Interview with Marco Trada

Lucy James: In your opinion and experience, what is the biggest challenge that is currently facing retailers?

Marco Trada: Adaptation. Expectations from consumers, and consumer behaviour are changing quite fast, especially in recent years, since Covid. Adaptability is probably the main challenge that retailers are facing, and specifically, omnichannel integration and customer expectations.

During the pandemic and now, post-pandemic, a customer expects to shop or browse e-commerce, obviously online, through the mobile app, through the website, desktop, but also to keep going to the physical store. This means that a retailer needs to integrate, and offer a more and more seamless omnichannel experience so that the customer can feel that they can surf or buy whenever they want and anytime they want through the channel they prefer.

The other challenge facing retailers is personalisation.

This is a challenge, but also an opportunity for retailers. Retailers have a huge amount of data, and the opportunity is to exploit and leverage that data to offer more and more customised and tailored experiences for a customer.

This could be to offer the right product that the customer expects, the right product recommendation, or the right promotion at the right time.

The third and last challenge, and this is an important one in Leroy Merlin, is the evolution of the supply chain. Clearly, to be omnichannel, and to offer a seamless experience and a personalised experience, this also means that your supply chain needs to be optimised, timely and efficient.

I summarise all of this as an omnichannel strategy that really leverages technology, with all the data points and insights to understand markets and customers.

LJ: One of the biggest challenges is adaptability, and how can that be addressed realistically? I’m thinking of legacy systems, mega data sets, integration of different business units. I can imagine the challenges. How can you achieve adaptability?

MT: It’s not simple. I think it depends a lot on the company culture. Even between the last two companies where I worked (Microsoft and ADEO), there is a lot of difference in the approach. Neither one is better, they are just different. ADEO has a very entrepreneurial, bottom-up approach, and in a context where adaptability has to be fast this approach can be positive, because you can collect a lot of local feedback and local dynamics. However, it’s not always easy to move fast, and to change fast across all the different business units and countries.

Second, having a clear direction is really important. Starting, for example, from knowing your customers, potentially means to really segment your customers on demographics and the needs of the customers you want to target so that then you can build a thoroughly strategic approach and direction to be more and more customised and personalised for them.

So one answer is culture, and the other is to have a clear vision that really includes customer data as a first point.

LJ: How can retailers really create customer loyalty? And I want to add to that, you said that personalisation is  a really huge challenge at the moment, but personalisation has always been a need in customer service, so what’s new with regards to that, and perhaps linked to customer loyalty?

MT: What’s new is something that is trendy at the moment but which is nevertheless powerful: artificial intelligence. It can be quite a strong ally, not replacement, but an ally to really build personalisation the right way. Honestly, I think we are not there yet in general. There’s a lot of discussion about artificial intelligence and the application of artificial intelligence for impactful results but there are few concrete results. I’m sure we’re going to get there.

In our case, locally but also globally, we are starting to use artificial intelligence, for example, when it comes to product recommendations, to really analyse the data.

We have been doing that online, but also offline with the purchasing history of a customer, the product preferences, to customise the offering more and more. We have also been leveraging artificial intelligence to build more qualitative product pages and product descriptions and images to offer an even better customer experience and to really showcase the product information that the customer is looking for. This is already a playground where companies are really working.

In my opinion, what’s going to be really interesting is also to use artificial intelligence as a predictive tool. If we think about our product catalogue, we have 150,000 first party products. And if we add on top the marketplace, it’s a two million product catalogue. Behind that, there is stock allocation, fulfilment methods, lead time, and shipping costs. So if we were able to use artificial intelligence to build product forecasts, particularly for seasonality based products, to avoid running out of stock, that would be a strong benefit for the company.

LJ: Are you already using AI for predictive projects, for predictive work?

MT: We’re working on something. But there is still some work to be done. The strategic vision is there, but it will take a little bit of time.

LJ: We were talking about customer loyalty and AI. Is there anything else you want to add to your answer about how retailers can really improve the customer loyalty experience?

MT: To maintain more and more loyal customers, companies need to have a 360 approach. That includes all the different aspects of the customer journey. We have talked about personalisation, which is more related to products or promotions, but I will also add the importance of exceptional customer service, which could mean, for example, a really basic way to train the customer service team so that they can offer the best answers to the customer requests, no matter where the customer is or the channel they purchased from.

Secondly, I would go back to the omnichannel approach. And actually we don’t even call it omnichannel anymore! We call it no channel to really eliminate any type of frame or limitations. But what I would expect from a company is to really offer all services as a standard, such as click and collect or drop shipping from a supplier, obviously free, ship from store, ship from warehouse.

So to really offer as a standard value proposition, a certain range of fulfilment methods so that the customer can really get what they want in the best way and the best time they want.

And then probably the last thing I will add in terms of loyalty is to engage with the customer through content and also community. In our sector, home improvements, in the professional sector, there’s a big range of products where it could be useful to be informed in the right way, to know exactly what to buy. So to really share valuable content or tips or tutorials for the customer to inform them through content and also to build more and more a sense of community, so that customers really feel engaged with the brand.

Some customers are home improvements customers, and some are more professional. Even Bosch for example, has two different lines: blue and green, one for hobbyists and one for professionals. And these customers would also be expecting different types of content and engagement by the company.

LJ: What’s your best advice for retailers that want to communicate effectively with their customers?

MT: I would say something obvious perhaps, but it’s to know your audience first in order to be effective with your communication. So really leverage all the data points that retailers have, and have been collecting over time, to really build a clear set of personas and targets with a personalised approach.

The second thing is to be effective using a multitude of channels. The third thing, goes back to personalisation, also in terms of communication, starting from knowing your audience. And the last point, that I think  probably sometimes we forget, is also engaging in a two-way communication. It’s important to engage with the customer, to ask feedback through surveys, social media, and also on-site. It’s also important because the customer will feel that you value their input.

LJ: Thinking about the different channels, at Leroy Merlin have you changed the channels that you’re using?

MT: As far as I know, there’s no channel that for the moment we decided to stop using. Actually, there are channels which we decided to add and to integrate into our communication plan, like TikTok. And this really goes back to the to the strategic decision making, connected to knowing our audience. We did some analysis in Italy with the support of a business school, and we discovered that in Italy we serve a more senior customer, over 30 years old. Based on which, we decided as part of the strategic approach to include some new channels, like TikTok, to try and be more and more top of mind for a younger generation. 

LJ: Your professional journey has taken you from working on the family business to global businesses. And I’m interested to explore those family business roots that you started from. In your experience, what are the things that the global brands that you now work for could learn from your family business?

MT: My family business is a retailer of products for home improvement and construction that is based in Piedmont, northwest Italy. The business is part of a big purchasing group that is developed across north Italy. I’ve always been involved in the business and after my university I worked there full time for five years, responsible for marketing, both online and offline.

I believe it’s a great experience to work for a family business, but of course I only realised afterwards!

Working in a smaller context really gives you a 360 view of a business. When you join a big multinational company, the basics are the same but the dynamics are different.

In my opinion, the second benefit of working in the smaller context is the more entrepreneurial approach. It’s possible to navigate a bit faster and not get blocked in processes or layers of bureaucracy that you find in larger companies.

LJ: Do you feel a different sense of satisfaction of how you perform in those two different environments?

MT: From one point of view, in a small company you benefit from that immediate impact, feedback or result, whereas in a larger company it’s harder to connect an action with the actual result. On the other hand, being supported by a more structured system can also have a lot of benefits: being able to tackle issues or start new projects with a set of resources that you wouldn’t have in a smaller environment.

LJ: Do you think that multinationals or larger scale operations can combat the, let’s say lack of in-the-field experience?

MT: Yes, I always recommend in my team that for anyone joining the company, they do a certain number of weeks training in the physical stores, and I think this is best practice. It’s important to really experience what it means to be at the core of the company. And for my team, not just new joiners, they also have the opportunity to work at any physical store. I encourage my team to spend time in the physical store, to go to the shelves, listen to the customers, talk to the sellers, talk to the team there and see what insights they come away with. It’s easy to get lost in data points, and you just need to go and talk to your customer.

LJ: What’s your prediction for how e-commerce will change in the next five years?

MT: When I think about e-commerce in the next five years, I would expect a more and more personalised, integrated and immersive experience. The personalisation I would expect to come through the use of artificial intelligence, using AI for product recommendations, customised messaging etc. Also the use of augmented reality and virtual reality could really play an interesting role, to let the customer immerse themselves in the product and to really leverage that to potentially offer an even better shopping experience.

I would also expect a more and more seamless experience, with omnichannel becoming the standard value proposition.

In addition, we are a bit behind in Europe, but also leveraging social commerce to sell products directly through the social media channel without even going to the e-commerce.

In the next five years I would also expect a stronger focus from companies on sustainability in terms of product sustainability, and also fulfilment sustainability through improving the supply chain. There’s quite a lot that brands can do through their businesses to also protect the environment and the planet more and more.