4 takeaways from NRF's Big Show 2017
Retail's biggest trade show has come and gone — leaving retailers with a lot to think about as they plan for another year of brick-and-mortar shake-outs and digital transformation.
This past weekend, retailers, technology vendors, analysts and thought leaders all flocked to New York City to attend the NRF's Big Show 2017, the biggest retail trade show of the year.
With retail in the middle of a massive transformation, the show is a place for retailers to talk shop about the good, the bad and the ugly. Many conversations centered around retail's biggest pain points — and which technology innovations retailers need to integrate into their businesses to elevate the customer experience.
"This is that shot in the arm, that adrenaline shot of technology information at NRF that [retailers] need every year to understand what’s out there in the market," Brendan Witcher, principal analyst of e-business and channel strategy at Forrester, told Retail Dive.
From retail's slow adoption of omnichannel fundamentals to the fast-growing need to think like a digital native, here are four takeaways we gleaned from this year's show.
1. The brick-and-mortar shakeout will continue in 2017
After a year defined by the shuttering of stores across America, Robin Lewis, CEO of The Robin Report, says the brick-and-mortar shakeout isn't going away.
“2017 won’t be any better than 2016 on a macro level,” he told Retail Dive at the show.
“When I say fundamental change, that means someone like Jeff Gannette … taking out of his vocabulary the world ‘department store,'" he said. “They need a new mindset — they aren’t in the retail business anymore, they’re not in the department store business anymore. They’re in the business of entertainment, of building social communities, of absolutely fundamentally upending their big boxes and turning them into places to go.”
"These department stores like Macy’s, they’re at the end of the line, they’re at a tipping point."
CEO of The Robin Report
Yet even if big-box department stores want to radically change their business models to become more nimble and experiential, it’s probably too late, according to Lewis. “I don’t think they can do it because they are so big and their organization is 100 years old, their culture is 100 years old, their processes are 100 years old."
Store shrinkage will continue to be a key theme in the retail industry this year. With the fall of specialty apparel stores like The Limited (which filed for bankruptcy on Tuesday), the sector will strip out the retailers that cannot meet the changing demands of today’s shopper. Those that effectively transform physical spaces, however, stand a chance.
2. Retailers need to think like digital natives
Consumer behavior has changed dramatically over the last few years, and retailers are desperately scrambling to understand the demands of today’s shopper.
“People don’t have to go stores anymore,” Lee Peterson, EVP of brand, strategy and design at global retail design firm WD Partners, said during a talk on Monday. "They have to want to go to stores."
“[Retailers] are lacking in the ability to think quickly. See how slow retailers are reacting to this digital native need," he said. "A lot of companies are being run by a digital immigrants.”
Digitally native consumers are typically born in 1995 or later, around the same time when Amazon, eBay, Craigslist and Google were born. That generation doesn’t remember what it’s like to live without digital innovations like the internet and the computer, spurring a desire for constant newness in their consumer demands.
"This is about a lot more than stores and how we put things on the shelves. There's only one thing to talk about: Are you a digital native or a digital immigrant?"
EVP of brand, strategy and design at global retail design firm WD Partners
Digital natives will become the largest spending population by 2017 with $200 billion in annual spend, Peterson said. Retailers cannot afford to brush off this group’s consumer needs for “new” and “now.” That means capitalizing on features like buy online and pick-up in-store, mobile checkout, self-service lockers and AI-based innovations.
Age is the number one disparity in the way retailers do business today, but age also shouldn’t box in the mindset of retail executives. Creative industry leaders like Amazon CEO Jeff Bezos and Entrepreneurial guru Richard Branson aren’t digital immigrants. Despite their age, these leaders have constant energy to innovate and think outside of the box — which is at the core of what digital natives want, Peterson said. For retailers to truly succeed in the new retail landscape, they need to tap into constant innovation and experimentation.
3. Omnichannel needs more than lip service
Ominchannel, omnichannel, omnichannel. Retailers must be sick and tired of hearing about omnichannel, but it's clear from the Big Show that omnichannel is far from conquered territory.
There is no clear market leader in omnichannel, according to Forrester's Witcher. “We see [the right] technology in place — what’s woefully inadequate is the optimization of operations to support those things,” he said. “We see that many retailers have a long way to go in creating good customer experiences.”
Omnichannel offerings have grown considerably over the last few years, but retailers need to buckle down on “the unsexy stuff — people and process,” Witcher said.
“The truth is, I literally don’t have a single retailer that is really doing it well. You can point to individual things from retailers and say, ‘They are doing pretty good at that.’”
SVP of commerce at Razorfish
Omnichannel has been a major challenge for the industry. But retailers need to understand that they are only 20% into the disruption, not 80%, Jason Goldberg, SVP of commerce at Razorfish, told Retail Dive.
“A ton of those omnichannel things are checkbox items and a bunch of retailers have checked the box. If that was your attitude, then omnichannel is done. But if you’re doing this because customer behavior is fundamentally changing and you need to figure out how to cater to new expectations of the customer, we’ve just begun,” Goldberg said. “Nobody can say we created this amazing store environment that people want to go to instead of Amazon. We’re very early days on that.”
Goldberg predicts 2017 will be the year that retailers get more serious about measuring the impact of omnichannel. “They’ve been thinking about it and doing pilots for a few years and I’m hopeful some of those pilots will become standard operating features this year,” he said.
4. ‘Retail’s future isn’t what — it’s who’
There was perhaps no bigger mantra at the Big Show this year than this: Store associates will be key to the future success of the retail industry. This may seem like a simple takeaway, but retailers too often have their eyes only on the customer and the product. As consumer behavior changes, good customer service and well-trained store associates are more important than ever.
The NRF trumpeted the sentiment on Sunday morning with the announcement of a new retail training and credentialing initiative called RISE (Retail Industry Skills & Education) Up. The effort brings together 21 merchants, including Wal-Mart, Macy’s, Target, Neiman Marcus and Under Armour, who have pledged to help individuals secure the skills and training they need to land jobs in the retail sector, regardless of their educational background, economic means or age.
“We had spent a year asking ourselves, 'What could we do as a retailer ... that would accelerate the mobility of people from entry level jobs to jobs of higher responsibility and authority, management jobs? What would that look like?'”
Wal-Mart Foundation president and Wal-Mart chief sustainability officer
The retail industry accounts for about one in four American jobs, but retailers are struggling to attract and retain talent, with the sector having a roughly 60% turnover rate. With the expectations and demands of the 21st century workforce evolving, retailers are taking steps to better train and compensate their associates.
“It’s a lot easier to retain at the executive level,” Macy’s CEO Terry Lundgren said Sunday during the Big Show opening keynote. “You’ve got to make sure your team is exposed to opportunities within your company. [To recruit], you’ve also got to get out and talk about company, your culture and what’s important to you. You have to get outside your box.”
The theme of retail focusing on more highly-skilled, loyal and invested employees carried on throughout the show. In panels on technology innovation, experts acknowledged the slew of new digital skills required for jobs.
“For us to have crappy employees in our stores is a death knell," Peterson said. "You just can’t afford to do that anymore. Service is a big factor.”
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