RSR Research: NRF 2012 Gets Down to Earth
Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.
I cannot remember a better attended NRF Convention. Compared to last year’s event, which was full of new customer-facing "shiny objects" to be dazzled by, this year’s expo floor seemed more down-to-earth and … businesslike.
Last year started with an almost smirking disregard (denial) of the transformation to retail triggered by the massive adoption of smart mobile electronics and social media, but ended up with retailers recognizing the inevitability to consumer empowerment via these technologies (acceptance). It was only a year ago that one CIO of a prominent fashion retailer (that is currently rolling out iPhones and iPads to its sales associates) told me that his company would "never" use mobile technology for assisted selling.
Several topics fronted the list of interests throughout. Workforce enablement (as opposed to workforce management) was a key focus area on the expo floor, with vendors demonstrating technologies that help employees to be at least as informed as consumers they are trying to serve.
The future of the store itself was much discussed — very clearly, retailers do not want stores to end up merely as a necessary "last mile" in the fulfillment process. Rather, the focus on the expo floor was on how to blend the digital shopping experience with the physical one, to make the store a compelling destination. Rich content, social media, and e-com-in-the-store were all featured in booth demonstrations.
As is so often the case in a buzzword happy industry, the NRF exhibition floor was awash with "Cloud" this-and-that.
As an overarching theme, business intelligence and analytics capabilities were on wide display. There were recurring themes between various offerings: the need for near real-time actionable information, customer-focused analytics, graphical user interfaces, and mobile. But the most interesting (and welcomed) focus was on the ability to analyze consumers’ paths to purchase.
The retail industry has seen big technology-driven changes in the past. The industry in the mid-1980’s experienced the widespread adoption of barcode scanning in the store. Some companies saw the opportunity to exploit data from barcode scanning to scale up their supply chains to hitherto undreamed of sizes, and that fueled worldwide growth and dominance by a few very large retailers.
Now, the combination of anytime, anywhere information and smart mobile devices has triggered what U.S. Secretary of State Hillary Clinton has called The Participation Age. Just as what happened with barcode scanning, the next generation of Winners will likely be the companies who understand the opportunities and integrate the concepts and technologies into their business models first, and define the use cases that other businesses will have to emulate in order to compete. It’s an exciting time to be in retail technology.
Discussion Questions
Discussion Questions: To what degree do you see “anytime, anywhere information” and mobile device adoption feeding a tech-driven transformation across retail? Which of the newer technologies on display at the NRF convention do you see gaining strong adoption?
For CPG, not so much. Technology may play much less of a role for shoppers in grocery stores where I suspect a majority of purchase transactions occur.
This article points to anytime, anywhere information transforming retail from the perspective of the retailer and store associates, but I think the more powerful force will come at the hands of the consumers themselves.
It is inevitable that retailers will adopt technologies to counteract the information disadvantage that store associates face today (just think of the shopper using Amazon’s app to compare prices and check reviews in real time by scanning a barcode at the shelf). But I think that is just leveling the playing field. The most interesting changes will be taking place in consumer mobile, not retail associate support.
Interesting comparison to the adoption of barcode technology. This is so different for several reasons. First and foremost, it is driven by hip consumer electronics, not cumbersome supply chain technology. Inhibitors to the spread of today’s technology are purely CE supply-side. How much easier is it to put a QR code on a product today versus a UPC back in the day? No comparison.
What I think this means to retailers is this: They can no longer be singularly focused on supply chain excellence. They must also get really smart about the specific sphere of society which they serve.
Technologies that empower employees to better serve consumers and allow consumers access to information will gain adoption. Consumers expect information and answers. Technology can provide it as never before.
It will continue to be almost impossible for retailers to stay abreast or ahead of consumers technologically. While it costs relatively little for consumers to adopt a new app or website, retailers need to learn how to adapt it to their customer strategies.
So, knowing that consumer will always be one step ahead, retailers should use new technologies to provide the basics of a great customer experience: general information, stock availability, pricing, and ease of purchase.
First of all, I hope the information wasn’t really “actionable” which, of course means capable of being litigated.
But on to the question. You don’t have to look any further than Tesco’s Homeplus stores in South Korea to understand that “anytime, anywhere” is as potentially valid for food as it is for high-tech goods.
Food retailers will find themselves in even worse shape than they are in if they can’t find ways of addressing new consumer needs and shopping patterns.
For supermarkets, social media done right — and God knows that’s a rarity — may be the most promising of the “immediate impact” technologies although enabling employees also has strong potential.
An increase in the use of mobile technology at the store level is inevitable, and will be welcomed by a consumer-in-control environment. Retailers, who bring the mobile technology into use, have to be certain to provide adequate training and focus for operations associates.
Don’t gain the “new” customer base, and see the existing loyal customer walk out the door, because she feels inadequately prepared to deal with the technology. Make her — and the technology — a part of the exciting new experience.
I see a focus on enabling the store associates and the shoppers as equal priorities. We’re seeing compelling use of assisted sales technologies (tablets, kiosks, interactive digital signage) and most retailers are focused on making sure they leverage their associates as powerful resources in shopper engagement.
Technology projects in the store will be driven with a focus on balancing the shoppers’ desire for empowerment with the store’s value in providing human interaction.
Differentiation in retail will continue to widen as retail distribution market needs separate further from factory direct sales. I see for the first time that the options and abilities for manufactures to place product in the market are less and less in need of distribution retailers. This is completely the result of the current information age, hand-held technologies and growing at breakneck speed. Apple is an excellent example to case study. As a small company refused to allow distributors to decide if their ideas would sell and sold them themselves. In doing so they have created a means for any manufacturing company to follow. What is amazing is how few manufactures have chosen to give it a try. I suspect that this is because so few companies have executives with a handle on what selling is and how it can be done successfully with little outlay.
I do see mobile shopping increasing, however, never displacing brick-and-mortar shopping.
By the way, regarding this NRF event, it has become virtually the LARGEST CPG event in the world. Last year 8% of the attendees were manufacturers. If that trend continued for this show, then there will have been some 2000 CPG executives present. All the big names were there. Fascinating insight, when you think about it.
Multi-channel retailers who win in the future will be the ones with the foresight to view the whole world as their “store.” They will deliver online accessibility and ease of use via mobile device and reinforce it with physical locations that offer distinctive and compelling experiences. The combination of the two, when executed well, will drive loyalty, engagement and share of wallet.
And yes, they will need to digitally empower their employees, too. In most categories it already is or soon will get hypercompetitive; retail associates will need the tools and knowledge at their disposal that can help them satisfy customer needs and prevent losing sales to competitors.
The move to anytime, anywhere information is inevitable — it has become an expectation in our personal and professional lives. Retailers will have to address this challenge, both in terms of addressing their customer needs as well as their employees. The move to address this challenge with real solutions will drive transformation, with early winners being those who saw this coming (the signs have been pretty obvious) and have made strategic investments to enable this transformation.
The “newer” technologies that will gain adoption are those related to this anytime/anywhere theme; technologies that will not only capitalize on the infrastructure technologies required to be anytime/anywhere, but also provide a more tangible and immediate ROI for such core investments.
An example is the move to “cloud” based applications. In today’s world, it can be argued that network availability and uptime are as good as server availability and uptime were 15 years ago when client/server applications were the rage. That network capability means that most, if not all, retail applications are ripe for transformation to the cloud where they can be maintained, enhanced, deployed and used far more efficiently and effectively than any client/server based application. Additionally, there are a number of applications that really only become practical in the cloud, including retail video analytics, real-time price optimization, omni-channel supply chains, and one-to-one offers.
I predict that the next few NRFs will see a dramatic move to real cloud based solutions that enable the anytime/anywhere application needs and drive additional ROI.