 more questions I could probably ask you. Fascinating stuff. It’s really good to hear about what’s going on from a technology standpoint. It’s encouraging to see that there are consumer goods and retail companies that are really being able to jettison forward, embracing new technology, investing in the platforms that are going to give them the adaptability and scalability required to not only survive this economic challenge that we’ve seen in 2020, but really thrive as we rise out of it.

It was also great to hear from you about the sustainability and how companies are approaching that. It’s going to be a trend to watch. ESG is a popular topic. I’ve always said there’s kind of two subsets. There’s the people I believe that do it because they feel an obligation, and then there’s the companies that are truly culturally evolved, and it’s deeply entrenched in their DNA, and I think those are where you see the greatest and most impactful ESG and sustainability projects. With this, I’ve got to say thank you, and I’ve got to end the show. We went a little long, but I think it was worth it. I hope everybody hung in there with us. Maria Morais, SAP, thanks for joining me today.

Maria Morais: Thank you, Dan.

Daniel Newman: For the Futurum Tech podcast, I’ve got to say goodbye, but, before I do, I’ve got to ask everybody out there to please press that subscribe button. Hit the show notes, you’ll get more information about what SAP is doing in this space, a couple links included down below. If you’re listening to this on the podcast, also check the show notes out, whether it’s Apple Podcasts, Spotify, or wherever it is you are listening. For this episode of the Futurum Tech Podcast Interview Series, I’m Daniel Newman, your host today, but I’ve got to say goodbye.

 

Daniel Newman