Asos chairman and former Amazon.co.uk CEO Brian McBride looks at the future of retail technology in an exclusive interview with Internet of Business, and warns physical bricks-and-mortar stores that they need to wake-up.
“I have lived through Moore’s Law,” opens McBride, speaking to me on the phone last month. “I started work at IBM as a young sales guy 35 years ago, so I’ve seen it all.
“I’ve seen some amazing technology cycles and waves; I’ve seen the mainframe disappear, seen the mobile computer come along, and seen the arrival of the PC, laptop and mobile phone… I’ve also been lucky to have ended up at some great companies at some great times. I ran T-Mobile as 3G was coming along…”
McBride has also held senior roles at Dell and Three PLC, whilst serving as a non-executive director of the board at the BBC and the advisory board of Huawei UK. In addition, he’s a member of the UK Government’s Digital Advisory Board and chairman of online cycling retailer Wiggle, so he is perhaps better placed than many to comment on the ever-evolving technology market, and – specifically – how this impacts a retail industry that isn’t always so quick to change.
Designers ahead of the consumers
This relative lack of inactivity as far as technology is concerned, is compounded by the fact that customers rarely know what they want, an opinion often voiced by the late Apple CEO Steve Jobs.
“I look at technology and I think the designers and scientists are ahead of the people,” says McBride. “They envision things, and actually, if you ask the customer what they want, they don’t really know – it’s for the businesses to figure that out.”
Nonetheless, McBride — a keynote speaker at our upcoming Internet of Retail conference in London — also has sufficient experience as a senior retail manager and C-level decision maker to know that it’s hard to judge which technologies will take off, which of those will fail, and ultimately where to bet your business on. In roulette terms, it’s not as simple as black or red.
“Retail is quite a traditional industry, in the way it operates, the supply chain, and the way it treats suppliers and customers. It’s not that dissimilar to that of ten or twenty years ago.” he tells IoB. “You get a certain amount of inertia, of ‘not invented here’. It’s a tough industry to get new technology accepted.”
The Asos chairman is no boardroom dinosaur though – he’s excited by the potential of IoT, machine learning and Artificial Intelligence (AI) in particular, but he also preaches about the dangers of jumping into a nascent market with no guaranteed results.
“I see lots of exciting technologies out there, and I think they will all make it, but how do you predict what makes it first? In relatively mainstream businesses, as my eCommerce companies are, you don’t just want to dive into and follow the next great wave.
“We all want to see mass markets start to evolve, you don’t want to be following, but if you’re a pioneer in everything you will probably go bust. I think there is very much a bit of watch and see [in retail]”.
IoT lacking “killer” app
McBride is excited by the potential of drones, automation and chatbots and machine learning. IoT, he says, is another exciting opportunity, but admits the lack of a “killer app” could mean mainstream adoption in retail is still years away.
“How and when it manifests itself, I am not completely sure. IoT hasn’t quite hit mainstream for us yet is what I’d say…I think the lack of an obvious killer app is the one thing [stopping IoT],” he said, citing how mobile apps were largely irrelevant until the arrival of Apple’s iPhone and the broader App Store ecosystem.
This is not to say he’s downbeat on IoT’s opportunity in retail, mentioning the future possibility of digital wardrobes, trackable clothes and improved supply chain thanks to improving (and ever cheaper and smaller) RFID technology. The potential is there, but the application isn’t ready yet.
Physical retailers need to wake-up
McBride talks up about how the growing eCommerce market could likely grow from 15 percent to 30 percent in coming year and whilst he believes physical bricks-and-mortar stores will remain, he believes they are at risk of being disseminated by online retailers and the likes of Amazon.
So, is there a growing need to combine the physical and online experiences, in order to know more about their customers?
“For the online retailer less so, I think we know a lot about our customers, we know who they are, what they like, what they don’t like, what they buy and how they want to connect.”
“I think the things you spoke about, that better and more connected experience, that’s something physical stores will have to find ways to deliver, or they’ll be threatened.” He says that many stores only have a credit card slip to go on, knowing little of buying habits or preferences.
“I think they are well behind the curve in applying technology in general, let alone applying it to advanced areas like IoT. They’ve all got Wi-Fi, probably all have beacon capability, but I think what they don’t have is the base data of who walked in…so they’re starting from well behind the online guys. Parts of the high-street really are threatened unless they find a way of using technology to find out who the customers are and what they like.”
Crucially, the Asos chairman adds: “This is a time of disruption – you’re either going to disrupt or be disrupted. There’s no middle way here, and certainly most of the disrupting is going on with the online guys”.
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Amazon? Probably not as good as you think
McBride was formerly CEO at Amazon.co.uk from 2006 to 2011, leading it through its high-growth period, and perhaps unsurprisingly this is the company he gets the most questions about.
“It’s over five years since I left Amazon, and yet it is always the company I get asked more questions about, which is understandable.
“People in the retail space, technology space and maybe even people in the carrier space probably fear Amazon too much. They attribute sinister motives to Amazon but [Amazon] actually don’t think like that. Amazon is not after world domination, they don’t want be a monopoly supplier for every market out there.” Instead, he said the Jeff Bezos firm is competing across some 30 categories in 200+ countries, and aiming for around a 5-15 percent market share.
He adds that too much is also made of Amazon’s use of data, and its ability to personalize experiences for online shoppers.
“Amazon actually doesn’t know very much about its customers,” he told me. “If you think about your relationship with Amazon, they have got your credit card details and email address, preferred delivery address, and a history of what you have purchased.
“But Amazon don’t know if you’re male or female, black or white, 16 or 55…it’s never asked those things, so Amazon is not at all intrusive. What Amazon has done is it knows what you buy and what you like, and is able to make algorithmic associations that tell it about people who bought this device, bought that book or that toy.”
Asos and start-ups
So how ahead of the times with tech is Asos – the online fashion retailer? Well, the company is partnering with Telefonica’s Wayra to harness the power of start-ups, but McBride stresses the importance of finding the right partner, and implementing the right technologies.
“We are looking at new technology…we’re looking at start-ups, and working with people creating apps in terms of helping people to get better sizes. There’s lot of stuff we try and participate in…but we don’t have the answer, and we don’t have a huge R&D capacity.
“At Asos our business is fast fashion, the fashion cycles are usually six weeks, so we are used to being nimble, agile and trying stuff out. To stop and try and figure out the right IoT app for next year – that’s probably not what we’d do. What we are prepared to do is be a bit experimental if something good came along.” He adds they can pilot faster than traditional retailers, in part owing to a young and experimental workforce.
The Internet of Things possesses the ability to greatly enhance the ways in which retailers are engaging with their customers. Advanced beacon, RFID, Sensor, AI, VR and wearable technologies are offering new ways to improve loyalty and increase revenue. However, disassociation between the business and digital sides of companies coupled with previous project failures and negative consumer feedback is placing strain on new IoT projects.
This 2nd Annual Internet of Retail event will present case studies from some of the world’s leading retailers who have overcome implementation pitfalls and are successfully harnessing IoT to heighten the customer journey.