NRF 2018: Six revelations from the retail show
Having just spent a hectic three days in New York at the NRF2018, I can honestly say that it’s only when you have stepped away from the hustle and bustle that you really have a chance to start connecting all the dots together that form the shape of today’s retail sector.
I have been to quite a few of these shows, and like any trade show, it is easy to get caught up in the excitement of it all, especially when you have approximately 36,000 visitors coming through the doors.
Speaking with a range of retailers at the event and attending some of the sessions, it is clear that retailers have been putting off capital investment across 2017, choosing instead to focus on continued efforts to reduce costs and consolidate operations.
However, 2018 is shaping up to be a year when retailers will need to begin laying out longer term plans, and start investing back into their company’s technical and analytical capabilities. The focus here will be on shoring-up capabilities that help them win in this highly competitive world.
The biggest investment is likely to be in cross-channel pricing capabilities that help retailers understand and manage customer demand across the wide range of channels they use. Achieving any kind of cross- or omni-channel implementation requires substantial infrastructure changes, that enable real-time transactions, analytics, and removing silos of data that together ensure the IT infrastructure delivers a single version of the truth and can function at speed of the business.
Many organisations have been steadily making the changes needed to achieve those goals, and it is something that I have been telling retailers they need to do for some time. The clear trends for 2018 at NRF this year only underline that further and to be successful, all of them require an IT infrastructure that can deliver on those requirements.
So, here are my takeaways from the event in terms of the investment trends retailers will be making in 2018, as they move into a mindset focused on future growth and competitive advantage.
- The bright lights of pricing – We have already highlighted the importance of getting on top of omni-channel, and here is another reason with the emergence ofnew and exciting pricing capabilities. The design, cost and viability of electronic store labelling (ESL) are looking more attractive all the time, and there were some great examples at NRF. ESL can, of course, remove one of the greatest headaches of running a retail store, and promises to cut costs, but it won’t be long before retailers use these signs to actively market to consumers, changing pricing and promotions to reflect a competitor offer, locality of a user, or other insights gained from across their omni-channel infrastructure – all in real-time.
- Personalisation grows up – Personalisation is going to move from simplistic (and sometimes endless) stream of email promotions or product recommendation based on your, and other shoppers buying habits, to a less cluttered and more refined approach. It will start to span channels, and make use of new data sources such as geo-location to inform the recommendation made.
- Customer experience – Retailers have spent so much time focused on their online user experience, that wider customer experience has fallen by the side of the road. Customers want to be loyal to the brands they love, but poke them in the ribs with poor customer service and they will soon get frustrated and move on. This is already being seen in other sectors such as retail banking and utilities. Retailers that can get on top of their whole customer experience, making it something special rather than just another commodity, will win out. The fact is that price is fast losing its attraction as a differentiator, and great customer experience speaks volumes.
- More AI is on the way – Gaining insights from our data has always been a key goal for retailers. It’s how we learn about our customers and try to improve the services and product we offer to them, as well as improve the overall customer experience. This amount of data we have access to help with this task is becoming immense, and almost impossible for a team of humans to manage in a meaningful way. This is where artificial intelligence and machine learning come in. These technologies can find patterns in data much faster than any human, and in 2018 we will see more retailers using this technology to free up category managers and marketers to focus on making decisions from the patterns presented to them, rather than spending weeks haphazardly hunting for them. This will mean much quicker and better informed decisions, as well as enabling the use of tools such as prescriptive analytics.
- Faster technology deployments – We’ve talked about the need for an IT infrastructure that enables a single unified version of the truth and that can take time, because it is not just about the technology, it's a process and data restructuring problem. However, one of the ways companies will speed up their deployments by using technology that are able to build relationships which is more loosely coupled and less structured. This can dramatically cut the time needed to implement technology and get to the insights and actions that retailers need to make, to remain competitive.
- Geo-location services – Many of the vendors at NRF were talking about using location services to understand where a customer is in a shopping centre or within a store, so that push notifications can be sent to mobile devices. Retailers are certainly experimenting with this technology, and the personalisation potential is huge. Imagine being able to tell a customer, that they are 20 feet from the dress that browsed online a week ago, and offering them a 10% discount in store today.
Who knows how far down the road retailers will get with some of these over the next 12 months, but we are already seeing signs that there will be some really exciting things to emerge from the retail space in 2018. What every retailer needs to remember, of course, is not to get so immersed in technology projects that they take their eyes off the ball. Ultimately the big winners in retail are always those that are focused on doing the basics better, faster, smarter and cheaper….
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Channie Mize is the Senior Vice President & Global Sector General Manager for Periscope™ By McKinsey. In this role, she is responsible for ensuring success of retail clients in using Periscope and for driving the solutions’ vision to address current and future needs of the dynamically changing retail landscape.
Channie is a...