Cheil Worldwide, the South Korean marketing services group which is part of the mighty Samsung empire, posted some interesting news last week – that it was consolidating its entire global retail resource under a single banner.
Called Cheil Retail, the new unit will be led by Simon Hathaway as the global chief retail office. Hathaway will head a team of 1,500 people across 52 offices and 43 markets – so it’s a big, and international, network.
What will Cheil Retail do? Well, it’ll be a lot more than simple shopper marketing. According to the press blurb issued by the company, “[Cheil Retail] will work across both traditional retail and ecommerce, offering onmi-channel solutions for clients.”
The interesting part is the “omni-channel” bit. Although many commentators make a distinction between ‘retailing’ and ‘ecommerce,’ the two things are actually the same; the distinction comes about, I think, because of the disruption wrought by online giants like Amazon on ‘traditional bricks and mortar’ retailers.
But it should be remembered that Amazon is just another retailer, and its success has come because it focused on the four things that make all successful retailers successful: Range, Amazon carries a far larger range than most high street retailers could ever hope to carry; Value, Amazon is almost universally perceived as offering good value, even if it’s not always the cheapest; Customer Experience, the Amazon website could hardly be called cutting-edge, nor will it win any design awards, but it is pleasant, intuitive, easy and quick to use; and Service, Amazon is single-mindedly focused on customer service.
It should be remembered that far from killing off retail, ecommerce has only increased its importance. All that’s happened is that retailing has changed, with an emphasis on the experience as well as more traditional KPIs like price and availability. Apple recognised this a decade and a half ago when it opened its first stores – the store was another way to interact with the brand; whether or not somebody bought something while they were in there wasn’t really the point, it was just another way of experiencing the Apple brand.
So, for example, Jobs and co. realised that research was starting to play an increasingly important part of the shopper’s experience, so it made sense to let the shopper come into a store and do the research. It didn’t matter – for the moment – that the customer’s researches didn’t result in a sale. The important thing was to let the customer, rather than systems or processes, or physical constraints like time and location, dictate the pace and outcome of his or her journey.
In fact, it’s becoming increasingly clear that a ‘bricks and mortar’ store is no longer just a place to buy stuff, it’s become more like a fulfilment centre, a part of a customer journey or experience. Look at the strides Argos has made over the past few years. It’s a retail model whose time has come; it suits today’s consumer mindset. No wonder Sainsbury’s, as well as a host of other businesses, are courting its shareholders.
This recognition of the new face, and importance of retail is at the heart of what Cheil is trying to do, I think. Some of the company’s previous work has shown that shown that it understands that the customer creates the journey, and this it is up to a retailer’s marketing to be both with them on that journey; and to be pushing them on to the next stage.
Cheil has also seen the importance that clients are placing on retail and their desire to work with specialists in that field. From what I can glean from the publicity handout, Cheil Retail’s offering will include digital solutions, retail operations, data and analytics, store design and build, shopper-marketing and brand activation. That’s covering pretty much every base, or to use the jargon, “every touchpoint on the consumer journey.”
Cheil already has a good reputation in the sector, through work like its famous multi-award-winning ‘virtual’ Tesco Homeplus store in a Seoul subway, a great example of being able to capture attention and use a consumer’s time effectively; mobile work for South Korea’s biggest retailer, Emart, and the roll out of Samsung’s presence in retail, there’s a Samsung Experience store in many of the UK’s biggest cities. The stores are obviously modelled on Apple’s, and while they’re not quite there yet, the company is thinking along the right lines, offering repairs, tutorials and advice as well as products.
Cheil Retail will work alongside many of the specialist components of the network, including recent acquisitions like The Barbican Group, iris Worldwide and Cheil-PengTai. All-in-all it makes for a pretty compelling specialist retail offer for those clients wanting to develop an ‘omni-channel’ approach.
As, Hathaway, boss of the new practice said last week: “Today people expect retail to be everywhere – instant and personal and we have brought together the skills, experience and creativity to deliver against the huge opportunities and challenges that brings for retailers and brands. I am looking forward to partnering with retailers and brands who are turning away from legacy networks and demanding specialists that can deliver solutions for the fast changing world of shopping.”
It’ll be interesting to see how this develops, and what Cheil’s bigger rivals do. I’ll be willing to bet that many of them will be putting their money in higher-margin specialisms (as opposed to increasingly commodified broad or full-service offerings). Already, earlier this week, Dentsu Aegis launched a specialist network called Interprise, which is aimed at the increasingly important B2B market.
Finally though, it’s worth considering for a moment why Cheil did this, and not someone else. Cheil, like its parent Samsung, grew out of a uniquely Asian, or more properly South Korean, way of doing business – creating lots of specialist units operating loosely under a collective animus, fostering an entrepreneurial culture – this is the way, for example, EMAP, the most successful consumer marketing publisher of the 80s and 90s, used to work before its downfall; how much of Silicon Valley works; and how many of the tech-driven giants of Asia work.
Cheil already has specialist design, social and tech offerings, so it makes sense to create a global one for that once so unsexy, but all of a sudden, highly fashionable, of channels, retail.
Andrew Moss is a partner at Green Square, corporate finance advisors to the media and marketing sector.