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Retail Rundown - Retail's Big Show Special

Retail Rundown – Retail’s Big Show Special

January 20, 2020 – NRF 2020: Retail’s Big Show Special: We hear from Tony D’Onofrio, Ricardo Belmar, Paul Lewis and Doug Stephens about their key takeaways from this year’s Big Show.

No time for news? We’ve got you covered. Welcome to the Retail Rundown, your go-to weekly podcast where RETHINK Retail teams up with industry experts to deliver the top trending news stories in retail.

  • Hosted by Julia Raymond
  • Researched, written and produced by Gabriella Bock
  • Edited by Trenton Waller

Digital Transformation Consultation

TRANSCRIPTION:

Julia Raymond:

Hello and welcome to the Retail Rundown. My team and I just returned from an exciting week in New York City. We were there for the National Retail Federation’s Big Show, also known as NRF 2020. I’m sure many of you listening were in attendance because there were over 40,000 people there this year.

It was held in the Javits Convention Center, which if you didn’t know is 1.8 million square feet and the event drew in crowds from across the globe as it always does.

Everyone was waiting to hear and see the latest and greatest solutions and technologies and hear from top thought leaders. We spoke with a lot of you there. It was great to see some new faces and some old ones as well.

Successful digital transformation is a matter of know how and access to the best talent. We connect you to both.Click for more.

There were big-name exhibitors like NEC demoing it’s creepy, yet convenient, facial payment software. Indeed, had an editable printed selfie booth and all of this to say NRF, 2020 did not lack in ingenuity or imagination.

And while solution providers were wowing attendees, brand thought leaders were delivering the scoop on the economic factors, consumer trends, and technological advances that will make major lasting impacts on the global retail landscape as we know it today.

We recap the event by hearing from four RETHINK Retail advisors on their key takeaways from this year’s big show. We’ll begin by hearing from Tony D’Onofrio. Tony is the CEO of TD insights, a respected industry futurist and a recognized global top 100 retail influencer.

Tony D’Onofrio:

First of all, one of the great things that I get to do at NRF is to attend an event called the Retail ROI. At that event, they unveiled the 2020s store experience study, which will be out later this month. And the top three strategic priorities for 2020 from that study are personalizing the customer experience, inventory visibility and empowering store associates.

And that really for me ties into some of the key things that I was looking for at the NRF. This actually was a very good and RF for me. I’m actually exhausted after 60,000 steps over the four days that I attended. But the key thing that I saw out of that for me is the progress that the camera is made as a sensor.

And I spent half of my career in security, so just to see how that camera as evolved and what computer vision looks like today and that really that was prevalent and coupled with artificial intelligence in terms of where that’s taken Rico next and that was both of them, the start-ups and the traditional goofs well for inventory security, face recognition really do. Yeah.

The blow up on the camera was one of the key takeaways that I, that that that I’ll be writing more about the other is how much retailers are looking for that competitive advantages too. If you ended a start-up area and you asked the question, who are you engage with?

First of all, you saw some really innovative brands or progressive brands latching on to technology faster and it’s no longer, I just have a pilot in a lot of cases that were deep in the rollout, so they’re looking for that edge.

How do I get ahead of everyone else? In terms of technology and I do see retailers getting a lot more engaged or we’re also really a lot of more the boosts today have for example, retail logos and retail, a rep presentation in the booths themselves, which is good for both the technologist and also for the retail industry because we’re actually developing stuff that will actually have a positive impact in the industry.

And then the final thing to me is that from a technology point of view, we are working on both the store associates and giving them more tools to get more productive and become what I call a brand ambassador and also responding to the consumer that comes into a store as their own brand new investor with a smartphone.

And there’s a lot more knowledgeable. So that conversation it’s getting better. So, there’s a lot more focus on the humans themselves that work in a store in terms of how to actually turn them into sales and actually engage positively with the, with the consumer as they walk into the store. So those are just some of my highlights.

Julia Raymond:

That was Tony D’Onofrio. Next, you’ll hear from Ricardo Belmar, senior director of global enterprise marketing and Infovista and retail influencer with over 20 years of experience focusing on digital transformation.

Ricardo Belmar:

So I really came away, I think with what I’m going to kind of call maybe three high-level trends that I think were really kind of set the stage for where what we see retailers do this year and then maybe at the same time I’m going to call them three cautions or things that you know everyone in the industry will watch out for just to see how they turn out.

And if it kind of starts with the caution isn’t really briefly. I mean I think the main one I came away with is that has to do with department stores, and I think it may not be coming as a surprise to most that department serves. Just continuing to struggle.

You know, we’ve seen lots of tactical moves by many of the brands like poles, Macy’s, JCPenney and others are trying to change things around. And Cole’s CEO at NRF of course, you know, being emphasizing very strongly that the Amazon relationship is working well for them.

But at the same time, we’ll see a lot of folks challenging that if the holiday sales they had didn’t entirely reflect that. So, it really does leave a question mark. I think as everyone coming out of the show as to what is the future of department stores now at the same time, we, we did see a lot of interesting concepts.

Successful digital transformation is a matter of knowledge and access to the best talent. We connect you to both.Click for more.

I know that there were a number of sessions kind of raising again to top of mind concepts like beta, a new style department stores like show fields right there in New York and also neighbourhood goods where it’s in my mind almost like bringing in Etsy like concept to physical retail where you’re bringing together some brands that people may or may not know all that well but curating them in a slightly different way.

So, it’s sort of a caution, but also maybe some upside there that new things are coming. I think a lot of people were excited about area 15 we heard about it, the show where you really have a blending of entertainment, food and beverage, and then with some shopping in a, I’d kind of rethink of the mall experience there.

So, then my second kind of caution thing is the, the idea is something that Microsoft CEO Satya Nadella brought up about the never ending spending on digital for promotion and advertising. If I, crate and barrel CEO mentioned that they didn’t know TV holiday spend the season, they only focused on digital and social and their sales were up. So, the digital spend seems to be increasing.

One interesting upside I think I saw from, from that kind of caution is that, and again South Mandela brought it up, you know, larger eCommerce sites, Amazon of course.

But we also see Walmart and target coming up with ways to develop ad units on product pages. So, at the, in a Dallasite at home Depot is an example there where they’re getting better engagement on ad units on those product pages.

Then they see in other areas. So, it really does mean that there could be a potential there for retailers with strong eCommerce sites to create a new revenue source by trying to get brands to buy some ad space in there. And then I the third costume, which I think is something that should maybe he’s almost a trend and the idea of the need to constantly innovate.

My favourite thing I heard there at the show is crate and barrel CEO mentioned that they’ve been around for the past 58 years, but they have no right to expect that there’ll be around for the next 58 unless they continuously innovate and change how they engage their customers.

You know, we’ve all heard about how digital transformation of the store is one of the key elements for that. And I liked one thing that the Lowe’s, Lowe’s, the CIO said during analogy that digital transformation and retail is kind of like a long car trip where the first hour everybody’s fresh and really energetic about the trip and the last hour.

Everyone’s really excited about finally getting to the destination. The problem is in the middle because that’s where the messy part is, and I think the transformation of the store is proving out to be just like that for everyone.

On the positive side and I, I think that the three big trends I saw coming out of this year’s NRF social profitability, the idea that retailers and brands need to take a stand and that they now realize their customers want them to take a stand on issues and not just sit idly by taking everyone’s dollars and focusing on monetary profitability at this idea of social profitability is important to people and we all know which brands have kind of led the way with this.

It’s places like Starbucks, Nike, REI, Patagonia and others. I think that was a, a fairly significant trend or hurt a lot of people talking about. A second one I noticed really is, you know, data everywhere. It’s just that everything we do now in retail generates data and Satya Nadella, his keynote, he mentioned that there are 40 terabytes of data generated every hour and retail, which presents a new problem for retailers and that’s that.

What do you do with all the data, you know, how do you handle it? How do you derive insights from it and act on it? And I think that’s maybe one of the biggest challenges retailers have going into 2020 is not generating the data or collecting it as much as how do I use that data to create the outcomes and experiences that I want in that customer journey, whether it’s online or in the store.

I think maybe retailers are going to start to focus on this almost in a reverse process and realize for themselves what is that outcome I want and then how do I leverage the data that I’ve collected to create that outcome.

So then my last trend, which I think is maybe the best one yet, is this realization that stores really are the future. We’ve been kind of in this media trend where everyone wants to talk about how so many stores are closing online and e-commerce are going to take over the world.

But at the end of the day, the stores are really where the magic happens in the relationship between consumers and retailers. And I think there were a lot of people talking about that and realizing that we need to end this sort of nonsense. Talk about a retail apocalypse, that it’s really a Renaissance and it’s really a re-imagining of what the store is like.

We see so many different concepts now of that and it’s a realization that, you know, technology itself is not the solution. It’s just a tool that if you use it the right way, it’s going to help you create the solution you want in the store. And I think that’s where retailers are finally realizing that.

And that leads me to this idea that each year, you know, we always look at an RF at what’s the latest and greatest technology that caught everyone’s attention. I really think this year it was almost a return to basic concepts for retailers that they’re, it’s not about what’s the one technology that I have to have.

It’s how am I going to use the technologies available to create the experience in the store that’s going to enhance that shopper journey so that I will survive as a retailer. Going back to what crate and barrel CEO said. I think that’s probably the number one takeaway out of all of these things is the idea that the technology is not going to solve my problem.

It’s the tool that’s going to help me create the solution that will solve my problem. And I think that hopefully is the takeaway that everybody who attended the show and all the retailers come away with, I think that’s going to serve them the best.

Successful digital transformation is a matter of know how and access to the best talent. We connect you to both.Click for more.

Julia Raymond:

That was Ricardo Belmar. Also attending was Paul Lewis. Paul is a connected experiences expert and the Chief Marketing Officer of Valtech, a global digital agency focused on engineering experiences for retailers.

Paul Lewis:

There are two continuing trends at NRF that seem to be gaining momentum. First, headless is where things are headed. Breaking out integrated commerce capabilities allows a single headless commerce engine to enable purchases across voice, internet of things, point of sale, mobile apps, and the traditional web.

The second thing is experience is becoming the heart of physical retail. At one point, physical retail was mainly about inventory and checkout, but those two elements are handled far better online. So physical retail needs to provide added value to lure the customers off their couches.

And that comes down to experience the experience of walking into a luxury retailer. A sports brand or a value store may all be different, but they have one thing in common, providing a connected, frictionless environment that delights and excites their customers.

Julia Raymond:

You just heard from Paul Lewis.  To round out today’s recap, you’ll hear from author retail futurist and Retail Prophet founder Doug Stephens on his key learnings from this year’s big show.

Doug Stephens:

I spent the two days at the show working with Microsoft and part of what I was doing with them was meeting with their clients. So, these include some of the largest retail brands on earth, frankly, from all parts of the globe.

And spending time with them, talking to them about their concerns, talking to them about the things that are on their mind, the things that they want to know more about. And there were really, I think, well there were many insights, but I think two of the most key insights were, number one, data.

Data was something that seems to be on every brand’s mind. And every brand that I spoke to once more of it,  the top of mind question was what data should we be collecting? How can we collect it? What, what technologies will allow us to get more consumer data?

So, every brand that I spoke to, what was top of mind with them was how can we get more data? Which technologies will allow us to collect data? You know, what, what data should we be collecting? But my response to them was, let’s assume that you could have all of the data available on your customers. Everything. Everything.

You know, let’s assume they came in and gave you their DNA test, their blood type, their, you know, the first names of all their family members and addresses, what are you going to do with it? What is it that you have in mind?

And not one of the brands that I spoke to had a clear plan or you know, some sort of clear strategy on what they would actually do with the data that they’re able to accumulate. So, the insight for me was that rather than brands asking what data should we be collecting or how can we collect more data, the question they should be answering is what unique or differentiated experience do we intend to create?

And then based on that, then they can step back and say, now, in order to make that experience happen, what data do we need? And in fact, it may be surprising to find that you don’t actually need as much data as you think you do in order to carry off an experience that’s actually going to allow your brand to stand out.

So, so that was the first insight just around this whole idea of data and sort of the, you know, this idea that data is, is a new gold rush of sorts and everyone wants more of it. Better to first of all start with the experience you’re trying to design and work backward to the data that you need.

The second insight was that most retailers and major brands that I spoke to are still regarding their physical stores primarily as being a distribution channel for products and media as being the means or the method of customer acquisition.

But the reality is that digital media is now becoming prohibitively expensive. For example, just the cost of Facebook ads, for example, doubled in cost between 2018 and 2019 we’ve seen an exponential rise in the cost per click in digital media.

But what we’re also seeing is a very, very marginal return in terms of the number of clicks on those ads. So, what’s becoming very clear is that media is no longer, or soon will be no longer the most effective means of acquiring customers. It’s going to be prohibitively expensive to use it as a customer acquisition method

And in fact, physical stores are now becoming a more cost-efficient and effective means of acquiring customers. Media, on the other hand, is becoming an efficient and effective means of transacting sales. So, what we’re seeing is a complete reversal of the entire purchase funnel where the old idea was you put media in the top of the funnel, and it converts to repeat business at the bottom in physical stores.

Julia Raymond:

That was Retail Prophet, Doug Stephens.  From the RETHINK Retail side. There are really three key trends I’m watching closely this year. Number one, interesting and unexpected partnerships. We saw a lot of these in 2019 Kohl’s partnering with the Amazon. Kohl’s also partnered with planet fitness and weight Watchers.

We heard old Navy partnered with Postmates during the holidays and Walmart and smile direct club actually just announced a partnership this month. My favourite announcements had to be Macy’s and JCPenney partnering with the resale giant thread up and of course the w hotel and rent the runway partnership which caused a lot of online buzz.

These things are very interesting for me because I do love shopping resale myself and the resale market is another trend I’m keeping a close eye on. So, number two, the rise of the resale market. There are so many factors driving this. Some include sustainability, affordability.

Luxury has a play here as it becomes more affordable and accessible through the second-hand market, which by the way, is expected to double in five years. And there’s a lot of growth in this sector, especially because particularly women are willing to or have bought second-hand, and that’s across demographics. So interested to see where the resale market goes in the next few years.

The third one is human-centric retail wins. This is something we’ve been talking about for a long time. I think now that technology has matured a bit, it’s able to sort of play in the background while we can focus on those interactions that create an emotional connection with brands and consumers.

With that. I’d like to take a moment to thank our four RETHINK Retail advisors who attended NRF 2020 and were gracious enough to hop on calls with us post-show and deliver their exclusive insights for our audience. Our Managing Editor, Gabriella Bock, attended so many sessions at NRF and wrote a fabulous recap blog.

It’s up on the site at rethink.industries. Check it out if you haven’t and let us know your thoughts. We’d love to hear if you agree and what trends are top of mind for you. Reach us on LinkedIn or Twitter, and until next time, thanks.

You can read more by Tony D’Onofrio, here

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