From speeding up the supply chain to adding personalization and making shopping more convenient — technology is fundamentally transforming the business. Here’s what you need to know.
“Our view is that retail is neither in a free fall, nor is it business as usual,” said Zia Daniell Wigder, chief global content officer of Shoptalk. “Rather we see the retail industry as being in a phase we call the new normal.”
This new normal, according to Wigder, is being defined by companies driving change, both internally and in the customer-facing market.
Putting some distance between the industry and the “retail apocalypse” narrative is imperative for retailers. In spite of the recent spate of bankruptcies, retail overall is coming off a record holiday season, consumer confidence remains strong and retailers are moving beyond the basics to tackle more complex problems.
Most retailers have moved past talking about omnichannel operations, but are still looking for back-end technology solutions to create new efficiencies, Wigder pointed out. Technology, of course, is the tool here and is becoming an integral part of every avenue of retail.
From using digital tools to add convenience and connections for customers to streamlining the supply chain, here are our top takeaways from Shoptalk:
1. BRANDS ARE BIG
Brands — store, direct-to-consumer and heritage brands — played a starring role at Shoptalk this year. There was an entire track of break out sessions devoted to the topic, and executives from Nike, Levi’s and Samsonite offered insights into the challenging environment for brands today.
It’s a balancing act for most, as they attempt to build e-commerce platforms, manage direct-to-consumer sales and maintain existing retail partnerships while facing the need to embrace and develop new marketing methods such as the growing reliance on social media influencers.
One of the most discussed and hotly debated topics of the week was the growing power of marketplaces. While many, including Samsonite Chief E-commerce Officer Charlie Cole, recognized the positive revenue stream marketplaces are producing, they also called out the risks.
“I think brands in general have a very short term, idealistic view of what the wholesale marketplace really is,” Cole told attendees on Tuesday. “If you could do it all over again, would you be on these marketplaces? The only correct answer is, no.” Risks run from counterfeiting to price arbitrage and responsibilities for customers’ identity theft, he said. “They have the eyeballs and you get a ton of money. But they also [carry] a lot of risk.”
Legacy brands shared the spotlight at Shoptalk with younger brands. Macy’s is growing its private label assortment from 29% to 40% of merchandise mix in the next two years. And direct-to-consumer startups like Glossier are giving customers more of a voice than ever.
2. CONVENIENCE COUNTS
Pricing is playing second fiddle to convenience at the moment, as concepts such as Amazon Go, Boxed and Shipt captured attendees’ attention with tales of how they are solving this problem for customers.
In the case of Boxed, the online warehouse concept, what began as a solution to bring the cost savings of buying in bulk to a greater number of consumers has evolved into something else. “As the B2B part of our business grew, it became clear that we underestimated something,” said Chieh Huang, CEO of Boxed in the closing keynote Wednesday. “This isn’t a physical need problem, it’s a time and patience problem.” Boxed booming sales in car-centric places such as Texas highlight this shift, he said.
Amazon Go, for all its ground-breaking technology, is at its core a convenience store. The ability to pick up a product and just walk out is the ultimate expression of this, Dilip Kumar, vice president of technology at Amazon Go and Amazon Books and Gianna Puerini, vice president of Amazon Go said on Sunday.
“It’s very geared toward people who are hungry and in a rush,” said Puerini. “Obviously, just walk out technology is a convenience play for customers to give them some time back. It’s so fast and easy.” Faster, even, than a vending machine — faster than a vending machine when swiping a card or inserting cash is factored in.
The e-commerce giant is far from the only one working out this problem. Sandrine Deveaux, managing director of store of the future at Farfetch, also gave a keynote about how the luxury marketplace is testing easier ways of shopping and paying in physical stores. The company is testing its store of the future technology at Browns East in London. It’s similar to Amazon Go in some ways: Customers tap their phones on a barcode upon entering the store and can pay via phone too.
Other tech startups at the conference showed off their work on the problem too: Standard Cognition’s technology is similar to Amazon Go’s but has fewer cameras, and MishiPay offers a tool that lets customers scan product barcodes on their phone before walking out of the store — an option that Walmart, Kroger and even Macy’s are testing.
3. DATA IS THE NEW CURRENCY
From talks on personalization and partnerships to omnichannel and loyalty, data was central to nearly all conversations.
“Data is the backbone of retail,” Daniel Alegre, president of retail and shopping at Google, told attendees during a keynote speech. Every day, he said people are searching for products to buy online through Google’s search engine. So the tech giant decided to help smooth the connection between retailers and customers — of course for a price.
Google announced a new product: shopping actions. It’s already signed on a few major retailers, like Target and Ulta, which he said have seen a 20% and 35% lift in online basket size, respectively.
Ulta is using data in other ways too, especially when it comes to omnichannel and seamless experiences. To build meaningful relationships with customers, Eric Messerschmidt, SVP of strategic marketing, CRM and loyalty at Ulta, said the company focuses on three things: infrastructure for clean data, an engaging loyalty program and personalized interactions. Attaining a 360 view of the customer is difficult, but “it’s the holy grail,” he said on a panel.
These days, data plays a crucial role in decision making in the c-suite. But other execs warned it can also be easy to get lost in. When asked what keeps him up at night, Tim Zawislack, head of e-commerce at Israeli textile firm Delta Galil, said it’s data. “You can reach a point where you’re getting too caught up in data and not seeing the forest from the trees,” he said. “Sometimes you miss trends or big picture stuff, but you have to get out in front of the next big thing.”
4. CUSTOMER CENTRICITY IS KEY
There are 400 billion bytes of data communicated every day, but humans can only process 2,000 bytes of data, Lowe’s VP of customer experience design Ruth Crowley, said during a panel. “How do you work to ensure what you’re doing, in innovation or on the practical side of the business, that it’s meaningful to the customer?” she asked. “Here’s the big answer: it’s not prescriptive, no two customers are the same.”
That’s something that Bridget Dolan, SVP of omni experiences and innovation at Sephora knows well. Shoppers have different needs depending on their mood, so Dolan came up with three scenarios for the Sephora shopper: inspiration, mission-driven and quick stop. Each of these things requires a focus on merchandising in stores, expertise among beauty consultants and digital tools.
For customers buying in an online world, there are more choices than ever but Emily Weiss, CEO of Glossier, argues they’re starved for connection. For many retailers, solving this means making a big investment in employees and expertise so that associates can spend more time making sure shoppers get exactly what they came for.
“In the age of Amazon, who has mastered offering a breadth of product, who has yet solved for a breadth of connection?” Glossier CEO Emily Weiss said in a keynote. “In the end you have to give your customers a voice, you have to truly listen to them and not just make them feel heard. You have to treat them with the respect that they deserve because after all in this world where there is no scarcity of choice, you have to give them a reason to keep choosing you.”
Nearly 80% of Glossier customers are referred to the site from a friend. For a digitally-native brand, that means not just being a part of the conversation, but creating a platform for connections is key. Weiss said the upstart beauty brand allows customers to connect to share recommendations, dislikes and skincare routines, all while building the brand image.
5. MOBILE ISN’T AN AFTERTHOUGHT
Thinking about a mobile strategy is no longer a job for a small team shoved in the back closet, it has become integral to everyone from the digital development to store operations teams. While several panels were dedicated to the topic, many executives offered up thoughts on how they use the channel to engage with customers and ease in-store checkout.
Phones are the entry point to the Macy’s brand now, CEO Jeff Gennette said, and personalization will be a big part of the way forward. Mobile is also part of the answer to smoothing the checkout process, a particular pain point for shoppers. Mobile checkout — where customers can scan product barcodes to pay through the app, then visit a specific counter to get a bag and have product tags removed — will roll out to all the stores by the end of the year.
Gennette also said the company will double its online assortment by the end of the year. Macy’s website and mobile app will also see a redesign.
At Lowe’s, 60% of in-store purchases are influenced by digital, Gihad Jawhar, head of digital development at Lowe’s, said during a panel on mobile experiences. Customers don’t think about channels, so neither should retailers. Instead, companies should think about the power a smartphone has to solve problems. For Jawhar, that meant figuring out how to capture the $60 billion he says is sitting on the sidelines because customers can’t picture furniture and other bulky items in their own homes before deciding to buy, he told Retail Dive in an interview.
“I couldn’t anticipate any of this. I think the amount of change the industry has had in that time period just blows everybody’s mind and it’s just accelerating,” he said. “[I]t’s about hanging on, placing your bets in the right places, and I think AR and VR is one of those places and keeping focused on the customer will keep you relevant.”
With that, Lowe’s announced the launch of an augmented reality feature on its mobile app. Later in the day, online marketplace, home remodeling and design company Houzz announced a very similar feature “View in My Room 3D,” which also allows users to virtually place 3D objects in their homes.
For other digitally native brands, like M.Gemi and Frank and Oak, mobile has always been central to their expansion into the physical world.
6. WOMEN ARE FINALLY TAKING CENTER STAGE
Leadership was a big topic at Shoptalk this year as industry leaders shared their insights, tips and strategies for motivating their troops. They also highlighted the role that diversity within the workforce plays in an organization’s success.
Shoptalk’s Wigder called out the more than 100 female speakers on the program this year (including Retail Dive Senior Editor Laura Heller), a point of pride for the conference and those women speakers. There was even a Girl’s Lounge with panel discussions about leadership and networking.
Ulta CEO Mary Dillon proudly showed off the many women leaders within the company, including those leading the retailer’s technology team.
7. TIGHTENING THE SUPPLY CHAIN ISN’T JUST FOR FAST-FASHION PLAYERS
Numerous panels and tracks focused on technology advancements in the supply chain.
Innovation in research and development in the supply chain will change the industry, Molly Langenstein, general business manager of Ready To Wear at Macy’s, said during a panel on the rise of private label.
“Our biggest challenge is understanding with certainty and precision in a business that is not about precision, and the supply chain piece is a huge part that has just not changed in a very, very long time. This is still a handmade industry,” she said. “The uniqueness consumers are demanding today is making it very hard whether you’re a big company or a small company to provide that uniqueness with certainty and that is something we are all continuing to grapple with.”
Making private label stand out means keeping the pulse on data and quickly tweaking merchandise to fit with what’s selling and what’s not. Through machine learning, Jan Wilmking, SVP of private labels at German e-commerce business Zalando, said on the panel that his teams develop predetermined modules on material, quality and price that can easily be adjusted in a few days.
Making them work requires a huge amount of trust between the retailer or brand and their suppliers, Wilmking said, as well as three key priorities: fashion, tech and fulfillment. The industry is quickly moving toward an on-demand future, he said, and data and flexible supply chains are key to building it now.