Georgia Morgan-Wynne Commerce & Industry, Retail, Market Intelligence...
General Counsels from the retail sector gathered together for a breakfast event at Soho Hotel in London to discuss the evolving role of e-commerce in the retail sector, headlined by speakers Kaspar Nazeri from Amazon and Catherine Palmer and Randa Crebbin from Joseph. Key themes emerged: companies must be prepared to innovate and adapt, to respond to customer expectations, and get to grips with tech, alongside recognising how offline and online businesses work better together.
Catherine Palmer, Legal Director of luxury clothing brand Joseph, opened the discussion to attending General Counsels who represented a variety of companies from luxury goods to groceries, spanning the spectrum from traditional bricks and mortar businesses to those purely e-commerce, and companies straddling the two. She outlined a central problem of uncertainty regarding the two models of retail: because e-commerce has grown in such a rapid and unprecedented way, it has been difficult to know what to make of it. Kaspar Nazeri, Senior Corporate Counsel, from Amazon, recounted founder Jeff Bezos’ assertion that for Amazon, 22 years after launching as a purely online retailer, it is still ‘Day One’ for them as a company “because the technology is constantly evolving and so we have to innovate relentlessly.” All agreed this uncertainty was a challenge for them as lawyers in the retail sector.
Palmer reminded the group of the once-lauded prediction of the death of the high street - and although it is clear now that there is room for both business models, e-commerce has changed the landscape for all players in the industry. “The idea with online retail was that you ‘had’ to do it - but the responsibility for it was left to our finance director who championed it from a little team in the basement. We now regularly have lively debates about where e-commerce fits in and what it is for - is it a selling site, or effectively the window of the store? It showcases the brand so this has an impact on many things like photography, and about how much information we should include on the brand, straight into what we are selling.”
Randa Crebbin, Head of E-Commerce at Joseph, said that since the early days Joseph has embraced e-commerce, and recognised it isn't a case of one thing or the other. “Things have evolved, influencing upwards as well as horizontally to enable us to create an online strategy.” Over the last three years and after rapid changes in technology impacting the business, Crebbin said that her job as e-commerce head is to engage the customer and always ask what it is that the customer expects. “For example, we have had to think about language, communication, and internationalisation - we have customers all over the world and it is important to introduce delivery and duty free options, because the customer does not want to have to think about that.”
Whether traditional retail or e-commerce, it seems the customers’ wants and needs are primary. One of the buzzwords of the discussion was ‘omni-channel’; Crebbin said that “while the meaning of omni-channel might be different for everyone, for us at Joseph it’s about delivering a meaningful, engaging and relevant experience to our customer at every touch point - online, stores, social media channels, magazines and websites. If you do it right you build brand loyalty which is hard to find and even harder to hold on to. Omni-channelling and being truly customer-centric is what makes or breaks a brand these days.”
The other hot topic for the group was artificial intelligence (AI). AI technologies are capable of introducing new ways of capturing customer data and of interacting with customers, and it is not clear what impact these innovations will have across the industry. Crebbin said: “For me, AI is an evolution led by technology and brands - because up until now, the customer has led innovation based on what they expect. But with AI there is a whole emergence of different companies and different people who work on it, such as data scientists who predict and calculate the lifetime value of a customer before he or she might have really spent anything, using machine-learning to make those assumptions. Where does all this lead?”
Sarah Ingwersen from Taylor Root asked the group what challenges AI innovations might create from a legal perspective? It was agreed that an effective in-house lawyer has to take on a proactive role, looking ahead to technological advancements and preemptively trying to manage areas of privacy, data and consent as well as they can. The best lawyers to hire for this are those who remain engaged, aware and conversant with new technologies and those who, above all else, remain curious. Nazeri said that lawyers “as well as needing to know the law, need to have a base level of understanding of the technology, although this can be learned – what’s important is that they’re smart and curious.”
Lisa Gan Tomlins, General Counsel for Made.com agreed. “Tech law in the traditional sense of the word – for example in relation to IT and software - is not at the core of the kind of legal skillset we generally need. The law in many of the areas relevant to us isn't that well developed so it becomes more about understanding the new tools and developments in the digital world, asking the right questions and getting together with the business team.” Regarding innovative technology, the law, as Stephen Edgar, Associate General Counsel EMEA from The Body Shop, commented, “isn't innovative as such, but we do need to know what it is, so that you can then give advice to the business. You have to have that desire to understand.”
Holly Sage, Principal Legal Counsel from Farfetch, said that her company invests in this knowledge cross-over through training sessions between legal and commercial “ to ensure that the legal team is fully aware of the technical and commercial environment in which we operate, and because we don't hire purely ‘tech’ lawyers.” As much as the commercial side of the business needs to work closely together, increasingly so too do the offline and online businesses of a company. Two sides of the retail business meet head to head at the e-commerce intersection - traditional bricks and mortar companies have had to examine what part they play in on-line retail, and e-commerce sites have had to expand their offerings to allow customers another touch point.
One General Counsel from a luxury goods company said that historically both its businesses were silo’ed with e-commerce sidelined, “almost like a business within a business, but the buying and marketing teams were linked and often it was the same person you would speak to online or in store. It became confusing if you had to effectively speak to two different stores.” The reality is that both feed into the other, and ideally, both off-and on-line would work from the same office. Sage from Farfetch said their team shares the same office “which is a geographical and cultural blending of the two, with the aim of keeping the businesses aligned offline and online.”
There are companies who have responded to the evolution of e-commerce by literally blurring the line between the two retail models. Made.com’s Tomlins said that while the online furniture retailer started off as purely an e-commerce player, over time they have moved into having showrooms. “We are still having the debate over whether we need showrooms, how many, and how much we should invest. Not having a physical store means we cut out associated costs, but with furniture some space can be helpful because people want to touch and to know ‘how will I feel sitting on it?’, so in between those two competing ideas is the showroom evolution. We have gone from online only to online with a touch of offline presence.”
Amazon continues to innovate and has even started experimenting with physical stores. Nazeri said: “For example, we are experimenting with a concept store called Amazon Go - it’s a store with no checkout required. Using advanced shopping technology, you just choose what you want and then walk out.”
He says that experimenting with bricks and mortar is an expansion opportunity that Amazon has traditionally resisted but which it is now experimenting with in light of technology providing a meaningful differentiator to the customer experience.
Crebbin noted that for a company like Amazon, moving forward with new technology was a risk that smaller companies couldn't afford to take. “Smaller businesses have to be mindful of what innovation they might take up, because of the big costs of money, time and resources. Amazon is in an enviable position of now being an innovation company testing new tech out for all of us.”