Indeed, this year’s Retail Big Show brought the usual pomp and circumstance around some newer technologies, but one of the key themes was also about reinvention. As Richard Branson, Founder of Virgin Group, explained during this year’s show, “We shook up a stale airline industry…” so must traditional retailers shake things up if they are to remain not just viable, but relevant and successful. In this light, we’d like to share some themes we observed during the 2017 Big Show:
Omnichannel—Yes, this is still a buzzword we continue to hear. While still through the lens of shopping that is seamless to the customer, retailers are even more focused on digital sales modes and inventory management. With continued changes in the brick and mortar landscape, the focus on how to better reach the consumer and meet or exceed their continuously high expectations—all while managing inventory investments—was a key theme throughout the show.
Emerging Retail Models—Along with continued omnichannel initiatives, the decline of traditional malls and fewer store visits are prompting retailers to look for other ways to up the ante. Some retailers are exploring wholesale, which in some cases may prove to be a good alternative—albeit with lower margin potential. However, one of the challenges is how to successfully operate as a wholesaler without cannibalizing or devaluing existing channels. Franchise models are also beginning to debut, yet pose similar strategic and operational questions, including whether to operate in a dual mode or as a consolidated enterprise. Many of Parker Avery’s clients are currently exploring these models and working through similar quandaries.
Customer Centricity—Another buzzword carry-over, many retailers are continuing to better understand the importance of building processes with the customer at the forefront. Most processes are designed (or redesigned) to improve efficiencies and to streamline efforts, but doing so in conjunction with putting the customer first can be more challenging. Customers want to get their products quicker than ever, and retailers are trying to keep up. Most retailers are still struggling with the constant dilemmas of:
- How to optimize supply chains and inventory management to make product available pretty much everywhere all the time?
- How to handle increasingly demanding customer expectations and enable multiple shopping and fulfillment options like ship-from-store, same-day shipments and (of course) mobile commerce?
Data Analytics—In close connection with customer-centricity, another key theme was about how to use data and visual data to make quicker and better-informed decisions. Our guess is that there is about 20 times the number of “retail data analytics” providers as there were two years ago, and 50 more than five years ago. Data analytics certainly caught the interest of retail executives – but what does it mean, and how quickly can we move from something on a white board to something actionable? What initiatives need to first be undertaken to ensure the systems in place provide the necessary data for analytics and that data is indeed usable?
Virtual Reality (VR) Software—It was not long ago that most VR technology for retail was in its infancy, and while it had a good “wow” factor, a realistic ROI was generally lacking. This year, there was more focus on utilizing the technology to gain efficiencies and reduce costs, and VR is gaining more traction across a wider array of functions, including merchandising, training, and more. Will we see conference rooms full of VR goggles in the near future? Maybe not, but we do think it will play a role in helping retailers run through business scenarios and options in various functions. Assortment management, shelf optimization, and store fixture scenarios are a few areas that come to mind.
Cloud Technology—Most solutions we saw utilized cloud in some way at least as an option, and most retail CIO’s are increasingly interested in what a cloud model can mean to their IT spend (both capital and labor). But do the cloud options also provide the same capabilities as the standard on-premise solution versions? Sometimes yes, but sometimes no. There is also the question of flexibility and customization (or perceived lack thereof) with a cloud model, which creates some apprehension among retail business stakeholders. While on premise and cloud options may be from different heritages of software evolution, typically retail software companies are either hosting their current solutions in the cloud or rebuilding the solution from scratch to be a cloud application. The latter approach will typically lag in terms of getting all functionality built into the solution immediately if it’s replacing a decade old solution.
Retail Application Landscape—We did make note of two retail solution areas that seem to be headed in opposite directions:
- Merchandising solutions had a lot more focus around pricing and assortment management. This should be expected given the recent retail climate – all retailers are laser focused on editing their assortments, rationalizing their inventory investments as much as practical, and then working to optimize prices and promotions for their customers. This is certainly where Parker Avery is getting significant interest from our clients as well.
- While not really something openly discussed, we noticed the retail product lifecycle management (PLM) market might have been marginalized to the point where one of the largest PLM solution providers did not even have a booth this year. What this says is that the retail PLM market is fairly mature, and that the ROI for PLM is not as obvious as with other solutions that drive sales or reduce inventory.
This year’s Big Show as usual did not disappoint. Traditionally hesitant to dive in head first, retailers are realizing just how “stale” many of their existing systems, processes and strategies are. In light of retail’s continuing (r)evolution, they are becoming more aggressive—at least in mindset—in exploring new ways of operating and embracing underlying investments needed to do so. The overriding questions remain: How do retailers continue to stay relevant and profitable but still invest in innovation? How slow can you go but yet keep up with the “Joneses?” Ultimately, balancing new initiatives and spending will be key for 2017.