Reporting from NRF: Top 13 Things You Should Know about the Changing World of Retail
The National Retail Federation's (NRF) Annual Big Show is big, and chock full of new technologies, concepts and inspiring ideas. Here's a look at a few of the biggest takeaways. We'll have more from NRF in the coming days and weeks.
*1* A robot is going to take your job. Maybe not today. Maybe not tomorrow, but soon, and for the rest of your life. Maybe it will go to India or China or Bangladesh or Vietnam first, but automation ? via robotics, AI (artificial intelligence) and deep learning – is the real threat (and awesome opportunity). The possibilities of machine learning are almost incomprehensible. This is the Big Data and Data Analytics we've been talking about, but its capabilities are expanding exponentially. It is artificial intelligence at a far deeper level than we've seen before. This is about machines being fed more information than was possible previously, and then processing this information to recognize fine nuances of patterns, learning as they go. This will improve everything from personalization to price optimization to targeted marketing to face recognition to apparel size optimization to recognizing patterns of global threats. In robotics, machines will have a more nuanced understanding of their surroundings, and will respond to them appropriately.
Consider Tally (see below) or the robot arms from RightHand Robotics, featured in NRF's Innovation Lab (iLab), which can pick up randomly shaped objects without a lot of data entry or fine-tuning of parameters, making them flexible for a variety of tasks. Consider Google's or Tesla's self-driving cars or Amazon's delivery drones or the many new made-to-measure companies that have sprung up in recent years that use algorithms to determine fit and style based on just a small number of pieces of personal information. Startup BoldMetrics, for example, has taken the concepts of the master tailor and applied them digitally. It fed scads of mostly North American and European body measurements into its system, and uses its proprietary algorithms to match the customer to the right size of a brand based on just four pieces of data: height, weight, age and jean size (for men) and bra size (for women), says co-founder and CEO Daina Burnes. The latest technology from Revionics uses self-learning models programmed to make pricing recommendations in alignment with a retailer's strategic priorities. "These ‘smart' models are continually regenerating to recognize demand patterns, monitor inventory levels and pick up on price sensitivities across channels and down to the store-SKU level," says Cheryl Sullivan, chief marketing and strategy officer.
What's the take-home message? Be kind and connect, because that may be all we humans have left. Oh, wait. Scratch that. There's also Pepper from Aldebaran (another denizen of the iLab), a robot designed to be a genuine day-to-day companion, whose number one quality is his ability to perceive emotions.
*2* Your customers are going to continue to gravitate toward Amazon and companies like it that offer a frictionless experience. Amazon wins customers even though there are cheaper prices elsewhere because it offers a friction-free experience. Yet today, some retailers continue put the items customers most want in the back of the store to force customers to walk by all the stuff they don't necessarily want in the hope that they'll pick it up on the way. In a world in which customers can shop from the comfort of their homes, this is not smart strategy, says Pano Anthos, founder, XRC Labs, a business accelerator that in partnership with Kurt Salmon (now part of Accenture) and Parsons The New School of Design, is helping small innovative startups grow. "At XRC, we take risks," says Anthos, and gives these words of wisdom: "We have to be willing to put out product that isn't ready yet. We have to be willing to fail, and work with failure. Beg for forgiveness not permission. Time is not our friend."
*3* Customers will "shop global like a local." Chinese customers are already doing this. That's because Liyia Wu, founder and CEO of ShopShops (also part of XRC Labs) has created a cross-border e-comm platform that connects global consumers to U.S. brick-and-mortar retailers, including stores with small, emerging labels, and allows them to shop by location via a curated, interactive and fully immersive virtual and physical shopping experience, including livestreaming from some U.S. retailers. Chinese consumers can put on a headset and walk through a U.S. retail store as if they are there in person, selecting items and purchasing them in the virtual environment.
Wu, who built her career in retail, saw Chinese consumers suddenly go wild for global brands five years ago, when Sex and the City, seven years after it aired its last episode, became the most popular online TV show in China. Suddenly, Chanel, Gucci, Fendi, Prada and many more labels became household names. "The new generation [of Chinese consumers] are cross-border shoppers, seeking individuality, uniqueness and experience, and searching for product that can express themselves. They are frequent travelers who love to shop when they travel, and the U.S. is their No. 1 shopping destination," says Wu. In 2015, 3.2 million Chinese visited the United States, spending $11,000 per trip, $5,400 of which was spent shopping.
"Brick-and-mortar retailers spend a lot of time and money on merchandising, product flow, [and so forth], yet they are losing share to the internet," says Wu. VR allows Chinese shoppers to enjoy the same experience from afar, it eliminates problems such as internet blocks and payment and language barriers ? and it allows small brands that don't have the capital or market experience to go directly to the Chinese consumer.
One Chinese consumer discovered Los Angeles' Reservoir via Shopshops from the comfort of her living room. She interacted via livestreaming with the host about product fit and material hand, and received instructions about how to mix and match. She purchased four items for a total of $2,000. Then, she watched replays of the same session and bought more. In four months, her purchases from Reservoir totaled $34,000.
*4* You are going to roam store aisles alongside robots. Meet Tally, a robot that can "go around the store and give your associates what they need," says Intel CEO Brian Krzanich, who highlighted the Intel® Responsive Retail Platform at NRF, a horizontal platform that brings together retail hardware, software, APIs and sensors in a standardized way to take retail to the next level of personalized shopping. Intel is also investing more than $100 million over the next five years in the retail industry to help retailers unify every part of the retail operation.
Tally, from Simbe Robotics, is the world's first robotic autonomous shelf auditing and analytics solution for retail. Tally roams the store noting price errors, misplaced product and low stock or empty shelves and reporting back, allowing retailers to have an understanding of the true state of their merchandise, and eliminating the need for countless hours of inventory counting. Tally is powered by an Intel CPU, lasts for 12 hours at a time and docks by herself when she needs a charge ? and she will roam the aisles without bumping into you. Tally was far from the only innovation shown at NRF, but she was one of the few with eyes. You can enhance your own with a pair of Recon Jet™ Pro smart glasses from Recon Instruments, which aid in picking at the warehouse by identifying product location and verifying a matching product with its appropriate bucket.
*5* Maybe tomorrow your customer will want to speak with a robot, but today she's still seeking an informative, helpful and kind sales associate to assist in her shopping goals. What does this mean for retailers? It means that you need an engaged and well-trained salesforce ? engaged employees deliver 21 percent greater productivity and 10 percent better customer service ? and one that has time to interact with the customers in the store. If your workforce is counting inventory, poring over store scheduling sheets or struggling with multiple systems that don't have the same version of data and don't allow for one transparent view of your supply chain, it is losing time that it could be serving customers.
At Cavender's Boot City, the Western wear company has freed up associate time by implementing the Kronos® human capital management (HCM) solution in the cloud. The 75-store 2,000-employee retailer moved from completely manual systems (and processes that varied from store to store) to a unified automated platform for HR and payroll that has improved visibility and accuracy and allowed employees to spend "a lot less time in the office and more on the sales floor," says Jim Thompson, CEO. Cavender's slashed payroll processing time from four hours to 30 minutes per week, achieved a consistent methodology for scheduling and has better compliance and visibility into how employees are paid. Next up, it's moving to employee self-service, automated hiring solutions, a central communications hub and analytics.
*6* Your customer will get excited by the "knickerbocker glory and chocolate sprinkles," but you need to focus on the "vanilla" first. That's according to Charleen Wood, IT director, retail and customer solutions, Burberry, who is obviously British, because we would just call that an ice cream sundae. But her point is that focusing first on the fun and engaging consumer-facing experiences (which are also a must) is putting the cart before the horse.
Burberry, which is certainly known for its flashy tech, including direct-to-consumer buy-off-the-runway fashion shows, also had to get a handle on its foundation. The company was working off an aging legacy system, including six different POS solutions, which were "all difficult to support and maintain," says Wood. The company is big and diverse, with stores and concessions in 33 countries and multiple store profiles, including outlet, flagship and its Regent Street store that has a cafÉ. "[Burberry] needed a global solution that could scale and add functionality and new features and give our customers a better experience," said Wood ? and the company did not want to be first into any country with whichever solution it chose.
It was looking for integrations it could use that didn't require customization and needed to roll out at its own pace. The solution needed to be future proof (good for at least 10 years), built with standardized, centralized processes that could be pushed out to each store, and its user interfaces needed to be simple for sales associates. Burberry ultimately chose Oracle Xstore POS and the company is in the process of a two-year roll out, doing a base build for the U.K. and United States and then rolling out to other countries. The priority is to replace 900-plus fixed POS terminals and it will focus on mobile afterwards. "We want to lay a good foundation that we can build on," says Wood. Also integrating into the system are a greenfield SAP implementation, CRM, security, Adyen Payments, a new tax system from Global Blue and more. The pilot, which included two stores going live on the same night (at New York's Brookfield Place and London's Westfield, respectively), has been a "great success," with positive feedback from sales associates. It's all about vanilla, says Wood. When evaluating a system for your enterprise, "really look at the richness you have in the product you're selecting and try to stick to its core functionality."
*7* Your home will soon be a link in the supply chain, if it's not already. Consider that Amazon is looking to buy a fleet of national jets. When you combine with Amazon Echo (your personal helper, with voice control and omni-directional audio that can control light switches and thermostats, plays all your music and much more) and Amazon Dash (a wi-fi connected device that reorders your products from home with the press of a button) the company can control the entire supply chain. Devices that enable a smarthome can be part of this chain. Consider a grocery retailer that is directly connected to your refrigerator, and knows when you are out of milk. Eric Skantze, CEO of Perseus Mirror (tag line: A Smart World Stares Back), part of XRC Labs, offers a mirror that helps to "to close the gap between retail and the home," he says. The Perseus Mirror helps keep you connected ? and functions as an actual mirror, to keep you looking good. "It's when we are home and out of toothpaste that we want it, but we often forget by the time we get to the store," says Skantze, who calls this convenience based purchasing, and says it becoming increasingly possible with the merging of deep machine learning/AI and IoT (the Internet of Things).
*8* Your customer is the brand. He wants everything personalized to match that brand message.
Consider NikeID, Nike's incredibly popular custom shoe design offering, J. Crew's campaign that lets you "give your chino personality" by choosing from various silhouettes, or Gucci's DIY line that allows you to customize your jacket with different patterns, designs and fonts. Alexa Fleischman, CEO of Strypes, a startup (also part of XRC Labs) that offers a 3D platform for personalization, calls it the "future of fashion." This is not a trend that has resurfaced, she says, but the culmination of years of smaller steps, from crafting, to customizing merchandise online (Shutterfly, Custom Ink), to mass customization in jewelry (Pandora) and accessories, to custom fashion (Rebecca Minkoff, Louis Vuitton, Rag & Bone), to today's movement from customization to true personalization. Want a few more examples? Take Shoes of Prey, founded in 2009 as the first website that allowed women to design their own shoes, or Indochino, the largest maker of men's made-to-measure suits and apparel in the world. "We're a nine-year-old company, and all of the garments we've made are unique to each individual," says Drew Green, CEO of Indochino. We are entering the Age of the Personal Brand.
That personalization extends to the store experience, too. The type of personalized digital marketing that we've grown accustomed to online is expanding to the store. Dave Bruno, marketing director of Aptos calls it persistent personalization, and the tech company is driving it into the stores with the help of its experience innovation partner, Formula 3 Group (F3G). Atop an Aptos platform of mobile POS, order management, CRM and clienteling are built interactive and personalized displays that are activated by shoppers' phones or RFID-enabled loyalty cards to greet them with relevant content based on their preferences and history, or, should they pick up a specific product, to offer detailed info about the merchandise.
*9* Stores will turn into manufacturing plants. Intel also showcased on-demand, in-store 3D knitting from Shima Seiki, a 3D knit printer that can customize printed knit designs ? changing the store from a place of fulfillment and distribution to a location where production meets consumers at the point of demand. That's personalization at the point of manufacture and purchase. You're also going to start seeing this with other types of 3D printers and materials, which will also allow homes to turn into manufacturing plants. A 2014 report from Strategy Analytics estimated that more than 50 percent of all households in the United States and Europe would own at least one 3D printer by 2030, but more recent reports seem to be a little less bullish. Still, as costs for the printers and the additive inks decrease, as speed increases and as more useful apps are developed, we can expect to see more household adoption.
*10* You and your customers are going to spend time in a virtual world. Whether on the job or during your leisure time, virtual reality (VR) is coming to you. VR can allow consumers to be "in" your store from anywhere around the globe and buy directly (see ShopShops, above) and it can allow retailers to play around with product, visually, in a multitude of ways, without actually having to move a thing. Stores can use VR for planograms, changing out displays and products on the fly; to overlay heat maps (technology from Buy Reveal) to view the most eye-grabbing parts of shelves or store or product; to overlay sales data to highlight the location of the best sellers on the floor to optimize profitability relative to product placement, and much, much more.
*11* When your customer heads to the brick-and-mortar store, she will have the intention of buying something. The Levi Strauss team had some "a-ha" moments as it was traveling around the world observing customer behavior. They discovered that the purchasing intent of consumers visiting stores is rising. "They don't have to go to store, so when they go, intention is higher than it used to be," says Carrie Ask, executive vice president of global retail for Levi Strauss. This means knowing exactly what inventory you have and where it is has become more important than ever before. "Lack of shelf inventory in-stocks is an Achilles heel," she says. "As a retailer and an industry we can no longer accept this." In its "store of tomorrow," Levi's is eliminating the out-of-stock and misplaced stock problems via RFID tags and overhead readers, allowing the retailer to track the movement of apparel and where it is in the store. (RFID also enables many other experiences, such as better service in dressing rooms (cross-selling and upselling), and better analytics (what did consumers bring into the dressing room that they didn't purchase?)). Plus, more automated and accurate inventory tracking frees the sales associate to focus on the customer and not the inventory, she says. For more RFID reporting from NRF, see this article on lululemon, adidas and Auburn University's RFID Lab.
*12* Your customers want their purchases to help people ? not just line the pockets of your company. There's a lot of house-cluttering swag at trade shows, but #NRF17 provided my first experience walking away with a small tree seedling to plant. Yes, you read that right. A tree. Apparel brand Tentree is one of a growing number of businesses built on a model of giving back. At tentree, 10 trees are planted for every purchase made, and as of this writing, 10,124,420 trees have been planted. The company was featured at iQmetrix, which creates solutions that integrate to omnichannel and improve the in-store experience for the consumer. You can see this giving back at individual businesses as well as across the retail industry, with programs such as RetailROI Retail Orphan Initiative, a mission to help vulnerable children worldwide, which continues to grow as company representatives travel to locations around the globe to help struggling children and communities. Visit www.retailroi.org for information about how your company can get involved.
*13* Your customers want to text you, not download your app or call on the phone.
Of the top 100 apps today, only six are for shopping and only 5 percent of customers use a retail store app, says Joe Beninato, founder and CEO of Banter, an XRC member and conversational commerce platform designed to bring customers and businesses together with messaging apps they already use. "Patagonia figured this out, and dismantled its mobile app," says Banter. "How do we reach the other 95 percent of shoppers? We give people what they want. They want to be able to message you. We all message, on Facebook, WeChat, whatever. Text messaging is built into every phone on the planet. One hundred percent of your customers could text you today if only you let them." They're already on their phones for an average 11 hours per day, says Banter, and in 2015, messaging surpassed social network usage. This will continue to grow, and is expected to double by 2020. Customers don't want to call you and wait on hold. Texting is easy, it's informal, it's genuine and expressive, it isn't bound by time (asynchronous); it's threaded (you have a record on your phone) and it's always with you, says Beninato. What's the No. 1 reason people call stores? To find out when the store closes. Often Google info is out of date. "Wouldn't it be great if you could just send a text message and get the answer back?"
Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].