How TikTok Drives People Back to Shops

[00:00:00] Around us today, you've got lots of people live with a ring light and a mobile phone, and they do that every day. The incremental cost of going live is almost zero. Some of the bigger brands, when they come to it, they think presenter, full studio setup, that tends to then bring too much cost and to break even on a live. It's very much about, you know, having that space that you can go live at zero incremental cost. It must be challenging for retailers to let go a little bit. Oh, 100%.

[00:00:24] But that's the way things are moving. We're seeing more frontline staff doing lives in the store or in the warehouse. Customers clearly want that authenticity and that relatability. Welcome to Retail Disrupted, a podcast that explores all the trends shaping the future of retail.

[00:00:48] I'm your host, Natalie Berg, and today I'm going to be speaking to Paul Mears, who is the Director of Retail and E-Commerce at TikTok. Now, regular viewers and listeners will know that Paul has been on the podcast before. He came on about a year ago to talk about TikTok's UK shopping report. Today, we are going to continue with the theme of commerce and entertainment converging, but we are going to be focused on live shopping.

[00:01:14] Now, I caught up with Paul over the summer at the first ever TikTok market. This was a pop-up marketplace right in the heart of Covent Garden. There were around 20 small businesses who were doing their lives right in front of us, right from their stalls. So fascinating to see. Firstly, how you can set up a live so quickly. You don't need a whole lot of kit. So I think that was interesting.

[00:01:39] And maybe for the retailers that are tuning in, maybe something that has prevented them been somewhat of a barrier to setting up live shopping. But it really is super, super easy. So it's interesting to see it in action. And it was also interesting to see what a mix of businesses that are finding success on TikTok. So there were the usual suspects, beauty and fashion. But then there was a halal butcher.

[00:02:04] There was a reusable nappy brand or reusable diaper brand for our American viewers. And there was even a fruit and veg box supplier who is doing a live right from his stall. So I think it really kind of dispels the myth that you have to be in a certain category or targeting a certain consumer to be selling on TikTok. I think it shows that TikTok really is for all brands. Now, I spoke to a couple of those brands, those sellers.

[00:02:33] And I'm not going to include it in today's episode because we have so much to cover with Paul. So we're going to focus on him today. But I will make sure to link to those conversations in the show notes. Paul is going to tell us all about how TikTok has added 10 billion pounds to the UK economy. He's going to tell us why over 4 million people visited an independent shop after discovering it on TikTok. And we're also going to talk about what the rise of live shopping means for the high street.

[00:03:01] Before we hear from Paul, though, I do want to spend just a few minutes talking you through a few interesting updates. So the first one is about Primark. And I know that I don't spend as much time talking about retail news as I used to. And it is something where I'm kind of toying with the idea of bringing that back. At the end of the day, I am a retail analyst. I do have lots of opinions on what's happening in retail. And I try to weave those into the podcast discussions.

[00:03:28] But I also think it's nice from time to time to bring you some news and my response to that news. So please do get in touch and let me know what you think. If you want to hear more of that, if you want to hear from more analysts. I know I've been very busy speaking to retail leaders and the disruptors, of course. Anyway, without further ado, the first update is the news that Primark is finally launching home delivery. Now, this is super interesting.

[00:03:58] And when I got a WhatsApp message from the BBC last week, I thought, oh, I definitely have to respond to this. Like, I have to have some thoughts prepared because it's such, such big news. Now, it's important to bear in mind that Primark isn't new to digital. So they have had a strong digital presence, a strong presence on social media for a very long time.

[00:04:19] They've also been experimenting with click and collect as a sort of halfway house because they recognize that their shoppers want to shop online. So I think what's interesting is, I mean, the way I put it to the BBC is that they are more than fashionably late to the e-commerce party. But you can't underestimate them. And I think that combination of them having a very strong digital presence and a huge loyal customer base, it gives them a ready-made audience for e-commerce.

[00:04:48] So if they get the online proposition right, I think that this belated move into home delivery could be a huge growth opportunity for them. Now, the elephant in the room, of course, is profitability. Can a value retailer like Primark actually make money selling online? And it was interesting to hear from the CEO of their parent company, ABF, who said that there is an opportunity now to drive profitable incremental growth through this channel.

[00:05:17] So they see a path to profitability. And that's going to be critical because there's not a whole lot of margin to work with. And so I personally think that they are going to go in with charging for returns straight away with high minimum thresholds. They're going to try to divert shoppers to click and collect and give them an incentive to.

[00:05:40] They're going to have to do everything in their power to keep the costs of serving the customer online down so that they can keep trading. Because I do think this can be really successful for them. So it is interesting. I've had a lot of people ask me, you know, what's really changed over the past few years? Is it AI? Is it automation? Have we reached a point where it is more economically viable for these value retailers to trade online? Or is it a case of it being 2026 and Primark being like the last retailer on earth to get online?

[00:06:10] And recognizing that the competitive landscape has evolved so dramatically over the past five years. It's not just the Sheeans and the Tmoo's that are going after the same customer as Primark. But you also have other forms of disruption. We're going to hear from TikTok in a minute. There's also Vinted and Preloved. And how, from a shopping perspective, there's so many ways to access value online.

[00:06:38] And that wasn't the case just a few years ago. So my view is that, you know, better late than never. I think they can make a real success of it. But they are going to have to make sure that they're doing something around returns. And, you know, the whole buy to try mentality that we talk about a lot on the podcast. They've been somewhat shielded from this as a bricks and mortar only retailer. And I say somewhat because, of course, Primark is a fashion retailer. They're selling clothes. They're used to dealing with returns.

[00:07:07] However, that is going to become all the more challenging once they do home delivery. Because returns rates naturally shoot up. That's just what happens. We, like I said, buy to try. We tend to put a few items in our basket, a few different sizes, return what doesn't fit. So that is, as we talk about a lot on the podcast, a perennial challenge for retailers. And this is going to be a new layer of cost and complexity that Primark will have to get right, right from the very beginning. So there are going to be some bumps.

[00:07:36] There's certainly going to be some things they need to work out. But overall, I'm super interested to see how this evolves. And I think at the end of the day, they are doing the right thing. Better late than never, you do need to be where your customer is. So my second update is that I have been working with Transporion, a leading transportation management platform. We've published a white paper where we identified six strategic shifts that can help transform disruption into competitive advantage.

[00:08:02] And I'm also going to link to a webinar that we ran with Tesco that you can watch on demand. We dove deep into all the key topics around supply chain and the importance of building resilience and how to manage supply chains during times of uncertainty. So please do check the links in the show notes. And finally, please do hit that subscribe button. We release episodes every week and your support really helps the channel to grow.

[00:08:29] If you would like to watch today's episode instead of listening to it, you can head over to YouTube and check out my conversation with Paul. Paul, welcome back to the show. It's great to see you. Great to see you in person as well. We are at the first ever TikTok market, which is a pop-up marketplace here in Covent Garden. Tell us a little bit more about it. What are we seeing today? What's the purpose of bringing all these brands together? Yeah.

[00:08:58] So today we are here to, I guess, celebrate TikTok's economic impact in the UK. So we have done a report with a third party, Public First, on the economic impact that TikTok is driving in the UK to the UK economy. So I guess it is a celebration. 10 billion is the big number. So that is what we added to the UK economy in 2025. I believe that represents 0.3% of GDP.

[00:09:27] You know, we're pretty, pretty happy with that. I'm pretty pleased to report that. I think the UK is obviously in need of economic growth. I don't think that would be a surprise to anyone. So we're happy to be making that contribution and reporting it today. Amazing. And I think the interesting thing about social commerce or discovery commerce, as I know you like to call it, I think the interesting thing is that it really is bridging the gap between physical retail and digital retail in so many ways. But what I found really interesting from the report that you've just released is that it's

[00:09:57] actually bringing people back to the high street. So just to share a couple of stats, 4.3 million people visited an independent shop in their local area after discovering on TikTok. 6.1 million people visited a cafe or restaurant after watching content on TikTok. So super interesting. It's not only getting people into stores and onto your high streets, but it's also driving incremental sales as well. So you found that it's driven 3.4 billion pounds in incremental sales for UK SMEs.

[00:10:27] TikTok is not just an entertainment platform. What's driving all this? I actually love this stat. There's 6 million that are particularly going into the leisure industry, shops, restaurants, cafes. I see this myself as just a consumer. It's been so powerful what we've seen around the restaurant food. You know, this concept of going viral with a restaurant. And, you know, there are certain creators that there's one that I follow called Eating with Todd. I might have mentioned him on the previous podcast. Brilliant. And, you know, his endorsement of a restaurant. I mean, it can send it through the roof.

[00:10:56] We actually had a instance in Glasgow. Henry Healy, a cafe that's been in business for 100 years that was struggling by all accounts. And a creator went and did a sort of a day in the life there. And they've had to now take on extra staff and fryers to satisfy the demands. They've got people from visiting from all over the world. I think that's the power of the platform to send people back to the high street and to physical retail. It's interesting, isn't it? Because I think in retail there is this perception that if someone is shopping online,

[00:11:26] that means they're not shopping in store. And I don't think it's as binary as that. We know that the way we shop today is very fluid and that path to purchase is squiggly, right? We might discover a product on TikTok and visit a store or then decide we want to do click and collect. It's so many ways of shopping. How do you see bricks and mortar evolving in this TikTok world? What do stores need to do? It is a hybrid environment there. And I think, you know, I certainly see this with a lot of my large advertising clients that, I mean, they see the impact directly that TikTok's making, but increasingly they want

[00:11:55] to then start to track the in-store impact. And so like from a technical point of view, they're already starting to bring in all of their store visits and their store sales data to try and optimize to that on TikTok as well. But I think one of the most visual ones recently is one of the success stories of TikTok shop is P. Louise, a British makeup brand founded in the north of England. So obviously they started online and they started doing a retail experience in their warehouse to huge success and has now actually just opened their first store in the Trafford Centre.

[00:12:25] And it's a beautiful store. It's incredibly pink. And, but it's, you know, it's, it's an experience to go there. It's not just to, to, to sell more, more product. I mean, obviously that will be a by-product, you know, it's got a salon, it's got a shop, it's got like a cinema entertainment experience. So it's like a full retail experience. And, you know, we've seen lots of that. It's certainly post-pandemic, the retail experience has become more of an experience in itself. Yeah, I fully agree. I think you have to deliver something that shoppers can't get from a screen, right? You've got to offer something more.

[00:12:53] And experiential is a kind of a, it's a fluffy word, but I think just looking at the new M&S store, the new flagship that opened on Oxford Street, they've got a sink in their kitchen section. You know, they've got places to kind of come and really experience the brand. So it's probably valid for all of retail. So it's interesting how there's such a mix of categories here today. So you've got a butcher who's found success on TikTok. You've got a veg box, all different, you've got cheeky wipes, the reusable white brand.

[00:13:19] So are there some categories that are better suited to TikTok or is it, is there a place for everyone? I think there is a place for everyone. Inevitably, categories have come on at different speeds for all manner of reasons. Beauty made perfect sense. It was like the flagship one because of course we have all these beauty tutorials, makeup tutorials. The products are smaller, easier to ship. The price point is good, impulsive. And so we very much started there. It has evolved. Like we've seen huge growth in other categories.

[00:13:48] I'm really excited about consumer electronics now with the heat wave that we've recently have. Fans have been selling out at quite a pace. One of our big partners is Shark Ninja. I just bought their personal fan because of TikTok. There you go. So, you know, these, these are, you know, if you look at the portfolio products that Shark Ninja have, there's some high price points on that, on them. And so they're, they're some of our most successful merchants in the UK. We recently welcomed Samsung to TikTok shop. They're selling TVs, microwaves.

[00:14:16] You know, I, again, I compare this to when perhaps when mobile came out and people were a bit reticent about buying on their mobile phones and now, you know, they'll buy anything on their mobile phones. And I think discovery commerce is the same where, you know, you kind of, it's a new behavior. So you get used to it perhaps with smaller purchases and then that opens up bigger purchases. So yeah, I don't think that we see a particular limit on, you know, like where this can go. Yeah. Yeah. You're right. I think eventually discovery commerce will just become commerce. Yes. Like so many things. Yeah.

[00:14:43] So I want to ask you about live shopping because there are over 300,000 small businesses now selling on TikTok shop. Live shopping is growing very, very quickly. I think the numbers are 55% year on year for retailers that are tuning in today. What do they need to know if they want to get involved in live shopping? I think this is absolutely fascinating as a space. I think we're reporting 6,000 lives. I think we were reporting that last year. My hunch is that it's, it's growing, you know, quite considerably now.

[00:15:09] I see this across all of my clients, the length that they're going live for the GMV that they're generating off of live continues to increase. And this is one area where I tend to look, you know, to the East in terms of, you know, that, that is where that behavior emerged. And I think offers us some clues about how that's going to kind of come through to the, you know, to the, to the Western market. And the fascinating thing there is, you know, live tends to be 24 seven now, and it tends

[00:15:36] to be the lowest funnel or the lowest part of the funnel. So almost like physical retail, when you go to the shop assistant, you ask that final kind of clarifying question, or you find out the best price and then you check out. So what we're increasingly seeing, you maybe do your research, watching videos and searching. And then the live experience is almost like there's an offer on, I can speak to the live presenter, find out about the product. And then I check out at that last moment. So I just think that's, it's a fascinating trend.

[00:16:06] I only see it growing. I think it's a challenge. I think if you see around us today, you've got lots of people, you know, they're live with a ring light and a mobile phone, and they do that every day. Their cost of going live, the incremental cost of going live is almost zero. Now, I think some of the bigger brands, when they come to it, they think, you know, presenter, full, you know, studio setup, and that tends to then bring too much cost, like a hurdle rate of the cost then to break even on a live.

[00:16:35] So I think it's very much about, you know, having that space that you can go live at zero incremental cost. You know, certainly, I think all of the presenters are on the payroll of all of the companies that you see here today. We're by no means fully there yet, but I don't see this slowing down. Yeah, super interesting. And especially your point about the kind of low barriers to entry with all this. I think it must be challenging for retailers to let go a little bit. Oh, 100%. But that's the way things are moving.

[00:17:02] We're seeing more frontline staff doing lives in the store or in the warehouse, and that customers clearly want that authenticity and that relatability that you get from a live. So really interesting. One final question for you, Paul. As we look to the future, we know that social discovery commerce, there, I said it. Discovery commerce. One, one. Direction, right? It's huge growth expected in this segment of e-commerce. What are you excited about for the future?

[00:17:29] Where do you think the growth, big growth opportunities are for retailers? I think a couple of things, and this is quite, you know, just in the TikTok sphere, although we are talking about TikTok today, so I'll probably go there. It's inevitable that we probably haven't said the word AI yet, but there's two very concrete examples that I think I'm quite excited about. So with discovery commerce, it's, you know, it's really about content, you know, so content is what drives the kind of discovery engine, if you will.

[00:17:54] And, you know, you have to get comfortable with building more and more content or discrete audiences. You know, you run an ad campaign or you run a TikTok shop campaign with two, three different creatives. That's simply not enough. You know, we modestly ask for six new creatives a week from our advertisers, but in the K-beauty world, we've seen some big brands, MediCube, Dr. Malaxin, I'm not sure if you're familiar with some of these. You know, we're seeing the K-beauty world, thousands of creatives a week now, essentially,

[00:18:23] and AI is enabling that via, you know, we've got a tool called Symphony that uses the C-dance 2.0, which is the leading video model now. And so this is, I think, going to continue as a behavior. And it's not necessarily about having the whole thing AI generated, but I think using AI to increase the amount of video content, thus that we can build content that is appealing to all manner of discrete audiences is probably my first one.

[00:18:52] My second one in the sort of agentic commerce space is that we have announced recently that we're integrating with UCP and ACP commerce protocols. And so what that will look like on TikTok is that you'll have like a kind of a shop assistant, if you will. You might see like an ad that has a product that you like, and then you'll be prompted underneath where with some kind of pre-filled queries, like, you know, check this color,

[00:19:18] check this stock, and that will then open up this kind of shop assistant window where you can then actually like have a discussion with our sales assistant there, find the right product, and then do a native checkout. So not necessarily through TikTok shop, but using the commerce protocols to do a native checkout through Stripe, for example, there and then, you know, kind of almost all contained within the ad. So very early days, but I'm very excited for that as well. But it's such a fast moving space.

[00:19:45] I mean, if I speak to you again in six months, we'll probably be something else. It'll be a third or fourth thing. Yes. Amazing. I didn't know that about what you're doing on the agentic commerce space. So that's super interesting. Yes, that's pretty hot for the press. So yeah. Fascinating. Paul, thank you so much again for coming on the show. It's been great to speak to you. Yeah, you too. Thank you for listening to Retail Disrupted. If you enjoyed this episode and would like to support the podcast, please leave a rating or review or share it with others. It really makes a difference.