The future of retail: #NRF2018 highlights
The impact of RISE Up
Last year, NRF launched RISE Up, an exciting educational program focused on building the next generation of retail professionals. The RISE Up theme permeated the conference in 2017 and felt like a rallying cry for retailers—and rally they did. Holiday sales were up 5.5 percent year over year (online and other non-store sales even stronger at +11.5 percent), coupled with a nice bump in physical store openings.
This year’s Big Show was full of positive energy. Chatter at sessions and on the show floor centered around operationalizing innovation, using technology behind-the-scenes to drive customer engagement and human connection, and blending physical and digital channels in meaningful, customer-centric ways.
Insisting on innovation
Retail is moving fast, with new, more nimble players joining every day. For large enterprise companies to compete and stay relevant, it’s more important than ever to not only build a culture of innovation, but also follow principles of the scientific method to prove out ideas.
A number of inspirational retailers spoke about how they’ve embedded a culture of testing and innovating within their organizations. Recommendations ranged from having innovation reside in outside groups to protect innovation funding and attract start-up talent, to changing performance metrics so team members are measured on the quality and quantity of their ideas versus purely on the bottom line.
Retailers are seeing the value in applying a scientific approach to managing their innovation efforts. Exploring, testing, and proving out new technologies within a more formal structure is enabling them to explore more ideas earlier, test with key success criteria in mind, and prove out new capabilities that are already aligned to business needs and strategic priorities.
A shining star at NRF, 1-800-Flowers has a long history of innovation. Since the mid-’80s when the company was the first eCommerce site on AOL, it’s been able to establish a culture of staying at the forefront of where new technology and customer behavior intersect. From an artificial intelligence (AI)-driven personal assistant powered by IBM’s Watson, to voice ordering with both Amazon and Google, to conversational commerce with Facebook’s Messenger, 1-800-Flowers’ innovative approach allows it to learn and grow with its customers. Wherever consumers gather in the future, 1-800-Flowers will be there and so will other retailers that successfully weave innovation into the fabric of their cultures.
Powering insights with AI
Augmented reality and virtual reality grabbed headlines in 2017, and this year we saw many new and promising use cases for their application. However, at #NRF2018, AI dominated the show. Some vendors were focused on back-end efficiencies, while some were focused on enhancing the customer experience. We were pleased to see a rare few focused on trying to use AI across the value chain.
The lines between applications and analytics are continuing to blur. We saw companies using AI to replicate the personal shopper experience at scale (through personalization and product suggestions), drive predictive logistics to improve efficiencies, and incorporate new types of personal data, like style, body type, skin, and facial features. For example, FindMine is using machine learning (ML) and AI to help retailers show customers what a product looks like as part of a complete outfit—to make them more likely to buy the product.
Data-driven insight is becoming increasingly important to gain a competitive edge. With AI and ML, retailers can make better business decisions and provide more meaningful customer experiences.
Blending digital and physical stores
Retailers are continuing the customer-first movement by meeting customers in the space they’re comfortable interacting in—whether that’s physical or digital.
To draw customers into their physical stores, retailers must design an experience compelling enough to get them off the couch. For example, many customers come to stores to capture “Instagrammable moments” and to share their experiences with the world. At the Museum of Ice Cream, people can take—and share—photos in the whimsical, delicious-looking scenes. At the Allbirds shoe store in New York, there’s a human-sized hamster wheel that customers can walk on to try out shoes before they buy them.
Distributed commerce is on the rise, with customers now engaging with retailers through platforms like Instagram, Facebook, Pinterest, and emerging conversational commerce. More and more, customers’ buying decisions are being influenced by brands’ and influencers’ social channels. Customers can even buy some products directly on their social channels. We heard from brands like Neiman Marcus, Outdoor Voices, and Capsule, that are driving high engagement with customers through one-on-one connection on social platforms.
Also, digital stores are using technology to give customers a physical store experience at home. At NRF, Wayfair showed off its application that allows customers to try out furniture in their home through augmented reality.
Retailers need to create a seamless experience across digital and physical—knowing that customers are looking for different experiences across every channel.
With companies dedicating more resources to innovation, many different channels and unique ways to engage customers, and the power of AI and ML to make the customer experience more personal and convenient—it’s going to be an exciting 2018 for retail. And we’re excited to help our clients use these technologies and opportunities to connect with their customers in more meaningful ways than ever in 2018.
Slalom’s retail industry experts
Slalom’s retail industry experts help companies navigate the rapidly changing retail landscape and find new ways to delight their customers. Learn more about Slalom’s retail practice.