NRF 2018 was my ninth visit to Retail’s Big Show. The first years were in the shadow of the global recession. Recently, retailers were in fear mode from Amazon, Omnichannel, and technology in general. NFR 2018 was a boring show, and that’s great!
Yes, there were many product announcements. Yes, there were many solution providers on the floor. And yes, there were many big name retailers on the stage. And yet, almost everyone I talked with expressed the same theme – “not much was new”.
“Retail is Retail” – Macy’s CEO Terry Lundgren
But Boring Years are Booming Years. The retailers are happy. And 2018 is shaping up as the year of action, data, and stores.
Here are my takeaways from NRF 2018:
A Strong Global Economy is Getting Stronger
In a roundtable, NRF’s Jack Lleinhenz, Conference Board’s Gad Levanon, and Oppenheimer’s Brian Nagel discussed the global economy.
The strong holiday season was due to low saving rate, impact from the hurricanes, and a boost from tax cuts. While there is a debate on the long term impact of the tax reform, retailers will benefit from the tax cuts in 2018.
“All global economics show positive trends.” – Gad Levanon, Conference Board
Two important trends will impact retailers. The first is a tight labor market. The costs of labor are increasing. In the next 2-3 years the forecast is for more AI Automation. But the direct impact is the demand for better labor quality.
The second important trend is demographics. There is a strong market shift to Baby Boomers and Millennials. For seniors, this translates into more health related products and services. For generation Y, it will accelerate the focus from products to customer experiences.
You will be happy to hear the Amazon Advantage is questionable. Beyond the 5 years horizon, traditional retailers should be up to speed.
In short, all indications are that 2018 is going to be a year of growth.
Walmart Wants to Win Big (Again)
While Amazon is in the thoughts of many retailers, it is Walmart that is striking back. NRF 2018 was the first time we have seen a booth by a retailer. Yes, Walmart had a booth. And the goal – get retailers to “sign up” for Walmart ecommerce platform!
CEO Doug McMillion was eager to change our perceptions about Walmart. He talked about the customer strategy as “team sport”. As a retailer known for its flimsy treatment of employees, the company is now raising labor wages.
“[Associate training and technology] that’s where it all matters and it’s all that matters.” – Doug McMillon, CEO Walmart
Big Solution Providers Get Bigger
You could not avoid the gigantic booths of the big solution providers. Oracle, Intel, and eBay were few of the prominent players on the Expo Floor. The big theme was working with startup and innovative partners. To increase the value of their platforms, they are creating an ecosystem of end point vendors.
IBM, for example, sees huge adoption in new formats of marketing. Conversational media is hot. Text push notifications are huge in international marketing. And they are investing in location technology. The impact of real-time location marketing is clear.
“AI Chat Bots, Social Segmentation, or Weather Benchmarks, we’re focused on the personalization of marketing.” Jay Henderson, Director of Marketing, IBM.
Aptos is another good example of Omnichannel Solutions. They recently bought TXT Retail to provide “From Concept to Customer” solution. They combine Aptos’ order management with TXT Retail’s customer engagement.
“Retailers top priority isn’t the Internet of Things. They’re talking about building a technology foundation upon which they can build, adapt and evolve. Then they will circle back to the bells and whistles.” – Cathy Hotka of Cathy Hotka & Associates
Customer Experience is Numbers Game
How long does it take to upload your mobile page? If it takes more than 10 seconds, your customer will probably not be happy.
Many retailers still use a private network for payment processing. But today’s networks carry a boatload of demands – from security to marketing. Moreover, the network capacity we use at home is not enough for a store with 50 employees.
“Retailers often underestimate the importance of the network infrastructure on customer engagement.” – Tim Tang, Director Enterprise Solutions, Hughes.
The Internet of Things Gains Traction
The Internet of Things is means many things, and yet most retailers think about RFID. The technology has been around for decades but only recently retailers showed interest. Despite the media hype, the challenge was not cost rather Return on Investment. Macy’s rollout proved fast returns from Inventory Accuracy.
The ability to tag products – throughout the supply chain and inside the store – has many benefits. But most retailers start their IoT journey with Digital Shelves Tags.
“IoT increases sales. Once cost savings and labor accuracy were the primary reasons to invest in digital tags. Today, we have price agility at the Point of Purchase.” – Guillaume Vicot, General Manager EMEA Altierre.
The 3 Rules of Location, Location & Location
What is the value of the physical store? How customers engage with products? What is the impact of a marketing video? These questions are driving technologies inside the store.
In NRF, the first floor was saturated with people tracking providers. This year we saw serious push for Location Marketing. A prominent example is Google’s Near Me.
Location Analytics, which includes both Store and InStore analysis, is emerging strong in 2018. We have seen complete coverage of stores, which includes path analysis and time metrics.
While there global providers, this is a field for local champions such as Chile’s Intelligenxia.
Store Associates Matter – Really!
“Invest in your people.” Hamdi Ulukaya, founder of Chobani
Chobani is one of the big success stories in recent years and much has to do with its focus on people. Ulukaya paid fair wages, hired refugees, and offered profit-sharing.
Three themes stand out – better wages, training, and technology. While Walmart made recent headlines on increasing wages, many retailers are investing in technology. Task Management Reflexis, this year alone deployed its solution in 30 retailers.
According to RSR Research, 79% of retail winners consider schedule optimization as highly valuable. Only 29% of retail laggards see value in task management.
An interesting trend is the conversion on the need to separate store operation and store sales. Retailers have long viewed the store as a tactical operational arm. This point of view is facing an assault by the ever demanding consumers.
The Power of Self Service AI Analytics
Data Visualization powered by AI Analytics is big in large retailers. The advantage of moving to the Cloud is the ability to learn more from the data retailers already have.
Besides the regular contenders of Microsoft and Google, we see specialized players. These include Tableau and Looker.
According to Looker, the goal is to balance between data chaos and data bottlenecks. To keep data consistency, IT Department manages the raw feed, metrics, and data warehouse. But everyone else in the organization can create their own “Dashboards on the Fly”.
The success of such platforms is a testament to the crumpling silos of data. Research after research shows that an open-data policy improves sales and profits.
Don’t Remain Data Dark
In Samsung’s Big Idea, the topic was how to measure the efficiency of the customer experience.
The interaction with the customer does not stop with the purchase. According to Forrester, we spend too much time on attribution models of what customers had bought. But the data tells us that past behaviors are not great for predicting the future.
“The industry is spoiled by internet commerce” – Sucharita Kodali, VP Forrester Research
In the physical store, we have limited data. Most of current In-Store analysis is based on Media Mix Models. But we are entering a phase where we are going to see more technology in the store. And with more technology, we will see more data.
Tommy Hilfiger’s Magical Tour
NRF 2018 ended with an upbeat conversion with Tommy Hilfiger. The famed designer talked about what it means to focus on the Customer’s Experience.
The company focused on three themes. First, listen to the customer. As an apparel retailer, this means keeping up with pop culture trends. The second is fast delivery, which led to major revisions in management of the supply chain.
Most important is the third peg in the strategy – See Now Buy Now. TommyNow is a social media extravaganza. The London Runaway got over 2 million impressions. And sales spiked during and right after the Live Streaming Event.
Technology is part of the company’s DNA. They worked with IBM and MIT to put all product images on the web. They developed programs for people with disabilities, which no retailer has done before. And they promote sustainable collections.
As the 80 plus years old designer says-
“Regardless of your age, you got to stay relevant. It never gets boring.”
Ronny Max is the founder of Silicon Waves Agency and Behavior Analytics Academy. We specialize in In-Store Conversion Optimization (CRO) for physical retail. Learn more on BehaviorAnalytics.Academy