1) Brick-and-Mortar Store Performance – A Case For It and Online Convergence
There is a case for the continued existence of brick-and-mortar stores despite the rise in internet shopping, and the reoccurring theme at NRF 2019 was that retailers have to embrace both to provide a great omni-channel experience for customers.
This year’s 38,000 NRF attendees were reminded in one the 500 talks that 90% of shopping is still done in store and the countries major retailers have opened 2,000 new stores in 2018 alone.
During the holidays, 3 out of 4 digital purchases were fulfilled by a store and Boston Consulting Group highlighted that 90% of consumers under 35 used digital devices to make shopping decisions over Thanksgiving, which fueled traffic to stores. We visited LISNR, who enables retailers to gain insight into shopping behavior from identification to payment. 83% of shoppers between the age of 18 and 44 are using their mobile phone device in store. LISNR harnesses the potential of this mobile activity as mobile Shopping and mobile scanning continue to grow with shoppers checking prices, accessing product information and reviews.
We were impressed with HERO, an omni-channel platform that connects online shoppers with associates in the physical store. PRICER offers the industry’s most comprehensive solutions for digital pricing, replenishment and e-commerce fulfillment and ZIVELO offers an Endless Aisle Self-Service Kiosk to stores.
One reminder about the viability of brick-and-mortar stores was right outside the conference center: Hudson Yard will open its’ doors in March with over 100 luxury, specialty stores and restaurants on almost 720,000 square feet of leasable space. One floor will be dedicated to companies that began as online-only retailers.
Overall, retailers are looking to offer personalized, seamless and relevant store experiences through collaborations and new services. The space is rife with innovation, with endless examples of brands pushing the boundaries.
TARGET demonstrated that their next generation store design and investment in its teams and in exclusive brands helped drive a 5.7% surge in same-store sales over the holidays. TARGET’S CEO said, “sales and engagement are driven by the Sales Associate” and the retailer helps them to become experts in their respective field from Apparel to Beauty, Tech and Home. TARGET also retooled their 1,800 stores, turning them into fulfillment hubs, and showrooms for inspiration.
WALMART beats AMAZON in groceries. AMAZON has increased its international footprint, but brands are pulling back from marketplaces due to pricing issues, counterfeits, image, and personalization versus privacy.
HOME DEPOT is working on 90 pilots in their Atlanta flagship store with a focus on testing a more frictionless shopping journey, combining on and offline innovation.
MACY’S is rolling out MARXENT LAB, a 3-D product visualization platform for customers to view furniture in VR and the retailer bought Story, a store where the merchandising theme changes every few weeks, while its acquisition of BLUE MERCURY continues to be an excellent investment with its exponential growth. MACY’S also works with B8TA, a company that measures how often customers touch products or receive product demos with the objective to make the store as measurable and manageable as an e-commerce store.
RALPH LAUREN wants to focus on consumers as individuals, better social media, connecting online business with offline stores, utilizing data and beacon technology.
ULTA leads with some of the best technology integrated stores where Associates carry iPads that allow them to access ideas for how to engage with customers. They use WORK JAM to integrate into social networks, and MIA to ensure that inventory is available while demonstrating to customers how makeup looks through VR and AR applications.
UNTUCKIT, once online-only, is now at 45 bricks-and-mortar stores and uses data to pinpoint the most promising locations for new store openings. In and off store, the brand aims to balance between being inviting without being off-putting. GOODYEAR launches Roll by Goodyear, a consumer facing tire store. TRACTOR SUPPLY now operates 1,700 stores while having a strong digital presence. WARBY PARKER launched online but quickly added physical stores. Co-Founder and Co-Ceo Neil Blumenthal said “it is all about understanding what kind of an experience the customer wants.” NORDSTROM bridges online and offline with a new Store in Manhattan.
2) Innovation – Digital Transformation Remains Top Priority With a Focus on AI and ERP
Robots are here. AI Avatars by TWENTYBN are Lifesize in-store avatars that assist brick-and-mortar customers in real-time. I AM ROBOTICS enables better picking and faster fulfillment, while lowering cost and improving efficiencies ultimately elevating retailers’ offerings for a better shopping experience and by 2022, robotics and automation will create 58 million net new jobs – good news! BOSSA NOVA presented a self-driven robot that addresses out-of-stock merchandise, misplaced items and more to enhance the customer shopping experience and China’s JD uses drones around the country to distribute its products.
“We are the only licensed company to distribute by drones. We have over 100 drone bases all over China. We don’t want to disrupt but share our technology with our brands and other retailers. We call it ‘Retail as a Service’.” says Harlan Bratcher, CEO of JD.
The key to retail success in 2019 will be supply chain efficiency and expertise fueled by AI.
APTOS promises the retail industry’s most comprehensive omni-channel solution, helping customers with their digital transformation. C2RO presented a turnkey cloud platform that drives customer recognition and behavior analysis. ESRI showcased how retailers use Location Intelligence to build customer engagement and COMCAST BUSINESS uses the nation’s largest Giga-speed network to help retailers realize their digital transformation goals. JESTA offers Vision Suite, a unified modular platform meant for the entire supply chain, from product design to omni-channel retail and ENVISTA enables unified commerce from Order Management to EDI and Trading Partner Management. ZIPPIN develops checkout-free technology. CAPER offers a smart self-checkout chart that allows customers to drop in the items and pay at the cart, and leave.
ONE DOOR presented how BEST BUY is using mobile technology to reinvent their merchandising process. A great talk that showcased how technology can improve the Associates performance and in return provide a better experience for the customer. CLICKIT offers a video management system that maps and analyzes the customer journey.
WALMART presented on their store technology incubator in Austin where the Retailer develops machine learning and AI capabilities with the aim to improve the customer experience. With a representative saying, “that an essential part of working with data is the input from merchants assigned to product categories.”
GAP showed a new check-out process that was developed in conjunction with INVISION, a company that offers a digital product design platform. The new process would remove up to 50 percent of the clicks or taps needed to check out.
3) Diversity and Inclusion – Women Running and Rocking the Retail Industry
With a focus on Women in Leadership, THE FEMALE QUOTIENT, is in the business of equality and brought the Girls Lounge to NRF, a go-to destination at conferences, companies and campuses for women to create connections and activate for change together. Sponsored by MICROSOFT, attendees could hear exclusive Q&As and access networking areas.
“Inclusion is about leveraging our differences to create high performing teams and bringing more value to our clients and customers.” said Jeanette Calandra, PwC.
“If you want to get real insight into other people’s reality, be humble enough to realize that you have to be learning all the time,” said Philippe Krakowsky, IPG and IPG MEDIA BRANDS.
Although Retail is the most diverse sector in the US, there were only 6% of c-suite positions held by women in 2017 and 5% in 2018. At one panel discussion, ULTA CIO, Diane Randolph said “60 % of their officers and 92% of the firm’s associates are women.” Women being nurturers by nature introduce a specific cultural dynamic and value system, but having said that diversity is still key and ULTA wants to invite more men into the conversation to bring a balanced perspective and diversity of thought. Rebecca Minkoff agreed, saying “I am now working at a female-founded company that I think needs more guys.”
A representative of IKEA asked, “How do you best serve consumers if you are not representing half of the population?” IKEA has diversity and inclusion ambassadors in every store.
In the wider context of trends in talent, something that popped up again and again throughout the three days at the show is that retailers are looking to hire from tech and there is a gap to be bridged as tech talent does not necessarily consider retail as they may not expect their skills to be relevant, which is no longer the case. A speaker from THREADUP stressed the importance of providing an environment that allows for mistakes and MEN’S WAREHOUSE fosters collaboration across departments to uncover insight quickly.
4) Doing Good is Good for Business
Chip Bergh of LEVI’S received the NRF’s top honor for orchestrating change in the industry. Chris spoke about the importance of values-led leadership, building a strong company culture and never being afraid to stand up for what’s right: He said, “The role that business plays in the world today, is far greater than just delivering a profit. It’s about taking responsibility for tackling the important societal issues of our time and having the courage to take a stand.”
PATAGONIA has been a socially conscious company for 45 years. Their new tagline is: We’re in business to save the planet. The company donated $100 million to grass-roots organizations since it was founded, and that approach has worked! The last decade has been their best in terms of business.
Another company that caught our attention is FORAGER, who connects farmers and grocers. Grocers can go on the platform and see what’s available, drop items in the shopping cart and place their order.
For info on our Retail Practice, please contact Jan Schüler