Kingfisher's Group Digital Director: AI Is Bigger Disruption Than E-Commerce & Mobile

[00:00:00] We need to make sure that we are being consistent. When you are in a physical store, you are interacting with store associates, with vendors and so on, where online you are in front of your screen and you are pretty much independent. On top of that, when you operate a marketplace, which definitely creates a much broader choice online that you have in store, you still need to make sure that it's not like a separate business that is totally operated on its own.

[00:00:21] Customers are channel agnostic, they're device agnostic and they do just want that seamless experience. Very easy for people like me, analysts to say, you know, retailers need to be omnichannel, follow the customer. Let's actually go and implement that is a big challenge.

[00:00:42] Welcome to Retail Disrupted. I'm your host, Natalie Berg. And today you're going to hear from Roman Rouleau, Group Digital and E-Commerce Director at Kingfisher.

[00:00:51] Kingfisher, of course, is the 13 billion pound home improvement giant behind B&Q, Castorama, Brico Depot, Screwfix, TradePoint and Costas. Roman leads all marketplace, retail media, e-commerce and innovation activity within the group. As you can imagine, we are going to dive deep into each of those things and so much more. Before Kingfisher, Roman spent over a decade driving digital strategy within the travel industry, including holding the role of SVP of Digital and E-Commerce.

[00:01:21] E-Commerce at Accor Hotels, which is one of the world's largest hotel groups. If you are watching today's episode on YouTube, please do hit that subscribe button. It is the best way to support an independent channel like ours. And last but not least, this episode is part of our Shop Talk series, which is brought to you by Manhattan Associates. So now a brief word from our sponsor. While customer expectations continue to rise, consistent execution is now the real differentiator.

[00:01:49] Manhattan helps retailers deliver on the promises they make to their shoppers across stores, e-commerce, fulfillment and customer service. From AI-driven operations to unified commerce, Manhattan works with many of the world's most recognized retail brands to help turn every customer interaction into a moment of trust. Roman, welcome to Retail Disrupted. It's great to have you on the podcast. Yeah, that's a pleasure. Thank you very much for the invite.

[00:02:18] Before we get into talking about tech and digital, can you just give us a little refresher about Kingfisher? Who are you? Where do you operate? And tell us a little bit more about yourself. So Kingfisher is a public company listed in the FTSE 100 in the UK. We are leading most of the European markets. UK, we have the number one DIY brand called B&Q. We have the number two, Screwfix, mainly focused on trade. We have the number two and number three in France, the leading operator in Poland with Castorama.

[00:02:45] And in Spain and Portugal, where we are today, we have Brico Depot with a discount model. So we have multiple models, mainly store operated. Stores is, we'll come back to this, stores is definitely a key element of our digital strategy. Stores at the center, which is a differentiator versus the pure players. And we are omnichannel business, as I said, different formats, store format, traditional store, discount models.

[00:03:10] And obviously, we have significant marketplaces in four other banners in the UK, in France, in Poland and Iberia, which also is a very significant part of our business. My role, I'm a chief digital officer of Kingfisher. I'm basically into the industry for, in the digital industry for more than 25 years, so a long time. Originally in the travel business and moved to retail, yeah, roughly 10 years ago. Oh, wow, okay. So we have a pretty hybrid model, which is not very usual, because usually when you are on travel, you stay in the travel.

[00:03:40] When you are on the retail, you stay in the retail. So I did both of them. There are some commonalities. Obviously, the one commonality is the digital disruption, which was originally starting in the travel business earlier, because obviously it's a non-physical product, which is obviously much easier to digitize. When you try to develop and to optimize your e-commerce journey, we always have the questions on, yeah, but UK is different than France, or France is different than Poland. But the always example that I use, I use two examples. One of them is retail. One of them is travel.

[00:04:09] Do you think that the booking.com journey is different from one country to the other? No. Do you think the Amazon.com journey is different from one country to the other? No. Which means that, of course, there are some cultural differences, but an optimized e-commerce journey will work everywhere, especially in, let's say, an occidental world, I would say. Yeah, it's pretty universal, isn't it? Exactly, exactly. I'd like to just start out by talking about sort of the state of retail right now, because we've already in our intro talked about how much change there is. But how would you describe retail today?

[00:04:39] Depends on which category you operate it. But in general, retail has been disrupted by multiple changes. Obviously, the Chinese platforms has been one of them. The marketplace rise, the Amazon development. I don't call it a rise because today Amazon is leading the retail world in the US and in Europe. But definitely, it is disrupting the traditional retail, which has always been a store-first operating model. Digital has been going on for like 15 to 20 years in most of the advanced retail business,

[00:05:08] but has always been a side business on top of the traditional physical store business. The reality is the consumer is not a store consumer or a digital consumer. The consumer is omnichannel. You start on one channel, you move to the other. You interact sometimes in the same way. For example, you are in store and you're checking your app. I think the biggest disruption that happened for the past 5 to 10 years, we're going to talk about AI after, it's definitely the fact that we need to be customer-focused,

[00:05:35] being customer-focused, meaning and understanding that we value and we concretize, I would say, materialize the fact that we need to provide a seamless journey, whatever channel you operate on. And obviously, that's a very easy phrase to say. That's a very complex thing to do because when you are in a physical store, you are interacting with store associates, with vendors and so on,

[00:06:04] where online you are in front of your screen and you are pretty much independent, I would say, on your choice. But we need to make sure that we are being consistent. And on top of that, when you operate a marketplace, which definitely creates a much broader choice online that you have in store, you still need to make sure that it's not like a separate business that is totally operated on its own. You've touched on a few really important points there. I think, first of all, the fact that customers are channel agnostic,

[00:06:32] they're device agnostic, and they do just want that seamless experience. Very easy for people like me, analysts, to say, you know, retailers need to be omni-channel. You need to follow the customer. But to actually go and implement that is a big challenge. Yes. So you touched on marketplaces. So let's jump right into e-commerce. I know you've had your marketplace a few years now. So we started with B&Q four years ago. Okay. So four years. How's it going? What have you learned? To be totally objective, it's a massive success. B&Q was first.

[00:07:00] By the sake of the coincidence, before I moved into group, so I became a group chief digital officer 18 months ago. Before that, I was a French consumer, customer, digital marketing officer. And because of my marketplace background, I led the initiative. And I know you interviewed Marc Vicente, and I just say hello to him. Before Marc joined into the organization, we started to have a reflection on how marketplace could be developed.

[00:07:25] And we did on a very small number of people because there were not a lot of marketplace experts within the organization. And we decided to be pretty bullish and start with our number one banner, B&Q, in a market where it is not as developed in terms of traditional retailers moving to the marketplace business versus continental Europe,

[00:07:45] where if I take the French market, obviously I know this one, 18, five years ago, 18 of the top 20 retailers already had a marketplace business inside their digital ecosystem. Oh, wow. Whereas in the UK, it was massively, let's say, managed and let's say led by Amazon and eBay. When we decided to move with B&Q, people would say, oh, but do you really think it's going to work on DIY? Because DIY is a complex, which is true. It's a complex. You're not like only transacting on simple things.

[00:08:14] Sometimes you are on long-term project, big tickets, and so on. The reality today, it's massive in terms of success. It's around 50% of our e-commerce GMV and B&Q. Wow. 50%. Wow. We have a lot of good proof points of people entering through a 3P product and converting on 1P, which is good. And very important thing, we now fully integrate, and it's the same on retail media and other strategies,

[00:08:42] fully integrate it as a store center first. What does it mean for marketplace? We have provided, we were one of the early providers to provide click and collect in our stores for 3P vendors. We did it. Return, which normally you cannot return a product that you have purchased on marketplace in a store. We have provided that. That's one thing. And we are also making sure that on the associate side, when he is in front of a customer in a complex project,

[00:09:12] he does integrate the 3P range into the reflection, into the project design. Let me give you an example. You're doing a kitchen project. Sometimes you want very specific elements on your project. Sometimes on our 1P range, we don't have it, which is fine. If you are in a pure store business, the customer would say, sorry, I'm going to move away because you don't provide everything that I need for my project.

[00:09:37] Whereas if you say, okay, I have a 3P range, which maybe could match some of the components you want on your tab, for example, and so on. You are able to conclude the project thanks to marketplace in a store. Wow. It sounds complex though, doing click and collect and returns. But the experience for the customer just must be surprising, I guess, for a lot of customers to even know that they can do that. So it's surprising.

[00:10:02] And in the same time, when you don't provide this service, it is not understood. Because people say, okay, I bought on the B&Q website. Yeah, but you didn't buy through B&Q. You bought through a third party vendor. Fair enough. Yeah. What does it mean? I was on the DIY.com website. So now that you say, okay, forget about it. You want to go back to store? That's fine. We do it. You want to click and collect in store? We do it. So then it's a real seamless channel agnostic experience. Yeah. Because I guess the customer is not seeing channels, right?

[00:10:32] They just want that seamless experience. So you recently announced a partnership with Google to deliver AI-powered shopping across the UK and Europe. Can you tell us a little bit more about it? Yeah. So one of the biggest disruption and probably the biggest disruption on retail, but on the whole economy in general, is AI. I mean, I'm not saying things that is just obvious. As I said, I've been into digital for 26 years. I've seen the early days of e-commerce.

[00:10:58] In France, when I do some interviews, I always say, I was not a dinosaur, but I was a little brother of the dinosaur. I was a little brother of the dinosaur on e-commerce because probably we would say that the early ones were 95, 94, very early ones. So I've seen the e-commerce beginning. I've seen the rise of the mobile and the app ecosystem as an expert, as a professional. That's the third one that I can see in my career. But I would say that it's bigger than the two first ones. Why? Because it's not only disrupting the commerce. It is disrupting the way we operate our companies.

[00:11:29] Within the commerce side, why is it so disruptive? Because through agentic, AI, we have a lot of opportunities and we develop a lot of things. But specifically on agentic, we have potential very different way of interacting with our end consumers. And I mean end consumers, not only being humans, but being potential agents. What we don't know is what will be the size of the agent, the pure agent e-commerce part. But we know it's going to be at least a part of the journey.

[00:11:57] So because of that, we have looked at multiple technologies. We have looked at multiple partners. And obviously we were, like all retailers, investing a lot on the Google platforms. And we also had a very strong partnership on the cloud side as well. And we decided because we wanted to move to a different search technology for our own platforms. We looked at different platforms and we decided to use the Vertex AI technology to operate our search ecosystem on all of our platforms, starting with B&Q in a few weeks' time.

[00:12:27] And before the end of the year, all of the other platforms, all of the other banners will move to Vertex AI on a traditional keyword search like we do today. But very, very quickly, what after? And that's one of the core elements of the partnership, including visual search and including conversational search, the same way you do on Gemini. And we will have the same technology that is backed up behind Gemini, which means that the experience will be very, very, very good and very powerful. Why do we believe in that?

[00:12:56] It's because we do believe that in an omni-channel business like DIY, where you are in a very complex journey between selecting a product, preparing your project, maybe on a few months, you need interactions. And this is why our e-commerce is super successful, but it only represents, I'm obviously quoting the only, 22% of our business, which is massive, but 78% of our business is in store.

[00:13:23] And there is a reason for that, because we have good stores, we have extremely powerful associates that are able to advise and to interact with our consumers. When you are in front of a screen, you don't have this level of the quality of the advice and the support, which means that if you start the level of conversation when you are online, and then if you, whatever, if you want to interact and then go in store, that's good. And this is why we have partnered with Google in order to maximize this technology and make it as a benefit to our consumers.

[00:13:49] It's so interesting hearing you talk about all this, because I interviewed the CFO of Holland & Barrett, a huge health and wellness retailer. And she was talking about something, obviously very different sector, but same trend. So shoppers are starting by asking questions, looking for advice, health and wellness, DIY. Those are categories where you do need a little bit of expertise, starting on ChatGPT or Gemini, then coming to the store and speaking to an in-store advisor or an associate. And it's just interesting how that customer journey is really being disrupted. Big time.

[00:14:19] We do believe that at least for the next few months, there will be an impact on the pure commerce side. But for us, the biggest impact is on the interaction and the preparation of the project and the transaction. And this is where AgentX sits for us, not only on the pure transaction. Obviously, we're having discussion on the UCP-ACP protocol because it's important for us. But we don't believe that the massive switch is not going to be on the commerce side, but more on the interaction and on the design preparation phase.

[00:14:48] If I understand this correctly, is it more the advice, inspiration, that kind of the search and discovery aspect? Yes. As opposed to, I'm going to have my AI agent go find me a drill or whatever I might need in that moment. So we are investigating the second part. But we do believe that at least for the 12 or 18 months, the one use case that will disrupt is the capability of, let's say, importing the great expertise that we have in-store online.

[00:15:15] And to make sure that we provide the same consistent and efficient interaction online as we do in-store. Yeah. I do feel we're in this transitional period, right? Where there is this disparity from a customer experience perspective, the kind of immediacy and relevance, hyper-relevance they get when going on to ChatGPT or Gemini versus going on to a retailer site. And, you know, doing the traditional things, the filtering and kind of a lot of manual work. It's so interesting to see how that's moving.

[00:15:40] And I just wanted to pick on something else that you mentioned earlier, which is about the waves of e-commerce that you've seen throughout your career. Because I completely agree. And I think that, you know, mobile was the last big shock. Yeah. But AI is being driven by the consumer. That's the difference from my perspective. And I think that's why it's so important that retailers respond. Yes, definitely. And there is also one thing that I like to always to emphasize. When you take the example of mobile, I fully agree with you.

[00:16:05] When it was launched in 2029, 2010, if I do remember, the first launch of the iPhone and the first launch of the app ecosystem, you could understand where it will go to. But it was not existing when it was live. Whereas on the big difference, if you look at obviously ChatGPT when it was launched, no one told the consumers how great and how easy it was to use them. From day one, they could do it. And they could understand the benefit.

[00:16:34] And people were just use it massively in a very, very accelerated process and asking questions that normally they would ask to associate. And this is for me the big difference is from day one, people understand how it's going to be an ease in their daily life, whether it's on the consumer, on the commerce side, but also on the day-to-day business. Robert, I'm conscious of your time, but just briefly, as we look to the future, next five years, I'm not going to ask you to go any further than that because I know AI is hard to predict. But how do you see retail evolving?

[00:17:04] First of all, you agree. More than five years are just a dream. Yeah. I would say that the agent interaction are going to rise. They're not going to be the dominant part, but they are going to be significant enough for a retailer to consider that they need to be visible, lovable, both for human beings and for agents.

[00:17:25] So they need to develop their own agents, but they also need to start thinking on how they will be able to please the consumer's agent. Because I do believe that some of the latest announcements that were done a few weeks ago proved me that both on the OpenAI, Claude, obviously Gemini, everyone will start to have its own agent that will, let's say, be an extension of ourselves. And we need to make sure as retailers to please those agents the same way we do with humans. Amazing.

[00:17:54] Roman, thanks so much for your time. It was a pleasure. Thank you very much. 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.