On Sunday, January 13, the National Retail Federation’s Big Show rolled into New York City for three days of focus around one of the world’s fastest-moving industries.
The event is a magnet for companies that want to get in on the latest trends to impact shoppers looking to buy products online or in store.
This year’s edition presented no shortage of talking points to an estimated audience of 37,000, representing nearly 100 different countries and operating at various points of the retail journey, including manufacturing, logistics, payments and more.
Given the ability of NRF to bring to life the inner workings of retailers around the world, here are the four key insights we believe retailers should keep in mind as we head further into 2019:
1. Artificial intelligence is no longer a buzzy topic
You didn’t have to attend the Big Show to recognize the excitement building around artificial intelligence (AI) and its role within retail. A survey of 1,900 executives from IBM and the NRF released on day two showed the forecasted jump in AI usage across three key functions of a retail business. They were:
- Customer intelligence (51% in 2019, up to 79% in 2022)
- Demand forecasting (48% in 2019, up to 85% in 2022)
- Pricing and promotion (38% in 2019, up to 73% in 2022)
Given its ubiquity on the agenda, and the type of sessions that filled the stage, attendees were able to explore not whether, but how AI is being used by industry leaders and disruptors alike.
Alibaba president Michael Evans took to the stage on day two to stress that AI was now at the heart of “everything we do” at the organization. While his words focused on the applications across customer service and product development, previous commentaries have praised the use of AI in Alibaba’s “smart warehouse”, which is 70% powered by robots.
Coresight Research founder Deborah Weinswig stated that retail is still behind the finance industry in terms of AI adoption, but this is likely to change in the near future as more businesses bring their concepts to life. One of the early movers is Guess, whose lead for retail in North America, Edward Park, presented a concept store which used smart mirrors to provide information around clothes and communicate with staff, enabling them to deliver items to the fitting room.
Retailers are set to spend $7.8 billion annually on AI-related projects by 2022, according to Capgemini, with “conversational AI” representing a highly popular movement. NRF saw plenty of tech providers demonstrating advanced forms of chatbots, with lots of emphasis on using contextual data to create even smarter machines. These will represent some of the most adopted and noticeable uses of AI in 2019 and beyond.
Still, if there’s anything that may affect AI’s rise to the top, it could be the race for talent to provide it. AI and machine learning specialists place second in the world’s top 10 emerging jobs, according to research by the World Economic Forum, which might create issues for retailers that have been slow on the draw.
It’s amazing to consider how forward-thinking enterprises like Alibaba have managed to develop their AI functions so quickly. But for those still finding their feet, securing budget, skilled workers and solidifying concepts might represent a more realistic aim for the year.
2. The gap between online and offline is being closed
When speaking to attendees about the hot topics for retailers in 2019, the conversation naturally drifted to the blurred line between e-commerce and in-store. This is a huge subject for any brand that wants to unify their online and offline environments to create a more seamless journey for the end user.
Brands including department store Kohl’s and mattress retailer Casper announced an intention to improve customer experiences by bridging the divide between their retail channels. Much of their advice centered around the notion of using technology within brick-and-mortar locations to create the idea of a single store, as opposed to having two with digital and physical labels.
What we also gathered was that every retailer is going about this differently. For instance, given the contrasts in products, customer preferences, the need for in-store assistance and other considerations, what might work for Kohl’s may not have the same effect on Lego, Adidas or another brand.
The important thing is that retailers are making a conscious effort to utilize services like click-and-collect to reduce the amount of friction they have between a store and a website or an app. Expect more uptake for the one-channel philosophy in 2019.
3. Customer behavior is getting unpredictable
In previous events, we’ve seen a clear narrative emerging: ‘customers are buying more online, physical stores need to adapt’; or ‘customers will always require a human to assist them in-store.’ We’re told that shoppers are changing, but now they’re throwing curveballs into the mix.
The NRF Big Show represents a prime opportunity for organizations to release new data on customer behavior and 2019 did not disappoint. To our surprise, we found the following:
- Three in every four digital sales made by Target is fulfilled in-store, according to CEO Brian Cornell.
- Nearly half of consumers (47%) have visited a retailer’s physical store after enjoying their online experience.
- Consumers rank website/mobile app speed as the most important online feature (57%), above discounts and rewards (45%).
- The majority (67%) of shoppers would prefer to receive recommendations from robots over humans.
The above directly contradicts everything we’ve been told about the need for humans to provide in-store assistance, how online is taking away from physical retail, and that consumers prefer a great price over an efficient experience.
The lesson here? Consumer behavior is changing in ways you cannot imagine. Only by mining your own data and understanding how your audience works can you provide for them.
4. Data needs to enhance customer experiences
In her day-one session, Sucharita Kodali, VP and Principal Analyst at Forrester Research, explored the “tension” that’s circulating around the topic of personalization. Data from Forrester revealed:
- Over a third (36%) of shoppers are demanding more personalized experiences from retailers.
- Nearly half of consumers (46%) are uncomfortable about the amount of data they share with retailers.
- People are most willing to share product preferences out of any data set (over 50%), above hobbies and interests (40%) and product spend (26%).
Though Kodali ended her presentation by explaining why personalization vs. privacy would feature among “a year of collisions and clashes”, it seems that consumers are willing to share certain information to receive experiences that are of value to them.
At the Innovation Stage, we heard how fashion retailers were using consumer and product data to create personalized customer journeys. We also found ourselves agreeing continuously with the words of Ann E. Joyce, chief customer officer at Chico’s FS Inc, who spoke on a panel exploring customer-centric merchandising.
“The more we give our customer what she wants, when she wants it, how she wants it. The more she trusts us. When she trusts us, she gives us more information. The more information she gives us, the more we can personalize.”
The exhibitors’ hall was filled with sentiments around how data could be used to better understand what customers want, and that’s an approach that we at Twiggle take with our own offering.
NRF showed that retailers are aware of their customers’ concerns over privacy and data security. However, this will represent less of a problem when their information is put to good use.