This year’s NRF highlighted agility, empathy, and innovation. We explore how these characteristics are helping retailers to thrive now and build resilience and success for the future.
It’s no surprise that the retail industry is in the midst of immense change. The pandemic accelerated the rate of digital transformation, challenged business models, transformed customer experience, brought new importance to human connection and to safety, and reinforced the need for sustainable practices.
During chapter one of NRF: Retail's Big Show, Slalom had the opportunity to listen, learn, and engage with clients and partners on the theme of “Forward Together.” While our retail experts missed bustle of the Javits Center, it was humbling to have the opportunity to dig into the impact of the pandemic, consider its future implications, and celebrate the resilience of our retail partners.
The impact of COVID-19
As expected, much of the focus this year centered on the pandemic. There were sessions exploring the impact of consumer life transitioning to the home, and the increasing digitization of interactions. We heard growth numbers for ecommerce retailing as big as 50%. The words “frictionless” and “contactless” bubbled up in nearly every session. While we don’t have time to unpack everything in this article, here are some trends that dominated the conversation:
- Acceleration of fulfilment options for consumers: For example, buy online/pick up in store (BOPIS), curbside pick-up, and buy in store and ship to home. Celeste Burgoyne, president of Americas and global guest innovation for Lululemon, spoke about delivering on the promise of a two-hour order fulfillment through BOPIS and curbside.
- Contactless shopping and payment methods: This topic is driven by the need to ensure safety through a completely touchless experience for customers and for employee operations.
- Store queue and traffic visibility: The pandemic has upped the interest in technology that guides retailers toward safer practices, and provides customers with time-saving information.
- Social commerce: Business Wire Research and Markets projected in 2020 that the global social commerce market will reach $604.5 Billion by 2027.
- Livestream selling: China is a key leader here. We heard reports of substantial year-over-year growth and 2020 sales figures in billions! Industry leaders expect to see this trend expand globally and in a meaningful way.
- Direct to consumer partnerships: Last year, Walmart announced partnerships in the resale community with ThredUp and Shopify to extend their curated marketplace. At NRF, it came through loud and clear—partnerships are a surefire way to win in retail.
- Physical retail continues to be reimagined: Models are emerging in which the physical store will increasingly act as a springboard to generate online sales, support order fulfilment, capitalize on research and innovation, and harness community.
- Virtual outfitting and support experiences: Marc Metrick, president and CEO of Saks Fifth Avenue, shared the successes Saks is having with technology that connects stylists in stores with customers at home.
With COVID-19 accelerating digital retail, the ability to quickly augment or build out net-new capabilities—and to respond effectively to changing consumer demands is impressive. So many retailers are thriving and finding ways to unlock success, even in these unprecedented times.
The retailers who are proving to be most resilient in the current landscape demonstrate agility coupled with focus, and a fundamental understanding that successful digitization comes down to people.
Of course, the keys to success are empowering your employees with the right tools to collaborate; meeting customers where they are; and an agile operational model (centered around customer and digital) that supports quick responses to a shifting market. But what really took mainstage at NRF was the importance of a robust, agile, and connected supply chain—one that’s also both smart and green. Shelley Bransten, Microsoft's corporate VP of global consumer goods and retail industries, shared that 60% of brands say an intelligent supply chain is the most critical thing to supporting agility.
The supply chain is now demand planning and is at the forefront of the customer experience. According to data shared by Carrie Tharp, VP, retail and consumer for Google Cloud, the search for the phrase “who has product in stock” grew 8000% in the United States year over year. Similarly, the search for “curbside pickup” grew 3000% globally. The consensus at the fair was that reframing a holistic strategy that combines first mile and last mile ecosystems is a worthwhile transformation and can extend visibility, planning, analytics, and execution.
Our perspective: Agile retail is the key to success. And right now, focusing on building it into your supply chain is a good place to start. With an increasing number of ways to reach consumers and accommodate speedy, personalized, and frictionless experiences, building an intelligent supply chain requires maximizing the use of developing technologies and a solid data management strategy. Our recommendations: Leverage artificial intelligence and machine learning (AI/ML) to automate the basics and unlock the power of predictability. Explore edge computing technologies like RFID and sensor to improve visibility. Draw upon Cloud solutions to centralize and organize structured and unstructured data and drive predictive, cognitive insights. Leverage partnerships and physical retail to accelerate last mile strategies like curbside or same-day delivery.
Leading with empathy
Last year was a rollercoaster of emotions. It fundamentally changed both the mindset of consumers and their behavior. There is an increasing interest in brand authenticity, business transparency, and corporate responsibility—especially in response to global issues like equality and sustainability. We heard a rising need to develop that deeper, human connection with customers.
Customers clearly want to know where your brand stands when it comes to important topics. Is your product sustainably sourced? Do you make ethical choices during the production process? Does your company prioritize giving back or creating a socially conscious model? Re-commerce (aka resale), while nothing new, is gaining substantial ground and will only continue to grow. In a session on sustainability with H&M and Ikea, we heard about some of the creative ways retailers are maximizing the life of their products. H&M has developed Looop, a machine that cleans and respins old textiles into new garments in under five hours. The idea of a circular economy isn’t going away anytime soon.
Empathy is moving beyond a focus on the consumer. It's now essential to invest in your employees and live your core values. And brands need to do the work internally before representing it externally. We watched Slalom’s very own Rachel James moderate a discussion on ethics in tech, equity, diversity, and human-centered design. One clear point the panelists agreed on: Ensuring employee inclusivity should be a priority.
Our perspective: The pandemic has really shown how interconnected today’s world really is. How can retailers continue to show empathy in 2021 and play their part in sustaining the economy, the environment, and society? We suggest keeping your focus on human connection with your customers. Connect your brand ethos and values back to the hearts of your consumers. Find ways to demonstrate compassion and understanding toward your employees. Lead with transparency and build trust by being honest about where you are in your sustainability and equality journey—and where you need to improve. Finally, prioritize increased sustainability.
Technology and data-driven innovation are more pivotal to the retail industry than ever. Many speakers agreed that continued innovation has been an essential part of responding to the pandemic; investing in it has helped optimize business and improve customer experiences and brand perception. One key sentiment we took away from this year’s show was the importance of automating the basics, investing in omni, removing friction points, and fostering enhanced customer engagement.
In 2020, retailers had to continuously adjust to varying customer needs. Demand skyrocketed for essential goods and fell in other categories like jewelry, apparel, and footwear.
Edge computing with technologies like RFID, computer vision (CV), and sensors is a great way to ensure shelf accuracy in the store, maintain social distancing within stores, and provide customers with real-time information about store traffic prior to their visit.
AI/ML will be key to ensuring inventory optimization, replenishment, labor scheduling, and automating tactical store operations. Additionally, employees will gain more time to focus on serving customers, developing the customer experience, and supporting value-add operations like curbside pickups. Digital growth and richer data generation will further improve and refine these models. It’s worth noting that none of the traditional long-term, year-on-year models supported the above demand variations, adjustments to real time variations of COVID, customer sentiments, or other unexpected events.
Augmented reality and virtual reality (AR/VR), product launch in digital platforms, virtual fitting rooms, and even virtual stores are great ways to engage with customers and provide a better experience. In furniture and home goods, Ikea is leading successful AR/VR experimentations that improve engagement and purchase decisions. Brands & Fashion is showcasing its products with virtual gaming and entertainment media.
Our perspective: Customers are becoming more comfortable sharing data, especially with brands they trust and that align with their values. Retail innovation will continue to shape the retail industry and digital experience. As you evaluate or expand on these areas for your business, be very clear on the relevant benefit to your business and customer. Do they improve customer experience? Do they remove friction in your business? Will they drive cost savings? We heard loud and clear that fostering a culture of innovation—one that also focuses on values and outcomes—will continue to differentiate frontrunners in the industry.
The pandemic has brought many new challenges to retail—and plenty of exciting opportunities, too. Whatever comes next, it’s clear that retail is continuing to move at lightspeed, and we look forward to being right there with you.