Chris Baldwin, Chairman, President and CEO of NRF kicked off this year’s event with his insights and forecasts for Retail in 2020. Unfortunately, I missed his session due to a malfunction in the NRF ticketing system. Rest assured, I will update this article as soon as I can get my hands on a video from the session.

Opening keynote with Satya Nadella, CEO, Microsoft

Microsoft CEO Satya Nadella delivered a charismatic opening keynote. I have had the opportunity to see him live once before in Stockholm, and again here at NRF. He shared his thoughts on the future of retail and how technology will help the industry transform. Microsoft works closely with retailers all over the world to help them deliver on the promise of intelligent retail.

Next retail innovations will not come from tech, but from you as you build your own capability

The global retail sector is such a pivotal part of world economy that it accounts for 31% of the world’s GDP. Apart from the fact that it creates employment for billions of people, in 2015 retail turned in a whopping $22.6 trillion which rose to $28 trillion in 2019. Retail has displayed a steady grown steadily with an annual growth rate of about 3.8% since 2008. Supermarkets still remain largest provider of retail services (35%).

Omnichannel is expected to surpass supermarkets, it already represents about 23% of retail sales with plenty of room for further growth it is inevitable that at some point in the near future retailers will expect multiple touchpoints for their retail journey.

Satya Nadella is of the opinion that digitalization is already soaked into the economy, pointing out that 92 of the top 100 retailers use Microsoft Azure. Retailers need to abandon conventional means and increase the intensity of technology, this always leads to improved capability and reach. Since 75% of shopping begins online, he advices retailers to capitalize on consumer data to create effective digital marketing campaigns. With Azure retailers does not need to reinvent the wheel, but can use off the shelf solutions and focus on their core offerings – to build their own digital capability so to speak.

Learn all the time, keep your strategies up to date. The retail world is fast paced and strategies are always evolving. Staying current gives your customers the confidence to be associated with your brand. Researching new market trends and strategies must be a vital part of every retailer’s process. All data from all systems should be utilized for personalization, and market data should be processed to meet the brands goals and identity, this sets retailers apart from others.

Customer expectations are constantly increasing, terms like “two days shipping” are now common. Partnering with suppliers can significantly shorten supply routes and spread retailers reach. The result is swift and monitored shipping. Offer customers quality service, swift shipping, personal connection and going the extra mile for their satisfaction. This makes customers expect the best and associate your brand with premium service.

Prioritizing customer satisfaction is the best way to create a loyal customer base. A recommendation from a satisfied customer is one of the strongest forms of marketing, all employees must be constantly aware of this. Satya wants to break down silos and empower employees with the right tools and the capability to communicate across departments.

A new era of transformation at Sam’s Club

Committed to fast-paced modernization efforts, Sam’s Club has gone big on digital and empowered a rising generation of tech-savvy associates who are helping the business grow. Apparently, the Sam Club is now looking to revolutionise the future of retail service. How much have they been able to achieve? Are the changes extensive to the whole world? Also, how would these changes effect the retail giants, small retailers and all of their consumers? Hear noted author and MIT professor Zeynep Ton and Sam’s Club CEO John Furner explore the current retail landscape when it comes to work and employee opportunity. Zeynep and John will discuss how work is changing and what retailers like Sam’s Club are doing to be great employers.

The impact retail has on employment can not be overemphasized, apart from creating over a billion jobs it also provides favourable work conditions and a diversity in roles. Two key features of employment in the retail industry are fair wages and stability.

Experienced and capable employees are crucial elements in the success of any retail service, having specialist employees for predefined roles (e.g sales, customer service, etc) instead of generalists produces better results.

Having a team that shares the brand’s vision is essential. This gives e-commerce brands a sense of identity and purpose which portrays them as a single working unit. Empowering employees to put the customers first can lead to a 15% increase in conversion rates and a 10% increase in customer satisfaction.

Winning the experience economy: How to raise the bar in a world of raised expectations

With consumers expecting increasingly seamless shopping experiences, who is meeting consumers where they are, instore, online or in-home? How does all of the data collected from consumers explain their experience? It’s important to note that we now live in an experience economy where the consumer’s experience is vital to brands around the world. A lot of data is gotten from human living and interaction; reaching about 2.5 billion gigabytes every day. So, how can all of the raw data be used to improve consumer experience? The experience economy isn’t a new concept and the big brands around the world make use of it to satisfy the ever-increasing demand of their consumers. Let’s learn from the top experts. In consecutive interviews, hear from three CEOs who are setting the vision and raising the bar by meeting “me-commerce” demands in a world of always on-demand.

Neela Montgomery believes Social Media is the new capital of advertising for obvious reasons – people spend more time on it than on TV or print. 51% of sales online, although sales still need to go frictionless across channels.

Targeting with products that matters to the customer. Use market data to specifically target customers who have shown an interest in certain products. Sometimes customers do not actually know what they seek, exciting product combinations are an interesting way to inspire sales. She also believes Brokering symbiotic partnerships with other brands leads to more success than unhealthy competition and rivalry.

Neela also maintains that stores are invaluable as physical connection points with the custome and having a solid brand DNA and staying true to it is vital.

Jennifer Hyman, CEO Rest the Runway spoke on ownership replaced by access, faster fashion, customer insight from the beginning and short feedback loop.

Ron Johnson, Enjoy Inc. focuses on having an eye for future trends and being open to change keeps your brand relevant, you should be a decade ahead in innovations. He also maintains that having a dedicated customer service team to provide rapid feedback leads to customer satisfaction. 50% of all visits to his company generated additional sales.

All in all a very fruitful first day of NRF and I look forward to two more days of exciting insights.

My third day at NRF Expo’2019 was devoted to the future of retail. With all innovations, what can we expect from commerce in some 10 years? Ask the futurist – and you will get the picture of the smiling robot knocking at your door to hand in a perfect-fit suit you virtually tried on halfway around the world a day before.

But though there is nothing impossible in this alternative, should the businesses rely on it while developing plans and building strategies? Does it reflect the needs of customers and their most desperate desires? Here we come back to the thesis you could repeatedly hear from different speakers at NRF Expo’2019: modern commerce is not an art, it is a science based on a deep and profound analysis of data. Want to be successful tomorrow? Study the trends and search for vacant niches today. For these are clients’ expectations that shape the future. And only those novelties are worth efforts which enhance customer loyalty.

With this in mind, here are the four magic words from the NRF wizards you need to remember and repeat as a spell while building your business strategy:

• customer experience
• convenience
• inclusion
• consciousness

Let’s see how the future of retail is to be built on these cornerstones.

Shops of the Future will Sell Experience, Not Products

It is hard to impress anybody with the assortment these days. Goods are available as simply as never before and new products are launched every day. This stimulates advanced retailers to bet on experience more than on products. Customers prefer things that either have a story behind, or create a special lifestyle, or highlight their individuality. Expert state that shops of the future will become more like places where retailers will build relationships with the shoppers creating opportunities for people to connect with the product.

Rather than just visiting the store to buy and leave, people want to be entertained and amused, to have some kind of social experience. This reminded me of Apple’s recent “town square” store concept: a place for shoppers where they can meet friends, have fun, and try new gadgets. Another fascinating example is The Dreamery by Casper, the place where you can book a nap session (during which you will actually try out a new mattress and maybe even decide to buy it). Such shops set a trend which has already got the name of “retailtainment”.

And here we come to the second variable which will define the future of retail in the forthcoming decades: convenience.

Customers Will Favor Retailers Who Will Offer More Convenience

The focus of reports of FIS, Excentus, and Shell representatives at NRF Expo was on enhancing brand loyalty while providing more convenience for the customers. This includes improved payment, flawless and consistent service, and better personalization.

Technologies like POS systems, beacons, image and voice recognition, AI, and AR already make shopping more user-friendly.  Amazon Go replaces checkouts with AI-driven Just Walk Out technology. It allows making all payments in the store using Amazon account. Another nice recent example is IKEA’s new app that leverages Apple’s ARKit. With it, users can preview how the items from IKEA shop will fit in their accommodation.

And the line between real and virtual shopping experiences will become thinner and thinner. Most experts agree that, on contrast to previous forecasts, brick-and-mortar stores will not totally disappear. Though most of them will face great transformations turning into what is called a phygital store – that is, a combination of physical and digital space and developing a fluid web-to-store customer experience. The others will become more of a showroom or switch to BOPIS model. What should be taken into account is that different segments of the target audience need different approaches to service modernization.

New Niches Will Be Occupied by Those Who Consider Inclusion

The constant challenge for the businesses is finding new market niches. One of the solutions proposed at NRF Expo was considering the groups which have been long staying in the shadow. Thus, Microsoft has started to pay special attention to disabled customers making services more accessible and convenient for people with disabilities. In his report, the company CMO Chris Capossela gave an example of how valuing inclusion and diversity can become a part of a brand strategy. Microsoft’s new Xbox controller is designed entirely for players with mobility impairments.

But the disabled are not the only group still waiting for more attention from the retailers. Think of ethnic minorities and, not surprisingly, women.

Statistics says women drive 70 to 80% of all consumer purchases. That is because they often buy on behalf of other categories, including children, elderly parents, and even husbands. Recently, women’s buying power has surpassed men’s. So, by prioritizing female segment, companies can win a lot. Want inspiration? Study the case of Soda Says, a retail brand selling smart tech to women, or making their life teccessible, as the company’s slogan says. Their data-driven approach to the study of true needs and preferences of female consumers shows it’s not just about coloring everything pink.

In terms of ethnicity, Asian-Americans represent a fast-growing buying power, especially in housing, public transportation, and education. Understanding in what categories this segment of customers is ready to spend more can give insights on how the companies can work more effectively to occupy this niche.

Environment Consciousness: The Everlasting Fashion

As society is becoming more environmentally conscious, the circular economy is gaining ground as another promising trend in retail. Progressive companies receive popularity by supporting environmental sustainability, and not necessarily with the cost. Consider, for example, a luxury fashion brand Elvis & Kresse. The business started as an attempt to tackle a ten-million-ton-problem of leather scraps which need to be disposed of in London annually. Now the company produces a full range of leather accessories from what previously was buried in the ground.

Other companies, like Starbucks or Best Buy, set on to reduce packaging or even build eco-friendly stores. This includes energy-efficient lighting and water consumption, using solar and wind power, and recycled and low-carbon-emitting construction materials.

Can technologies help retailers to become greener? Sure. Consider, for example, the use of IoT. This technology is already gaining ground in agriculture where it helps to reduce the number of pesticide fertilizers and so on. In retail, the use of sensors can reduce energy costs (due to more efficient lighting and temperature regulation, for example), enhance supply chain management, and help the customers make healthier and greener choices when shopping.

Let’s Sum Up:

Building a successful business strategy implies the understanding of how things are going to change in the course of time. The future of retail is defined by the most promising trends we are observing today and is tailored to the needs of different groups of customers. As it was shown at NRF Expo’2019, the companies which want to succeed in retail in 2030, should organize their business processes and technical modernization keeping in mind such crucial ideas as emphasizing customer experience, ensuring convenience of services for various target groups, providing inclusion, and staying environmentally conscious.

Hope the presented ideas and tactical trends will be useful for you and will help you to chart the course for your business. Stay prosperous and flourishing!

If you are interested in hearing more about the future of retail, feel free to contact me at bjorn.nostdahl@gunnebo.com 🙂

The second day of NRF Expo’2019 was devoted to the changes the retail industry is facing these days and the novelties we are to expect in the nearest future. Brilliant speakers, including John Zavada from PETCO, Glenn Shoosmith from BookingBug, Phil Thompson form AWS, Linda Bustos from Skava, and others, shared their vision on how and why introduce innovation into the company’s processes.

Their main message was: while everybody is talking about digitization, automation, ML, boundless stores, and omnichanelling, human interaction is still of the top priority for it causes and shapes all the changes.

Why Take Online Disruption Seriously

Few people today would object to the necessity of introducing technical innovations. At the same time, few as well understand that this implies a significant rethinking of cost components and budgets. As was mentioned by Sebastian Grady, president and COO of Rimini Street, today companies are still spending up to 90 % of their IT budgets on operating expenses, maintenance and support just “to keep the lights on”.

So, while everybody is talking about innovation, it seems that quite often, businesses don’t take it seriously enough – and put themselves at risk. For keeping up technologically not just allows your business to stay competitive among other companies in your sector – it is if but the only way to retain customers who are aware of and willing to use new technologies.

Meet the Customers on Their Terms

Reducing friction points for consumers and serving for their convenience are the main reasons for digitization and automation in retail in today’s competitive environment.

Developing so-called boundless stores and omnichannel integration are the two strategies which experts recommend to pay attention to in 2019. Improving logistics (like same-day delivery or easy return) and strong reliance on data are the other things to keep in mind.

Though, accent on digital channels does not mean physical stores are to lose their relevance. People are still attracted to in-store visits and purchasing. People are attracted to brick-and-mortar stores by the social pleasure of personal experiences, human interaction and communication – that human touch which can’t be replaced by machines. Reimagining store functions supercharging staff with insights for better service were in the focus of the session by Glenn Shoosmith, CEO and Founder of BookingBug. Skilled, well-informed and enthusiastic staff empowered with digital support ensures clients get those exceptional experiences that encourage them to become return customers, the speaker stressed.

But what can be the trade in question? Many business owners are reluctant to innovations because of the expected costs. So, is it really necessary to invest huge sums into the development in order to bring digitization to your retail business?

Don’t Reinvent the Wheel

Though custom development has a lot of advantages, it is not necessary to address it any time you want to introduce IT innovations into your processes. Many services are available today from AWS, Microsoft Azure, Google Cloud, and IBM Watson as ready-made units. Such big technology providers have more capacities and years of experience in the development of IT products, and cloud technologies make their implementation and maintenance rather easy and convenient.

For example, Phil Thompson, industry CTO from AWS Retail team, introduced possibilities provided to retailers by AWS – and the list is impressive, indeed, including IoT, AI, and machine learning, all promising to ensure 50% greater forecast accuracy and store productivity.

Summing Up,

The statistics speaks for itself: 36% of retailers are considering introducing digitization and automation into their businesses in 2019. So, don’t miss the opportunity to stay competitive, join forces with fellow retailers, partner up with vendors and remember: where there is a wish, there is always a way!

If you are interested in hearing more about the future of retail, feel free to contact me at bjorn.nostdahl@gunnebo.com 🙂

Welcome to NRF Expo Series

With this article, I am starting a series of reports inspired by visiting NRF 2019 retail’s big show which took place on January 13-15^th in NYC. As noted by the organizers, NRF is the world’s largest retail conference and expo which gathers the biggest retail players from 99 countries. So, it is a splendid opportunity to learn about trends and innovations, find new partners and clear out prospects.

My first day was majorly devoted to deepening into the transformations small retailers are facing today with the increasing impact of digitization. While everybody’s eyes are justly turned to the marvels of such erupted online giants as Amazon, Alibaba or eBay, do so-called mom and pop stores really stand a chance to survive in this brave new digital world? Here are some insights from the leaders of the industry.

Can Mom and Pop Shops Stay on a Roll?

Mom and pop stores are small, mostly family-run businesses with a small amount of business volume and single location. Most of them are struggling hard today to stand up to large international retailers. But the experts promise the situation can be improved due to technical innovations and improvements in customer experience.

Being not burdened by large operating expenses, staffing, and warehousing, small stores have more chances to benefit from flexibility and clear customer focus. On the contrast to multivendor marketplaces, they can succeed in a vertical dimension, that is, in exploiting narrow, really specialized niches and competently addressing their target audience. But most important, it is easier for them to develop and maintain relevant corporate culture and staff involvement.

Next Step to Staff Efficiency

There is a close link between the customer experience and employee experience, states Jami Blake, a voice of customer director in Tiffany & Co. Today’s customers differ considerably from the previous generations. They have much more knowledge about the product yet before they enter your store – and expect a consultant not just provide adequate and detailed information (which itself demands from employees to be better informed and enthusiastic). What is more important is the message the company beams, the narrative behind the product, the inspiration it brings to people’s lives. To be competitive, modern companies want (and need) to be the part of customers’ lives.

But to inspire clients and to deliver the company’s promise properly, employees need to be inspired first. Here are some recommendations from the members of the senior executive panel discussion on how to drive enterprise profit and performance. The participants included executives with 50+ year experience in retail from such companies as Finish Line, Shopko, Macy’s, and Chico’s. The following statements from their discussion drew my attention:

• do forget about multitasking, instead, keep all members of your staff concentrated on one task and delivering one message,
• keep in mind the limitations of any technology, remember that technology should inspire your staff and make work easier, not become a burden,
• encourage employees to ask questions and keep them involved,
• create success stories not only for customers but for employees,
• and, what is most important, while introducing any innovations into the processes, remember that any changes take time and avoid staff’s fatigue.

To make a long story short, educate your staff, create corporate culture and connections and remember that staff dissatisfaction may cost too much since most often, it leads to customer dissatisfaction.

Customers Engaged

One of the ways to unburden your employees and though strange it may sound, to enhance customer loyalty is to shift more responsibility in the process of decision making and purchase on clients. Modern technologies make it simple and easy and it is a great opportunity for both big and small businesses.

We all live half-virtual life today staying connected most of the time. According to forecasts, each household is believed to have up to 50 connected devices by 2020, and mobile commerce is to capture 49% of online retail sales by that time reaching from $ 250 to $ 300 billion in transaction. Even today, companies which wisely use mobile apps are one step ahead of their competitors.

Turning your eyes on mobile technologies allows you to reach your customers where and when THEY want to shop. It encourages purchases through quicker and easier access to information about the product. It gives your customers more power and brings them into decision-making. It delights them through more personalized and seamless experiences. And it makes your employees less burdened.

Try It Online: State-of-the-Art Demos and Showrooms

Another perk modern technologies bring into commerce is opportunities offered by virtual and augmented reality. Even today, using headsets or other applicable technology, users can try on items and see holograms or 3-D views of the products. In the future, people will be able to visually shop in their local mom and pop store using VR or AR and have orders delivered to them.

Does it mean that traditional brick-and-mortar stores will sink into oblivion? Most likely, not, since there is a kind of the shopper’s delight no virtual store can give – that of keeping a thing in hands, touching it, feeling its smell – you know, all those sensations which induce us to spontaneous purchases. But it is quite predictable that most of the shops of the future will need to turn to BOPIS (Buy Online, Pick up in Store) concept. No wonder one of the panels of this year NRF conference was totally devoted to the future of the BOPIS model.

What small retailers should take into account first and foremost when intending to introduce this model into their business? Remember that to start BOPIS, you need to have full control of your inventory. Your store is expected to have agility and ability to act rapidly. Do think of autonomous supply chain. And remember that no matter what model you choose, a scientific, data-driven approach is a must-have for commerce today.

Conclusion: Modernized, not Historized

To survive in a modern competitive world, the company does not necessarily need to be a big conglomerate like Amazon or eBay. Small mom and pop stores have all chances to stay afloat and even prosper provided they benefit from modern technologies and innovative marketing strategies, such as developing in narrow specialized niches, staff optimization and education, creating a strong company culture, encouraging customer involvement, and store decentralization.

If you are interested in hearing more about the future of retail, feel free to contact me at bjorn.nostdahl@gunnebo.com 🙂