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

0:00We 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.

0:21Natalie Berg: 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 omni-channel. Follow the customer. But to actually go and implement that is a big challenge.

0:42Natalie Berg: Welcome to Retail Disrupted. I'm your host, Natalie Berg. And today, you're going to hear from Romain Rouleau, Group Digital and E-Commerce Director at Kingfisher. Kingfisher, of course, is the 13 billion pound home improvement giant. behind B &Q, Castorama, Brico Depot, Screwfix, TradePoint, and Costas. Romain 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, Romain spent over a decade driving digital strategy within the travel industry, including holding the role of SVP of digital and e-commerce at Accor Hotels, which is one of the world's largest hotel groups.

1:26Natalie Berg: 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. 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.

2:12Natalie Berg: 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. 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.

2:45and 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 definitely a key element of our digital strategy which is a differentiator versus the pure players and we are omnichannel business as I said different formats store format, traditional store discount models 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.

3:29Originally in the travel business and moved to retail, yeah, roughly 10 years ago. So we have a pretty hybrid model, which is not very usual because usually when you are on travel, you stay in the travel. 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.

4:04But the always example that I use, I use two examples. One of them is retail. One 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.

4:27Natalie Berg: 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? 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.

5:03Digital has been going on for like 15 to 20 years in most of the advanced retail business, 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 five to 10 years, we don't talk about AI after. It's definitely the fact that we need to be customer focused, 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.

5:51And 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 associate, store associate with vendors and so on, where online you are in front of your screen and you are pretty much independent, I would say, on your choice. So, 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.

6:26Natalie Berg: You've touched on a few really important points there. I think, first of all the fact that 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. You need to follow the customer. But to actually go and implement that is a big challenge. 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? Massive success.

6:56To be totally objective, it's a massive success. B &Q was first. By the sake of the coincidence, before I moved into group, so I became group chief digital officer 18 months ago. Before that, I was the 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. And we did on a very small number of people, because there were not a lot of marketplace experts within the organization.

7:31And 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, where if I take the French market, obviously I know this one, five years ago, 18 out 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?

8:10Because DIY is a complex, which is true. It's a complex. You're not like only transacting on simple things. 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, 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.

8:53We 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's in front of a customer in a complex project, 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.

9:37Whereas 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.

9:51Natalie Berg: 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. And in the same time, when you don't provide this service, it is not understood. Because people say, OK, 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. 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?

10:25We do it. So then it's a real seamless channel agnostic experience.

10:30Natalie Berg: Yeah, because I guess the customer is not seeing channels, right? 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. In France, when I do some interviews, I always say, I was not a dinosaur, but 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.

11:09So I've seen the e-commerce beginning. I've seen the rise of the mobile and the app ecosystem. them 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. Within the commerce side, why is it so disruptive? Because through Agentik, AI, we have a lot of opportunities and we develop a lot of things. But specifically on Agentik, 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.

11:49What we don't know is what will be the size of the pure agent e-commerce part. But we know it's going to be at least a part of the journey. 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 BNQ in a few weeks' time 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 right 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.

12:47And we will have the same technology that is backed up behind Gemini, which means that the experience will be very good and very powerful. Why do we believe in that? 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. 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.

13:30When 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

13:48Natalie Berg: consumers it's so interesting hearing you talk about all this because i interviewed the cfo of holland and 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. We do believe that at least for the next few months, there will be an impact on the pure commerce side.

14:24But 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.

14:48Natalie Berg: 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 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?

15:24Natalie Berg: 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 doing the traditional things, the filtering and kind of a lot of manual work. It's so interesting to see how that's moving. 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 mobile was the last big shock, 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.

16:00Yes, definitely. And there's also one thing that I like to always to emphasize. When you take the example of mobile and I fully agree with you, when it was launched in 2029, 2009, 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 and people were just use it massively in a very, very accelerated process and asking questions that normally they would ask to associate.

16:42And 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.

16:54Natalie Berg: Robin, 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? 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. 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 So prove 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.

17:49And we need to make sure as retailers to please those agents the same way we do with humans.

17:54Natalie Berg: Amazing. Raman, 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 a review or share it with others. It really makes a difference.