A refreshing air was blowing on retailers at the January 2016 NRF conference. The mindset was driven by some pragmatism: Be Simple.
Retailers invest in their business to manage highly challenging competitive contexts. 2015 Holiday sales were quite disappointing in the US, forcing retailers to react. They funded deeper discounts by 20% to 50% to meet sales forecasts. In Europe, retailers and grocers did not give up their fight to stop market share growth of discounters.
At a same time, retailers invest back in technology. The 2016 average forecast for retail IT spending in the US is “+4.6% growth in retail enterprise IT and +3.9% growth in store IT” (by Greg Buzek, IHL & Joe Skopura, RIS News).
“Should we or shouldn’t we?”
Former questions now answered by retailers:
Should I go online?
Digital is no longer a question, it is now a given, fully embedded in retailers’ language and ecosystem. Alia Kemet (Ikea North America Media Director) summarized it this way: “There is no such thing as a digital strategy anymore. Just strategy in a digital world”.
Should I be mobile?
Mobile is frequently used by shoppers (57% of US holiday sales) as well as by retailers’ employees in their stores. At NRF, you could see all types of tablet and smartphone apps offered to store associates.
Mobile for associates is the #2 Top Priority in Store System choices planned by 42% retailers. The next move is unified content deployment from access to product information, to knowledge of customers’ shopping activities in a particular banner, to preparing online orders including in-store picking with mobile scanning devices, just to name a few.
Should I go in the cloud?
Cloud is now a new paradigm for unlocking retail potential. Retail operates high volumes of data, generates picks of data and needs to save costs at all times. Overall, 26% of software spending will be cloud-based in 2016 (by Greg Buzek, IHL & Joe Skopura, RIS News).
The 3 “To Do’s” from NRF16
Three clear directions emerged from the retail industry guiding their technology investment priorities.
1. Unified Commerce
Removing silos was a red thread throughout retailers’ testimonials:
- Retail organizations are reviewed accordingly. “A digital transformation fueled by consumer behaviors means embracing change by all functions of the organization. It is a shared responsibility for survival and future success of the company”. (by Kevin Ertell, Elain Rubin and Rob Schmults).
- Product data silos and duplication are still a headache for many retailers (without even speaking about users’ multiple registration points and databases). Bruno Mourao, leadingSonae IT Strategy, confirmed we have to “manage item catalogs and inventories, manage product availability first, and then we will converge”.
- Enterprise technology silos used to cause increasing integration and maintenance costs. In the current digital environment, they prevent businesses from keeping up with the speed and diversity of consumer touchpoints. As Andrew Laudato, Pier 1 Imports CIO said, “You cannot be efficient at the front end if you are not efficient in the back end.”.
Technology solutions serving unified commerce are well defined by Ken Morris, “The most important component is a middleware layer—a piece of software that connects the dots. Retailers aren’t going to throw their legacy applications away (...) but what they have to do is link it all in real time."
- Conversational E-commerce showed by North Face (online and mobile, enabled by new product attributes, presented by Cal Bouchard)
- Convenience with Walmart wish-lists scanned in store (enabled by a continuous disciplined work achieved through Data within the organization, presented by Jaya Kolhatkar)
- Value-added, targeted deals and recipes by Kroger USA to grow customer loyalty (presented by Matthew Thompson)
- Culture content networks aligned with customer behaviors (instead of customer channels) by Sam’s Club (presented by Tracey Brown).
Waitrose Head of IT Planning and Engagement, Thomas Fuller, reiterated “Consumers [Technology] adoption is what matters and commerce experience comes first for us”.
Tesco Head of Technology, Matt Newby, shared that RFID is now rolled out at large in Tesco. “What it means for customers: they have a greater availability of the products they want and Tesco associates can serve customers better every day.”
FGL Sports VP Operations, Jean-Stephane Tremblay, said “You have to make sure that some of those technologies will be very helpful to your customers.” Sport Experts, an FGL franchise banner, started to implement RFID interactive Shoe Walls that were demonstrated at NRF.
Hershey’s North American President, Michele Buck, shared the “Smile Sampler” facial recognition technology used in-store, reading individual customer emotions to propose products. Hershey’s also innovated with 3D printers, testing their new experience in food.
Commerce experience is a big thing. This year at NRF, experience was taken more seriously than ever by retailers. It aims at leveraging the one-to-one relationship between an associate and a customer. Retail ambition is about customer experience scalability (online and in stores), replication (within a full banner), innovation (contributing to brand attractiveness), engagement (gaining the customer’s heart and habits) and action (embracing customer behaviors).
Nir Eyal (author of Hooked) captured the purpose of experience for business in a compelling way at NRF: “Companies create consumer habits through experience, no longer through exposure.”
No conclusion but a call to actionThis year, NRF was definitely action-driven. Lee Peterson, EVD WD Partners, energized the audience by describing the 3rd wave stores for today and tomorrow (in other words, “do it now or die”).
To set the scene, who is leading the pack?
- Amazon, $100 Billion in revenues, +20% growth, more than 1/3 of online sales made through mobile, captured 40% of holiday sales this year (4 times more than any other retailer).
- Alibaba, 310 Million orders per day in 2015, 14.5 Billion items per year, commands nearly 80% of China’s e-commerce business, $1 Trillion in sales in the next 5 years.
- Focus on 1 or 2 things and do it better than anyone.
- Do it any way the consumer wants it.
- Break the rules, be unique.
- Simple, Simple Simple!
- Be the brand, be honest.