What are the ‘hot topics’ for NRF’s Big Show…and beyond 2019?
As The Parker Avery Group was winding down 2018 and preparing for 2019 and of course NRF’s Big Show, one of the conversation topics that circled around our firm and clients was, “What’s ‘top of mind’ for the coming year?” Meaning, what are the key initiatives and technologies that retail executives are planning or considering over the next year or so? A quick internal and external poll revealed some common threads:
• Analytics, machine learning, and artificial intelligence • Disruption and Amazon (of course.) • Customer experience and ‘experiential’ retail • Optimization—everywhere
By far, analytics, machine learning, and artificial intelligence (AI) were clear front-runners in our ‘top of mind’ poll. For the past few years, retailers have been increasingly eager to use the massive amounts of data they collect—an element that continues to expand, not only in terms of the amount of information, but the types collected during each and every customer or supplier interaction. Data collection has morphed significantly from the gathering of simple transactional data via an in-store point-of-sale system to capabilities that enable accumulating data about customer journeys throughout a retailer’s website, social media interactions, and even much deeper, including how a consumer presses, scrolls, and types on a mobile device or keyboard, facial feature recognition, movements throughout a store, and more. To some extent, this level of data collection verges on being invasive and even ‘creepy’ (particularly from the consumer perspective), and horror stories of data security abound in the media. But the bigger issue is that there is such a massive amount of data, most retailers are only at the forefront of grasping how to leverage it. We expect to see a resounding response to this conundrum from vendors this year at NRF.
Which leads to the second highest ‘top of mind’ theme: disruption and the ‘Amazon effect.’ Amazon has long been known to be far ahead of other retailers in terms of their ability to leverage consumer browsing behavior and transactional data to provide personalized recommendations, enhanced online customer experiences, and optimized fulfillment. Every other retailer is striving to understand how they can capitalize on consumer desire for instant gratification in terms of personalized product assortment and quick delivery. Amazon has been able to pinpoint specific assortments to their distribution centers leveraging predictive analytics to ensure quick fulfillment based on customer buying patterns. In other retailers, we’ve seen a significant interest in not just implementing buy-online-pick-up-in-store (BOPIS or click and collect) capabilities, but also leveraging these to increase foot traffic and the inherent physical store sales lift. All of these processes and capabilities have forced renewed interest in shoring up foundational systems, as well as investing in supply chain efficiencies, which in the past may have just been a ‘nice to have.’
Speaking of physical stores, the idea of separate shopping ‘channels’ has all but faded—now replaced with experiences with the brand. Retailers and professionals in commercial real estate are desperately trying to find new uses for the massive amounts of empty retail space once occupied by shuttered or failing retailers like Toys “R” Us, Sears, and others.
There continues to be strong interest in developing ‘experiential’ retail. Grocery stores like Wegmans and Publix have managed to do this quite well for a number of years through their enticing designs, flawless customer experiences, and on-site customer trial through recipe and wine tastings. Publix is even going beyond the store walls by introducing a YouTube cooking school channel—a fantastic method of bringing the brand even deeper into consumers’ every day lives. Other retailers like REI and Orvis have long been successful capitalizing on providing near-outdoor experiences like rock-climbing and fly-fishing demonstrations, classes, and more. Forward-thinking retailers are investigating interactive and even virtual reality (VR) dressing rooms and incorporating additional, complementary services like spas, tailoring, and more into the overall shopping experience.
All of this is being done in conjunction with enhancing overall digital capabilities. With ‘frictionless shopping’ now a buzzword, retailers are understanding the priority of upgrading and integrating their technologies—many are now becoming comfortable with adopting cloud-based environments. As these trends and innovations merge, we still expect to see continued downsizing of physical stores but with more acutely targeted assortments, as well as faster (and smarter) replenishment and shipping through optimization and better analysis of information as well as streamlined business processes, supported by advanced technologies. Much of this goes back to the overall theme of advanced analytics, artificial intelligence, and machine learning—particularly the application of AI and machine learning to merchandising systems to enable optimization of information and (ideally) enhanced business processes. Omnichannel planning is more important than ever—in not only satisfying consumers’ needs and wants from anywhere, but also ensuring inventory investments are seated in the right place. Retailers are no longer buying separately for each channel, but rather using channels as alternative fulfillment options. This becomes a blessing and a curse as we all try and answer the age-old question of “what demand signal do we replenish to?” There is strong desire to use the massive amounts of information gathered to understand if consumers are buying online and picking up in-store for instant gratification or if they prefer the idea of the physical store but are unhappy with the customer service and check out process. Having visibility into optimized forecasts to trends and behaviors by selling channel, as well as better understanding of inventory movements, will likely continue to be widely talked about at this year’s Big Show.
With so many moving parts and technology advancements, another key topic we expect to have conversations about is change leadership and change management. The newest ‘shiny object’ could easily collect dust if users and consumers alike do not adopt. How will retailers adjust spending to make sure they are focusing on the process and the people as much as they are on the new software and capabilities? What does leadership need to do differently, and how do we ensure the pace of change is appropriate for the organization? We look forward to having many of these conversations with our clients.
Overall, this year’s Big Show looks to be another great showcase of software competition and innovative thinking. We look forward to sharing our learnings and exciting takeaways when we return from New York. See you at NRF.