News from NRF: Top 20 Takeaways
If you were looking for advanced technology and innovative ideas to help your business run better, this year's Big Show, held Jan. 11-14 at the Javits Center in New York City, didn't disappoint. Here are the Top 20 Takeaways from the show:
Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].
- This is a really exciting time to be alive. Because… science. Advances in technology are making possible innovative products that just a few years ago would have seemed like sci-fi. They still do, but now they're real, and NRF's iLab provided a view into a number of amazing next-gen technologies in development and many already on the market. Consider the Circlet bracelet, still in development, which, with a flick of your arm, projects your iPhone screen onto your wrist. The bracelet is waterproof, so that you can take calls or send messages from, say, the bathtub. (Your phone must be nearby. Which it would be. See #4.) The Tunity app allows you to tune into the audio on any TV you are near, say, in a loud bar, and stream it to your device, while Sensacell offers a modular interactive sensor experience: the surface changes colors as your hands move across it (more entertainment while you're watching TV in that bar). Samsung's VR virtual reality headset provides a true 3D experience, while Samsung's light-up Gear S 3G Smartwatch lets you stay connected without your phone nearby. Kinematic is making 3D dresses and Cutecircuit wearables are clothes that use smart textiles and microelectronics to light up. 3D pens will let you "write" in 3D. The Pavlok bracelet uses cognitive behavioral science – and a mild shock – to help you break bad habits. (Editor's note: it's not really that mild). Under the heading of sustainable technologies, the Luci emrg is a versatile, inflatable solar light that can help to meet the needs of the 3 billion people worldwide who are off the grid, while the SOCCKET energy-harnessing soccer ball serves as a portable generator – the more it's kicked, the more energy it stores up to provide power. As for energy of another type, EXO bars made with cricket flour can help fight hunger, and Loliware edible cups eliminate trash in our landfills. Speaking of sustainability and innovation, Noah Graj, manging partner in charge of new ventures for Graj + Gustavsen, says that the "purpose-driven consumer" offers an amazing opportunity for those retailers that can guide him to the products, services and experiences that will help him fulfill his mission.
- Facial recognition is coming soon to a store near you. If you're planning to shoplift, this may thwart your attempts. Retailers are beginning to look at this technology as a way to nab shoplifters before the fact. In other use cases — if you're just looking to find products you like, you may find that stores are getting better at providing them. Anonymous analyzing of faces for age range and gender as people walk through your retail door can allow you to get a better handle on the demographics of your store, in this way making e-commerce-like data collection and analytics possible for the brick-and-mortar space, says Allen Ganz, digital media solutions and biometrics, NEC.
- There is a great "digital divide" between what consumers want and what retailers are giving them, says Deloitte's vice chairman and U.S. retail and distribution leader Alison Kenney Paul. Digital technology is influencing 36 cents on every dollar spent. In other words, $1.1 trillion in retail sales is influenced by digital. Eighty-four percent of shoppers use digital before or during a store trip. Digital is part of consumers' entire lives: shopping is no longer a destination; it's a journey. "It's essential we measure the entire journey, rather than measuring one step along that path," she says. If you are only focused on shopping-cart abandonment, for example, you are missing the point. Digital efforts must be measured across the entire enterprise. Retailers must rethink how they measure digital success, and stop viewing their customer strategies as separate from their digital strategies. "Consumers and their digital devices are one," says Paul. Need more proof of this?
- 75 percent of people take their phones with them to the bathroom, says Will Smith, senior vice president and chief merchandising officer, Brown Shoe. [Insert your own joke about "omnichannels" here.] People are making purchasing decisions "in bed; on a road trip," says RichRelevance's CEO and founder David Selinger. Location is distinct and important because you're entering a different space of the person's life, he says. "The number of things that are becoming location-disconnected is dramatic." With that in mind:
In your digital-consumer strategy, consider mobile first. The influence of mobile continues to far exceed everyone's expectations, said just about everyone at NRF. "It used to be we'd focus on desktop and then maybe make a small version. Now we develop first for mobile or tablet," says R.B. Harrison, chief omnichannel officer, Macy's. According to Deloitte, mobile's influence on in-store sales was $593 billion, or 19 percent of all sales in store in 2013 (up from $159 billion in 2012), yet many hold mobile responsible for only the sales transactions conducted on it, which is just 1.2 percent. J.C. Penney reinvented its mobile experience in just 97 days, says chief customer officer Mike Rodgers. After it launched its new mobile app, downloads on one Saturday and Sunday exceeded an entire month's worth of downloads of the previous app. "The new layout makes the product the hero," says Rodgers. "Choosing color and style is intuitive and fun." The scanning feature of the app alone, which allows customers to scan a bar code in the store, is being used more than 1,000 times per day, and, since it introduced the app, conversion has increased 40 percent.
In keeping with its motto of "when it fits, you feel it," JCPenney has fleshed out three "pillars" of omnichannel relative to fit. Our customer has "too little time, too little money and two little kids," quips Rodgers. To capture her loyalty, the retailer is determined to help her 1) Find it (since launching the mobile app, conversion has increased 40 percent); 2) Get it (one-third of online orders are shipped to store and picked up in store, and one-third are transacted in the store while the customer is using her mobile device; and 3) Make it worth it. The customer made it clear over the past few years that she did not like JCPenney's new strategy of everyday low prices, and the retailer has brought back "clear, easy-to-understand promotions."
- Nobody wants to talk to a sales associate anymore. Everybody wants amazing customer service from sales associates. Wait. What? Yes. Both. Eight in 10 shoppers say they prefer to use their device or a kiosk vs. talking to a salesperson in the store, Deloitte reports. Yet customers want a great customer service experience. As GameStop's president Tony Bartel says: The store is the epicenter; it is "where the magic happens," and customer service still matters. A lot. Therefore:
- You must bring digital and in-store shopping together now. Here are seven tips to doing that, says Paul: 1) One digital strategy does not fit all. 2) You must give customers more than a seamless experience by tailoring the experience to their specific needs according to where they are in the shopping process. Are they browsing? Are they trying to connect with other shoppers? Are they trying to purchase? 3) Be consistent. The experience must be consistent even if you don't offer all products in all channels. You must know where your inventory is at all times, and integrate all systems and inventory. 4) Focus on better, not more, functionality. Customers aren't looking for tons of bells and whistles. They want as few clicks as possible to get to what they need. 5) "The retailer's paradox: when retailers stopped trying to sell, customers bought more." When it comes to digitally influenced shopping, less is more. It's critical to recognize the difference between browsing and buying. Consider JCPenney's app, which shows promotions and offerings, but also allows the user to check availability and save information for later. 6) Embrace social media. You may not have a page, or be friending anyone, but Millennials are, and they are your most important future customers. For them, friends and families are more important than the sales clerk. Make sure you have the right talent in house — digital natives — to help deploy it successfully. 7) Don't focus only on conversion. If your customers are comparing prices and products, help them! In other words:
- Showrooming is not a bad word. Consumers using digital in-store convert at a 40 percent higher rate. It can be the difference between making or not making a sale, says Paul. "This debunks the irrational fear of showrooming. The fear that people will buy less is simply not true." Digital increases order size by 22 percent, too.
- Consumers, especially Millennials, want 1:1 personalization. If you can do what's right and what they want, Millennials are happy for you to have their information, says Tom Cole, partner at Kurt Salmon. "It's a race to have this one-to-one relationship with the customer. The customer has a million choices and retailers have very little of something that no one else has." So capturing that customer for life by engaging with her at a personal level is key, he says. "For the client in the 25-44 age range, but particularly the 25-35 age range, they're looking for different ways and channels to engage around personalization and around the Stitch Fix model," says Diane Ellis, CEO of The Limited. "The consumer is looking for the retailer to take her information along with her own feedback and then "ship out to her recommendations that really fit and are tailored to her lifestyle," she says.
- If you hit it big on Single's Day, you can probably just slack off for the rest of the year. It's time to go global, and you might want to start with China, where you can invent a new holiday and stand back while you rake in the cash. Alibaba pulled in $1.63 billion in just the first 38 minutes of Single's Day, said Alibaba Group's head of international e-commerce business development Sherri Wu, and by the end of the day, had raked in more than $9 billion in sales, with 42.6 percent of those sales coming from mobile. If you've somehow missed hearing about Single's Day, it started in the ‘90s as a party day for single folks — the date (Nov. 11) was chosen for its "singles" (11/11). Like most holidays, it didn't start as a commercial enterprise, but in 2009, Alibaba re-introduced the holiday as a day for some retail therapy, and it's been going strong ever since. It doesn't hurt that China's online population as of June 2014 was more than 632 million people, with 332 million of them shopping online. China also has the world's largest mobile internet user base of 527 million (as of June 2014), with shopping an intensely social activity in China. Chinese shoppers are different from Western shoppers, says Wu. "If you go to a restaurant, people will fire up Taobao to show each other products while they're waiting for their food. It's a social activity." Alibaba handles 2.85 million transactions per minute. On a related note, Alibaba's executive chairman Jack Ma, who took the company public last year, said in November that he has plans for Alipay, Alibaba's financial services arm and the most popular online payment method in China, to issue an IPO as well.
In your quest to go global, whether physical or digital, leverage all the knowledge you have from e-commerce, opportunistic partnerships and anything else that gives you the insight you need. Then LOCALIZE. When British luxury heritage brand Belstaff (whose customers include iconic figures from Che Guevara and Amelia Earhart to Tom Cruise and Kate Moss) set out to expand its presence from 12 retail stores and a digital presence in the United States and most of Europe, it looked at its CRM data and its ecommerce traffic data (many customers were coming from Russia and China) but also considered that its parent company had locations in other countries, including South Korea. Ultimately, it made the decision to open up two physical stores in South Korea, translating the "rugged luxury" of its outerwear into "something that made more sense for Asian markets," says Alison Conway, head of the company's digital and ecommerce team. With two stores on the ground, ecommerce sales in that region also spiked.
"When customers want a product, it's amazing to see the lengths they'll go to get it," says Andrew Robb, COO of Farfetch, but it sure helps when it's not too difficult. About two years ago, the pure-play e-commerce marketplace for boutiques, (featuring 300 retailers and 120,000 items from 1,500 brands (with 400,000 customers from 170 countries)), set out to remove the friction from the customer buying experience, looking at how it could make returns, shipping, etc., an easier experience. It removed duties from the process, for example, handling them on its end so the consumer didn't have to, and also launched Click & Collect, which lets the consumer shop any boutique in Farfetch, and have the purchase delivered to a nearby boutique.
To expand its e-commerce operations internationally, $2 billion U.K. fast-fashion brand New Look (800 stores worldwide, with about 500 in the U.K.) turned to third-party partnerships, selling its apparel and footwear on fashion marketplaces such as About You and Zalando in Germany, Fashion Days in Romania, Answear in Poland, The Iconic and Ezibuy in Australia and New Zealand, Bench in the Philippines, Zalora and Lazada in Southeast Asia, Koovs, Myntra and Jabong in India, Wildberries in Russia and Nelly in Scandinavia. With these partnerships, New Look benefits from the knowledge and market insight of the local partner, says Simon Taylor, head of international partnerships at New Look. It's a fast and low-risk route to new markets, the sales data generates visibility of consumer patterns in new markets, it offers exposure to new customers and there's minimal impact from cannibalization, he says.
- On the omnichannel path-to-purchase, there are more than 800 possible journeys. And that figure is on the rise. Retail is much, much more complex than it has ever been before. Consider the research methods (in-store browsing, digital signage, print/broadcast, retail mobile app, retail mobile app, web search, retail website), purchase processes (staffed checkout, self-checkout, mobile device payment, PC payment), delivery methods (in-store fulfillment, deliver to car, drive-through pick-up, secure locker, home delivery) and product support touchpoints (in-store associate, interactive kiosk, retail mobile app, live video, call center, email, online chat), then do the math of possible combinations, and you've got more than 800, says Lisa Fretwell of Cisco Systems. But you know what? The customer doesn't care. "For consumers, omnichannel means a seamless experience that offers the same products, engagement capabilities and level of service regardless of how, where and why they interact with retailers," says Kurt Salmon's Cole.
- The closet is also a channel, says The Limited's Ellis. "[Consumers] are looking for you to add value in a significant way. They're looking for you to take the information you've given them to engage even more, in her home, via another channel: her closet. Say, for example, she bought a great wine-colored pant and never could find the right top to complete it. She can send a photo from her closet," says Ellis. With a new iPad app it is developing, The Limited is equipping sales associates to help customers on the floor or extend that engagement outside the store. Establishing a strong relationship between customers and sales associates is core to The Limited's mission. "The sales associate is seen as a trusted advisor who can create and put together outfits," says Ellis. So while there may be more than 800 paths to purchase (see #12), understanding the unique and preferred path of your customer is crucial to shaping your omnichannel strategy. "We don't have the [same] level of resources as Lowe's or Macy's, so we have to lever[age] the best part of our store experience, the store team, their stylings, to help her extend the items she's reserved to a full outfit."
- You, the customer, may be a retailer's greatest marketing asset, but not for the reason you think. Social media is coming full circle. Customer reviews and social media are "huge," says The Limited's Ellis. "It's changed the way we market." The language the specialty retailer uses in its marketing now often comes from client reviews. "Many times we think we're good marketers. We come up with why the fit is great, why you should have this style, but it [doesn't] necessarily resonate. Now we use her language — what features were important to her. We bring that into our marketing. She's willing to tell you a heck of a lot."
- Same-day delivery will soon be old hat. Macy's has piloted same-day delivery in seven to eight Bloomingdales (and also finished rolling out buy online pick up in store). Capgemini's senior vice president, North American retail lead Ben Pivar suggests that disruptive models such as Uber might be an alternative solution for retailers when it comes to last-mile delivery. After all, they can pick up a product as easily as they can pick up a person, he says.
- Macy's is a technology company. Yes, it sells a lot of apparel, footwear, cosmetics and all sorts of other goods, but the department store retailer is on pace to become the seventh-largest online retailer this year, surpassing Netflix, which currently holds that rank. "People may not think of us as a technology company, but we've invested hundreds of millions of dollars [in it]," says Macy's Harrison. What became apparent to Macy's over the past years is that it had to break down silos. As customers were shopping its two channels at an accelerated pace, the company needed to make sure it wasn't operating from "two sets of truth with two inventories," says Harrison. This year Macy's will ship $1 billion in inventory from its stores. How do you run that?" Via a hybrid management model, with one "strategic headset over the entire strategy," carried out with digital and in-store tactics. "Our challenge is we have to keep moving and evolving with the customer," says Harrison. "I'm 100 percent confident that with our organization focused on a single view of inventory, it will free up an incredible amount of power to drive our business." Macy's has turned in five years of consecutive growth and sees the combination of brick-and-mortar plus ecommerce as the key to success. "We offer with our stores something that one big online retailer cannot," quips Harrison.
- RFID. That is all that needs to be said. Shawn Neville, president, Retail Branding and Information Solutions, Avery Dennison, says the technology has been over-proven. Based on the response – and the results — of the retailers that use it, your only debate now is, "are you in the right position?" — not "if." "At Macy's, we're incredibly bullish on RFID," says Harrison. The RFID benefits of inventory replenishment are known, but it has also proven itself as a game changer as omnichannel evolves. As a fashion-based department store, with 20 percent of merchandise in single size-color units at any given time, RFID offers a "huge margin opportunity," says Harrison, when you can "know exactly where that garment is at any time." Macy's is starting to experiment with bringing the tech into the dressing room, which would "light up" with information about the products you bring in to try on. Speaking of:
- Interactive digital try-on experiences are happening. eBay has recently partnered with Rebecca Minkoff to bring online tech into its first U.S. store in New York's SoHo neighborhood. The immersive shopping experience, showcased at NRF, features a new consumer mobile iOS app, a connected touch-wall (a mirrored display that a shopper can touch to explore products she sees as they appear in video or product images) and a connected "magic" fitting room. From the app, the shopper can select "send to my room" to initiate a session with a stylist, who will pull the items into a fitting room, which uses RFID to recognize all items in the room and turn the mirror into a touch screen, from which the consumer can see what other sizes and colors are available in the store. The shopper can make requests of the associate from the room, is notified about how long it will take to receive the items and can even check out from the dressing room.
- There's a deepening divide between the upper and lower classes in the United States, with the folks in the middle getting squeezed out. This isn't bad for the luxury market or the low-end market, but it's making things difficult for companies targeting the middle-class. Former chairman of the Federal Reserve Ben Bernanke in a discussion with outgoing NRF chairman and former president and CEO of Saks Inc. Stephen Sadove, noted that two things are making the economic recovery from the recession so complex. "On one hand, we've got a decent recovery. The recession ended five and a half years ago. Jobs are coming back and things are getting a lot better," he says. At the same time there is a long trend going back to at least the ‘70s of the hollowing out of the middle class, due in part to a lack of high-tech skills and a decrease in well-paying manufacturing jobs. That middle is being emptied. "That is why the recovery doesn't feel so great. Growth areas are [in the low- and high-end stores such as Walmart and Saks]." Still, "it's not been a hamburger flipper recovery," says Bernanke, with most of the recovery in full-time and well-paying jobs. He says that jobs, income, hours of work and confidence are all up, oil prices are down, and it's the "best situation for consumers we've seen since 2006-2007."
- Retailers continue to improve their businesses with technology, and technology providers continue to improve their offerings to make retailers' businesses run better. Here are just a few of the many technology launches, acquisitions and retail implementations announced at the show:
- Epicor, which purchased Quantisense last year, has acquired ShopVisible, adding e-commerce to the company's end-to-end retail platform, along with order management and PIM.
- Zebra, which acquired Motorola Solutions' enterprise business (MSI) in October, showcased an array of new mobile marketing, personal shopping, workforce management, inventory management, self-service and mobile POS solutions including the Zebra PD40 mobile payment solution, which Is PCI-compliant, links to Zebra's Android mobile computers via Bluetooth and supports almost any type of payment card (magnetic strip and EMV (chip-and-pin)) for secure process transactions. It also showed a new VoIP telephony client, Workforce Connect Voice, that using only Wi-Fi can bring desk phone functionality to mobile computers to allow associates to answer and manage telephone calls from anywhere in the store, improving both workflow and customer service.
- Retail cloud-services provider SPS Commerce, which acquired cloud-based supply chain solutions company Leadtec in October, has enhanced its POS analytics with condition-based alerts and automated email distribution, additional years of historical retailer data and pre-built executive dashboards. Suppliers can receive automatic alerts about significant changes in sales trends or inventory issues such as out-of-stock warnings.
- JDA launched Retail.Me a service offering that provides shopper segmentation and localized assortment recommendations by applying big data analytics to POS data.
- Famous Footwear, a division of Brown Shoe, has deployed Quantum Retail Technology's Q Allocation and Replenishment to provide an optimal inventory placement solution that will work in conjunction with its existing legacy JDA allocation solution. With Q, Famous Footwear has seen an uptick in store service levels and conversion for its full range of inventory. Additionally it has seen improved inventory balancing across locations along with an improved ability to anticipate and respond to demand at the store level.
- Kohl's has overhauled its core merchandising, inventory, and pricing operations with a new retail merchandise operations management solution from Oracle. The platform will allow the department store retailer to gain one view of its inventory to better serve customers across channels, and to simplify its business user experience.
- More than 68 percent of e-commerce shopping carts are abandoned before the transaction is completed, and Celerant Technology's new Conversion Center module may help lower this number by giving etailers the ability to immediately respond to abandoned shopping carts and recover customers quickly with incentives or other service recovery options.
- Revionics' new Promotion Optimization solution provides enhanced collaboration capabilities, highly visual planning modules and interactive "what-if" scenario simulation to optimize the number and mix of promotional vehicles.
- Brooks Brothers selected the 7thonline Fabrix Retail Suite as its corporate merchandise and assortment planning solution and also the company's Size Optimization Services to match merchandise size allocation with local demand across all of its stores. The solutions will enable Brooks Brothers to gain a single view of consumer demand signals in order to optimize inventory positions across its various regional operating units.
- Cloud-based distributed order management provider Shopatron is offering a two-year free trial of its omnichannel order management solutions: "Allied to Win: Free Two-Year Pilot." It also has a new pricing model based on a fixed monthly fee with unlimited order volumes.
- RichRelevance introduced the Relevance Cloud™ to deliver a continuum of personalized customer experiences for mobile, web and store. The solution includes modules called Discover™, Engage™, Recommend™ and Build™, the latter of which offers "livestreaming," going beyond a traditional view of CRM (name, demographics, what have you bought and what have you returned) to provide an event stream of a consumer's activity. For example, perhaps you see she researches a pair of earrings on your site. She stays 56 seconds. Then she goes to a coupon site, and returns to your site four minutes later. Then she goes to a competitor's site, and returns to your site 10 minutes later, etc. When she comes into your store, if you know that she has already looked at a specific pair of earrings 12 times, you are going to be a "fundamentally better sales associate when she comes into the store," says founder David Selinger.
- Tape a l'Oeil, a French children's ready-to-wear retailer with more than 300 bricks-and-mortar stores and an online presence, chose SAS Enterprise Guide to drive marketing research and analysis based on loyalty program data.
- Provider of advanced retail planning and supply chain optimization solutions Logility Inc., which purchased MID Retail seven months ago, released Logility Voyager Retail Optimization V5.4, which gives retailers greater planning flexibility by enabling them to assign rules based on their unique requirements. It also added capabilities to its assortment planning that makes it easier for retailers to establish a repeatable process (for example, the ability to dynamically assort stores into multiple volume ranges within a store attribute type); and introduced group allocation rules that allow retailers to define and select a group of individual items to allocate together. For example, an apparel retailer may require 120 white blouses while another location may only need 30. Within this there are 20 or more styles plus individual size distribution requirements. The new group allocation rules allow retailers to automatically create location specific groups to ensure each store receives the correct mix.
Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].