While New York was freezing cold NRF 2018 was red hot and awash with optimism for the future of retail and the value it can contribute to consumers and society as a whole. A welcome contrast to the recent apocalyptic commentary.
The message was clear: Retail isn't dead - it's simply changing. This change represents a huge opportunity to those in the industry and on the periphery. Core to realising the opportunity this change represents is a need to take a far more expansive view of what retail is, a view that places the customer at the centre and allows organisations to build new and exciting business models that improve lives.
To do this organisations are changing their approach. To become adaptive in an increasingly fast-moving environment, they are embracing digital capability and bringing it to the core of their businesses. This ensures that its benefits are syndicated throughout the organisation, enable it to achieve efficiency and differentiation.
Business and Technology teams are coming together and organisations are becoming far more discerning about the way they buy technology. You only have to walk the halls of NRF and witness the prolific number of vendors and partners selling the wares to know the latter is essential.
Our top 4 takeaways from this year's event:
1. Building a digital backbone
NRF saw organisations from across the global retail industry - such as Walmart, Tommy Hilfiger, Levi’s, Adidas - all citing Digital capability and leadership as being core to their future success. In response they are changing the nature of their organisations.
These changes are more fundamental than simply having a good website or another superficial “shiny front end” application, rather it is about building a “digital backbone” to underpin a new more adaptive organisation. This means new people, new technology approaches, and new ways of working. Investing in the core of the business in order to drive the efficiency and differentiation required to compete.
Walmart’s CEO Doug McMillon is extremely clear that people are central to Walmart's success but sees technology as critical to achieving their potential. Walmart are investing in the digitisation of retail tasks and better tools, resulting in better jobs. Jobs that free people up to do more interesting higher value, intrinsically satisfying tasks, such as spending time with customers and building better product ranges. For many of us who have worked in Retail organisations where much of the commercial day to day is run on archaic systems or excel and email; this is long overdue. In the words of Chieh Huang, Founder and CEO of Boxed “The back end is where you live and die. You must own it!”
2. Customer intimacy; a key battle ground
There has never been a better time to be a consumer. Customer intimacy is the new battleground and technology (and particularly AI) is beginning to enable organisations to connect with their customer bases in far more intuitive and human ways than ever before.
Critical to success is avoiding the ‘technology for technology’s sake’ trap and ensuring that you are solving “real problems which matter” to quote Scott Emmons, Innovation lead at Neiman Marcus. Both Neiman’s and Adidas evidenced this increased focus in describing the efforts that they are investing in to understand the whole customer journey intimately. They are then able to focus their innovation efforts on the most valuable opportunities where they can engage and delight.
The conference had many examples of how technology can enable greater connection with customers and remove friction from the buying process: Adidas is working with FindMine to use AI to build personalised product collections. Alibaba is using AI to support its Singles Day event with AI powering personalised product pages and 95% of customer service requests. Warby Parker is using facial recognition and AR to enable people to virtually ‘try’ on glasses. Alibaba’s “pay with selfie” trial where consumers use facial recognition to make payments at selected KFC locations. A whole new world of customer experience is emerging.
3. Alibaba goes from strength to strength
From ‘factory of the world’ to being one of the world's leading consumer markets, China is now a leader in pioneering innovation in the consumer space and Alibaba is one of it’s leading proponents. Increasingly, China is more than just an exciting growth market, it is where you look to get a view on where the future of the retail and consumer sector may be headed.
Lee McCabe, VP of Alibaba Group did a wonderful job of describing how Alibaba is doing just that as they set out to reimagine retail through focusing on three pillars; Context, Convergence, Contact.
Context refers to their having a single sign on to the whole Alibaba ecosystem and the ability to leverage this in order to provide innovative customer experiences. Convergence refers to their investment in developing improved customer experiences which cross the physical and digital such as their new Hema food store concept. Contact refers to the creation of amazing and fun customer experiences such as Singles Day which took a mind bending $25.3bn in 2017.
The examples of innovation under these banners came thick and fast, outlining the breadth and extent of Alibaba’s desire to create new models. From restaurants to cafes, smart cashier-less stores to giant car vending nachines, AR gamification to live shoppable televised events and a VR Macy’s store. Make no mistake China and Alibaba’s influence on global retail are just beginning and will be significant.
4. Retail for good
“a business that makes nothing but money is a poor business” Henry Ford, Detroit resident.
A personal highlight of the show was a panel which showcased the work done by retailers who have been central to the rejuvenation of Detroit, once one of the greatest manufacturing cities in the world but in recent times a city that has experienced dramatic urban decay. Shinola, Wholefoods and Detroit Denim told powerful and emotional stories of how they have worked with local communities within Detroit to build successful businesses and at the same time provide opportunity, education and enhance the environment of a city that other companies have rejected. In the case of Shinola and Detroit Denim these stories play a fundamental role in powering their brands.
We often forget the social importance of retail in improving the quality of life of customers and employees that are touched throughout the value chain. We should not, it is too important to take for granted.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.