Ernst & Young

Luke Short – The Digital Revolution: threat or opportunity?

Luke Short

Luke Short, Ernst & Young Senior Manager, Europe, Middle East, India and Africa Advisory Centre

In your opinion, in what way is the digital revolution going to affect the relations between retailors and industry? How, why and in what particular areas?

I know that Portugal has a very strong retailer “bricks & mortar” market, which is good news because enhancing the customer experience in-store and indeed across the end-to-end journey is a focal point of Digital evolution.  Technology, data and analytics are enhancing retailer-supplier relationships in areas such as joint business planning, but I think the most important aspect is to navigate away from the standard discussion about price and focus efforts on better understanding and appealing to consumer wants and needs:  how, where and when do they shop, what sorts of products are they buying, are they purchasing online or in-store? By understanding and sharing these insights, retailers and suppliers can tailor their products and service offerings to be more appealing to the consumer, drive the shopping experience and grow business.  This all sits outside the discussion about pricing.

And how can you improve that customer experience when, nowadays, through technology, you can buy almost everything from anywhere, anytime you want?

The Burberry example is a good one.  They have done a fantastic job turning around the brand and retail experience.  If you ever visit the flagship store in London, you’ll see first-hand how they have totally reinvented the in-store shopping experience. Among other innovations, they have introduced interactive mirrors that shoppers can stand in front of, skip through different outfits to visualize what they’d look like without having to physically try them on and simultaneously get more information about each clothing piece.  You obviously cannot get this sort of experience online.  I think it’s important for retailers to develop a strategy that delivers both.  Channels need to be complimentary rather than simply shifting sales through one or the other.

If I go back to my earlier point about moving the discussion away from price, you can see how this sort of transformed experience puts the consumer focus beyond price.  Focussing on the customer experience and the other key consumer paradigm of convenience will drive growth.

Your answer leads to the next issue: what kind of behavioural changes do you expect from these new consumers? Will they be more demanding?

Absolutely. Consumers will be a lot more demanding. We are both consumers, right? And as consumers, we want shopping to be as pleasant and convenient as possible.  We lead busy lives, so convenience is key.  Technology and the internet have given us the means to purchase anything, anytime, anywhere, meaning we don’t have to go into a store anymore if we don’t want to.  We have options and we want to be able to exercise those options how and when it suits us. This is key.  Technology is delivering this to us and we are not prepared to let that go.  Another point to make is that as consumers we essentially play a kind of gatekeeper role for emerging technologies.  When the first iPod and iTunes came out, it removed the need to buy CD’s and carry around Discmans/Walkmans. We liked it.  Then the iPod Touch came out with the cool feature of navigation through touching a screen.  Great!  We’ll have that.  Then the iPhone came out, incorporating all the features of the iPod touch into a phone.  Fantastic!  Now the iWatch is out and the response hasn’t been as overwhelming.  Multiple reasons for it, but coming at this as a consumer, it’s because I’m not clear on the value it provides in addition or differentiated from my other Apple devices.  Smart pay systems like Google Wallet and Apple Pay are also experiencing slower uptakes.  Consumers are not entirely comfortable with the idea of financial details sitting on their phones.  It’s a security concern.  Founded or not, it’s just the general sentiment at the moment, especially in the wake of some significant cyber attacks within the industry of late.  Hence, it’ll take a bit more time to accept and adopt these new technologies.

That´s true and probably when they lose their smartphone, they lose a big part of their lives and memories…

Yes, absolutely right.  Who can remember more than a few phone numbers these days?  If I lost my phone, I’d only be able to remember my wife’s number and my own, but that would be it. We’ve become incredibly reliant on our phones, but as mobile technology and e-commerce continue to grow, that expectation – to buy anything, anytime, anywhere – is not going to go away.  Which means that we all – retailers, suppliers, and service organizations – need to gear ourselves up better to respond to that. We will need to focus efforts on improving the customer experience, but that is by no means the extent of it.  We need to re-think the whole operation. Is it fit-for-purpose?  Can our current supply chain organisations sustainably meet the demands and dynamics of an Omni Channel / direct-to-consumer operation?  Do you extend services to include a “Click & Collect” offering?  How do you attract consumers into your stores?  Do you want to continue getting consumers into bricks & mortar stores?  How do you leverage existing assets to beat back competition and drive value?  These are all important considerations in developing a business strategy fit-for-purpose in a Digital world.

And in your very specific area of business – financial and advisory services – what kind of changes has your organization applied concerning the digital revolution? Are you redesigning your services? If so, in what way?

Yes, we have been partnering with our clients to address these issues.  Internally, we are building strong Digital capabilities so we can help clients perform the necessary transformations in their businesses.  Beyond business strategy and process improvement, we have some great offerings across digital law, taxation and cyber security. We´ve done a lot of work helping clients to build the right tax structures, establishing country-by-country reporting and clear transfer pricing frameworks.  We are across the legislation changes happening in Data Privacy and taxation and last but not least, in terms of digital security, we offer a range of services from cyber threat analysis, monitoring and protecting against security attacks.