During my 18+ years as a consultant in the retail and consumer goods industries, I have attended NRF’s Big Show seven times – not bad for a guy based in Europe! This year, it attracted over 37,000 attendees from across the globe. And once again, I was there to support a whole slate of Avanade activities. But I was also there to listen and learn from customers, partners and colleagues in the industry. Here are a few of my takeaways from those very full days in January:
Retail continues to be at the bleeding edge of innovation. NRF continues to shine a spotlight on those brands that are the best at adapting to how the world is changing, the ones that are accelerating growth and staying relevant and compelling. The consensus is that retailers that have been able to embrace a culture of innovation, to reimagine the traditional way of engaging with consumers. A lot of retailers come to NRF bent on showing how they’ve out-innovated their competitors. More retailers are taking notice by beginning to adopt an experimentation mindset, moving from a “know it all” to a “learn it all” attitude. But they are also aware that innovation comes at a cost and is never without conflict. A recipe for getting a leg up in the innovation race was outlined in the principles for an “intelligent retail” organization that were laid out in a breakfast session we had with clients at NRF.
Consumers drive all trends. To be honest, consumer brands and retailers don’t create trends anymore, consumers do. Customers are in the driver’s seat, and retailers are in the hot seat to adopt the trends that will generate greater customer confidence. A good example is “conscious consumption.” Shoppers are waking up to the realization that we all need to be more mindful in our consumption, so they are conscientiously looking to make ethical purchases and willing to pay more for goods/services provided by value-driven brands, thereby benefitting brands that are ethical, environmentally-friendly, sustainable and committed to positive social and environmental impact.
“Retail is retail” no matter where it happens. The advent of online pure players (e-tailers and marketplaces) tipped the discussions at previous NRFs in the direction of how to provide a real omnichannel experience. The retail sector has been slow to embrace the reality that there is no longer a distinction between online and offline, e-commerce and brick and mortar and physical and digital. To be sure, modern omnichannel customer journeys are shaping retailers’ strategies, marketing activities and technology decisions for the entire organizations and will for some time to come. But various speakers at NRF 2019 seemed to finally acknowledge that there is a true convergence of channels, and retailers need to recognize that and operate with one brand and multiple channels. With shopping being integrated in “micro-moments” all day long (consumers want to buy the way they want, with expectations heavily dependent on the moment and the context), it's all just commerce now, with the customer as the channel.
This time retail is getting personal. One of the strongest themes talked about this year was how to use unprecedented levels of personalization with customers, levels that will meet customer expectations (and even exceed them, see - the “serendipity effect” concept that I introduced in a previous blog). It’s easy to articulate but difficult to implement. Advanced technologies and the incredible amount of customer available data (the so called “consumer genome” that enables enterprises to sequence, analyze and interpret the habits, preferences and behaviors of shoppers) may help. But managing data privacy guidelines and customer data security has emerged as one of the priorities for the sector in the coming years. So, while many consumers are fine with retailers having access to purchase information, most feel that other sources of information, such as social media, should be off-limits.
The end of the over-hyped “retail apocalypse.” NRF 2019 showed us that physical/high street retail is far from dead. It’s the boring stores that are hearing the death knell. Notwithstanding the enormous amount of recent store closings in the US, the mood at this year’s NRF was that the death of the physical retail space has been exaggerated and is generally a US phenomenon. The real questions this year were around what needs to happen to the stores to make them viable and what does it mean to have a great store experience. It can’t be what it was historically – just a box for selling stuff. That doesn’t work anymore, given all the changes in consumer behavior. Some argued at NRF that there are gizmos you can put in a store to patch poor store experiences (things like digital mirrors, virtual try-ons, etc.). But more advanced perspectives (ones that make sense to me) provide a vision of refurbished environments and immersive spaces with higher return on investment on a limited amount of square feet in a physical space (stores as advertising/media channel connected to themes that relate to sponsors, promoting other brands that drive new streams of revenue, etc.).
Artificial intelligence (AI): An impending revolution for retail. The biggest theme of discussion last year (and continued this year) in terms of technology, was around robots with a lot of attention paid to physical customer-facing and inventory robots. This year, the soft(ware) dimension of AI (advanced analytics, predictive models, machine learning, deep learning, etc.) was the over-arching theme. Although still in early days for some retail organizations, initial use cases were provided on how to help retailers enhance their execution abilities in several dimensions, including marketing, merchandising and supply chain..
Retail is ready for the conversation. I was intrigued at the amount of attention paid at NRF to “voice intelligence” and “conversational commerce,” a concept fueled by AI. AI-based virtual personal assistants were at the center of major technology announcements. Several speakers and colleagues pointed to a near future where voice will be the user interface of choice and simple voice commands will place an entire commerce order. In fact, the next evolution of voice could see an integration with visual components: augmented reality (AR) and virtual reality (VR). While this is an evolving concept, there are already simulated environments that take customers beyond the confines of the shop walls, transporting them virtually.
What’s needed along with technology. While technology is now a critical piece to retailers’ success, it will never be all that’s necessary. No matter how many great technologies you use, they are only effective if retailers really deliver great products and services. Technology can enhance that, but it can never replace it. Anyone who has been paying attention to what is happening in the industry knows that only those retailers who clearly recognize that their workforce is a competitive advantage will define the future of the industry. And this year, the “human touch” returned as a benchmark of customer service. The importance of nurturing a workforce who are the ambassadors for your brand took center stage at this year’s NRF. I noticed a heightened awareness that winning brands are looking at the future potential of their employees, investing in helping them succeed, and fostering a sense of belonging and commitment to their companies. We were glad to see that our strategic focus on workplace experience (WX), particularly in-store employee engagement, resonates with clients and is foundational to their business to set new levels of service, employee productivity, efficiencies and effectiveness.
Perhaps the biggest takeaway from NRF was that most of us are optimistic about the industry. Retail is certainly alive and well and demonstrated great resilience in 2018. This optimistic attitude and infectious enthusiasm were displayed by retailers and suppliers alike. I really left the show inspired! Thanks, NRF, for a great show!
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