Photo: NRF
NRF puts on another ‘big show’ for a hopeful industry
Here are some quick hits from my experience over the past three days walking the halls of the Jacob Javits Center in New York, taking in as much as I possibly could of the 2020 version of the National Retail Federation’s annual show.
In a completely unscientific and informal survey of show attendees, I found most were hopeful about the retail industry’s prospects. Many expect the economy, which began posting gains in June 2009 to mark the end of the Great Recession, to continue on its record streak of monthly gains as unemployment remains low and consumer sentiment remains strong.
While the positives list was short and concrete, the potential downsides listed by attendees largely dealt with economic uncertainties and concerns over how geo-political events could upset the order of things going forward.
“Trump’s tariffs,” a phrase repeated often, were cited as the number one challenge, with many believing that the U.S. administration’s trade war with China and other countries has cost American workers jobs and led to higher prices for consumers. While some were hopeful that an interim deal with China would deliver economic benefits, most expect that little of practical value will be accomplished in any agreement regardless of how it is spun by the administration.
The potential for a recession was downplayed by the vast majority of those I met, although continuing tariffs were seen as a potential cause for the economy to go south. Quite a few people expressed concern about an economy that could be upset by geopolitical actions or ill-advised tweets made by Mr. Trump. A smaller number were concerned that the positive effects of the tax cuts signed into law by the president in 2017 are now largely over, with little wiggle room for the administration to further stimulate the economy as the deficit grows to record levels.
On another front, it was encouraging to see that NRF is serious about promoting diversity within the industry. Women, in particular, were well represented in educational sessions. It seems not only fair, but practical, that an industry that has frequently referred to its core customer as “she” starts to reflect that in c-suites and throughout organizations on both the retailer and vendor side.
It was also encouraging to see technology vendors take a more practical approach to the challenges faced by their customers. Not once did I hear anyone refer to technology as “disruptive” or use other adjectives suggesting they had a solution that would change retailing as we know it. Vendors seemed to be offering solutions addressing real challenges faced by merchants and instead of searching for non-existent problems to fix. As to tech challenges faced by retailers, the big two — no surprise — were legacy systems and a lack of executive leadership/silos.
Discussion Questions
DISCUSSION QUESTIONS: What are your expectations for the retailing industry in 2020? What are you most hopeful about and what causes you the most concern?
Poll
BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
Brandon Rael
Strategy & Operations Transformation Leader
I’m attuned to AI, the show buzzed AI to me. It is fascinating to see AI come to life using NRF as a year-over-year visual update of the progression. AI growth will compound year-over-year, so I’m optimistic that this year will see dramatic growth in the AI space.
Also, I saw you in passing George, but we never formally said hello. It was nice to see you!
Nice to see you, too, Bethany.
I believe 2020 will be the year we begin to break up the silos. We have been functioning in siloed environments for too long in technology, process and the organization. It is time to take a more holistic approach, break down the silos and approach the problems with a unified commerce approach for people, process and technology.
What causes me the most agita is the political situation in Washington. We are passing through some of the most turbulent times since the Cuban Missile crisis and nobody seems to notice. I hope for all our sakes we wake up before it’s too late.
Ken, I hope you are right — every year I hope the silos that have been in place at companies for decades would break down and every year it seems that companies are resistant to breakdown silos. With people moving on in companies, it is even more important to share that info, retune or refine processes, etc. I sometimes think people are afraid of technology which is why the silos stay up…
The most significant takeaway from the NRF 2020 Big Show was a sense of cautious optimism as we proceed into 2020. There was also a sense of reality, as retailers and consumer brands tackle the needs of the empowered and digital-first customers. The prevailing theme with the technology providers was to take it back to the basics and focus on the fundamentals of meeting the challenges of the retail industry.
Instead of leading with how artificial intelligence, cognitive, machine learning, Watson, and Einstein computing will change the world, there were practical use cases showcased by Salesforce, Intel, SAP, etc., which demonstrates how embedded these technologies are within the core retail merchandising, customer experience, and supply chain functions.
As retailers and brands look to drive top-line growth, all while reducing and optimizing their cost structures, they are depending on their consulting and technology partners to help solve real-world challenges.
Sometimes we get caught up in all the fancy stuff that is out there. Over the last year or so, we have always been talking about technology. But are we missing the most important trends?
What is the consumer looking for? Consumers will continue to have less time and more options in their life. The desire for convenience and simplicity will only get stronger. Those retailers who recognize this and adapt, either through technology or in other ways, will be the winners.
Thanks for sharing your insights, George. Glad to hear the overall tempo of the event was upbeat and that retailers – and suppliers/partners were not living in fear. Somewhat surprising that adjectives like “disruptive” were not voiced because for those retailers trying to operate with establishment (traditional) rules, the game is changing before our eyes. Let’s hope the optimism expressed at NRF translates to renewed energy and innovation across the retail sector.
It’s an election year, and in election years the party in power always does whatever it can to ensure a good time is had by all … at least until November. So I suspect there is a fairly pragmatic “old school” reason to be cautiously optimistic. That said, we do have an impeachment hanging in the air and half the country won’t like the verdict, no matter what it is. We also face the possibility of an extension of our apparently endless military engagement in the Middle East and our foreign policy with respect to Russia remains a joke. And add to that Tweet Knows What happening on the trade front. Any or all of those could easily combine to create a crisis in consumer/lender confidence. As the election draws near we will also have lots of talk about niggling issues like the deficit and the national debt which may impact people’s faith in the economy. And if the Democrats do succeed in ousting the President, they have almost all promised to put the brakes back on things like environmental regulation, tax benefits for the rich, etc., so who knows how the country and the economy will react? I also expect the slow shakeout of brick and mortar retailers to continue. Bottom line: color me more bearish than those folks George spoke with at NRF.
I am finally hopeful for retail — hopeful that we will finally begin to leverage the value of bricks.
It won’t be easy, though. Many retailers are in bad situations from a decade or so of using “fight Amazon” as a strategy. In fact, I heard surprising whispers from one of the retailers that had be praised heavily for the success in their anti-Amazon fight but thrived because of macro-forces, not their strategy.
Let’s build on that. Now that it’s clear how many problems there are with an all digital strategy, let’s get focused on building on bricks while smartly using digital to create a competitive advantage.
I’m with you on this one Doug! I missed NRF this year, but love seeing and hearing new thoughts and actions around the store. Until we all start dressing, living, thinking identically, we will remain visual, tactile people. And that’s my 2 cents.
While many of us in the retail industry are seemingly preoccupied with global and domestic politics, the American consumer is not. Now that middle class wages are finally growing at a significant pace, unemployment levels are steady around 3.5 percent and taxes remain at the same or even lower levels for both retailers and their shoppers, the environment is right for retailers to smartly invest in both technology and their associates. More than the economy, the more vexing challenge for retailers centers on the “paradox of choice” they encounter at shows like NRF with so many dynamic technologies. Picking the right, sustainable solution, one which is designed to both better serve their shoppers and be accompanied by cogent business models, is a daunting task. Many retailers I talk to are simply hesitant to commit to a specific solution or direction, believing it could be antiquated in just a few years with something faster, cheaper and more comprehensive. What is clear is that these difficult decisions must be made if the retailer hopes to stay in the chase for a reasonable share of their customer’s business…given that shoppers are quickly adapting to the new, more convenient engagements presented by those retailers who have made the right investments, both technological and strategic — at least for the near term.
What was inspiring to me at NRF this year was retail winners clearly recognize data as a strategic asset, are investing heavily in talent and tech, and embracing the responsibility of owning (creating) new IP, competencies and even new business models.
It was also evident that traditional retail leaders that are making big bets in their “digital transformation” and demonstrably breaking away from the competition, may well be leaving more data and analytic impaired laggards in the dust in 2020.
With the strongest economy in memory, consumer confidence is shown at the retail level, both online and offline. I am extremely encouraged at the growth potential for 2020. Technology adoption is gaining strength, and more solutions are available as a service, so retailers of all sizes can afford the very latest AI, Blockchain and other capabilities. The only concern I have is leadership at the Federal, State and Local levels that create regulatory obstacles to entrepreneurship and retailer growth.
Reading tea leaves for any particular year — even the upcoming one — is usually a fool’s errand, particularly when so much can turn on an errant tweet. The big challenge(s) lies ahead — the ’20s (and ’30s..) more than 2020 itself — as the Baby Boomers begin to retire and sell off their stocks (or try to) and consumers become more demanding about seeing implemented all those (perhaps) impractical ideas we hear about (ranging from “zero waste” to everyone having a trade surplus with everyone else).
Nice to know this was a theme: “It was also encouraging to see technology vendors take a more practical approach to the challenges faced by their customers.”
Hype has been rampant in recent years, but I expect many retailers are fatigued by ill conceived promises of transformative tech to address the huge challenges in the retail landscape over the past few years.
Practical, measurable and timely steps are what most retailers need today, especially around how to best apply and scale AI and other advanced analytics. It’s truer today more so than ever: you can’t manage what you can’t measure and a business model in flux is not easy to work with. I expect to see a lot retailers take parallel paths to get their data houses in order, while at the same time moving on AI use case opportunities with an eye on learning and scaling.
Also theme-wise, the whole cloud to on-prem IT strategy seems to be taking hold as it becomes clearer the advantages of a hybrid strategy. Not long ago we are all going “cloud cloud cloud!” Love it, but in practice it’s not likely to be that cut and dry.