The latest conference of the National Retail Federation in the US showed that tech changes do not erase retail’s most important fundamentals
Last week’s National Retail Federation (NRF) Big Show retail technology conference in New York highlighted a renewed focus on getting the basics right. While technologies such as virtual reality (VR), augmented reality and robots were all present throughout the show on 13-15 January, retailers are doubling down on the nuts and bolts of omnichannel retail.
The role of stores continued to stir debate, as did the question of how to find the right talent. There was also evidence that technology is increasingly being used as a tool to enhance, rather than distract from, a brand’s core values.
As Brian Cornell, chief executive of US department store chain Target, put it: “A couple of years ago we realised we were never going to win if we played someone else’s game. We couldn’t build distribution centres fast enough to compete with Amazon.”
Target went on to invest $7bn (£5.42bn) into reimagining its stores, turning them into a distribution channel that offered services such as click and collect. Last November, it reported third-quarter sales growth of 5.1% – store sales were up 3.3%.
“We’re exploring everything from artificial intelligence [AI] to VR, but there’s still no substitute for that human connection,” Cornell explained.
This was echoed by Tim Brown, the chief executive of relative newcomer Allbirds. The sustainable footwear brand opened its third store – and first in the UK – in London’s Covent Garden in October 2018.
“Physical retail is a no-brainer,” said Brown. “People want to try on shoes. Plus, we’ve found they are the best marketing dollars we can spend.”
Allbirds has been “blown away” by the early success of its London store, but Brown admitted it has not been easy: “We always knew there were synergies between online and offline. What we underestimated was how difficult retail can be. We thought the retail model was broken and we would reinvent it, but it’s about the fundamentals being done really well.”
The talent challenge
Brown said building a strong team was crucial: “You need to invest in people and have a standard of excellence in customer service.”
Cornell agreed: “The capital [investment] is important and has changed our business model, but the investments we made in the team are why we are sitting here today, saying we’re having the best year in over a decade.”
Investing in tech talent is also a top priority for many brands.
John Hill, chief information officer of workwear and casualwear brand Carhartt, said: “Everybody’s got their unicorn with five to seven years of industry experience, who is great with colleagues, and has the technical chops behind them. But those are hard to find.”
He looks for a mix of strong technical and soft skills, as industry know-how can be more easily taught: “If you only have one person, I would make sure they really understand statistical models. You can teach them the rest.”
This year’s Big Show provided further evidence that even as retail develops and technology changes the way we work, the fundamentals of connecting with your customer and hiring the right people do not change.
Stealing from the “big four”
Karalyn Smith, Sephora senior vice-president of HR at beauty retailer Sephora, and Margo Downs, chief people and culture officer of personal shopping service Stitch Fix, explained how they attract talented data scientists away from the big four technology companies – Amazon, Apple, Facebook and Google – in Silicon Valley.
- Show the impact they can have: “We had a candidate with offers from the big four tech companies, and he went with us because he could see the innovation happening in retail, and could feel the impact of what he was going to be able to do.”
- Highlight the consumer connection: “There’s a tangibility in retail. You connect with the consumer. You can say: ‘I built that, and millions of consumers will use it tomorrow.’”
- Allow freedom: “We have an innovation think tank where we get people inside the company to work on new ideas. They present them to senior leadership, it makes them feel important and valued.”
- Highlight data: “We have tonnes of data and data scientists love that – it’s a huge attraction to be able to work with it. People want to solve interesting problems.”
- Understand their aims: “They care about whether they can do cool stuff, be innovative, and get stuff done.”
- Start a tech blog: “Our algorithms team run our blog, and people who are in that space want to read it. People can see from their peers the type of problems they’ll be able to work on.”
- Promote your talent: “We have amazing leaders in our tech space, and that makes a difference because talent attracts talent.”
A new way of retailing: Story
Story is a New York store that “changes like a gallery” and refreshes its entire inventory every three months, with a new theme and new creative partners. It was bought by Macy’s in May 2018. Founder Rachel Shechtman – who is now also Macy’s brand experience officer – introduced the brand and said:
“Story is based on the conception of retail as a media channel. We’re curating merchandise around the subject matter, but it’s also about strategic partnerships. We ask: do they add authority and authenticity to the category they exist in?
“It has to be a great product, but is that enough? You can buy great product online. How are we displaying merchandise in a way that’s part of the experience? We always challenge ourselves: are we giving the consumer something that they can’t get on the couch? The story behind something is important. There’s a sense of discovery – we’re thinking not just about price point and category, but narrative and context.”
Seven services Nordstrom offers at its New York menswear store
Shaye Anderson, director of programme management for the customer experience team at US department store chain Nordstrom, gave a rundown of the services on offer at its first menswear-only store, which opened in April 2018.
“We wanted to focus on what experiences and services matter the most,” she explains. “They all bridge the gap between in store and online. That’s the standard for any experience we offer.”
- 24/7 click-and-collect
- 24-hour same-day delivery and an under-three-hour promise in certain zip code areas
- Reserve online and try in store, for loyalty scheme members only
- Express returns kiosk, allowing for self-service returns processing
- Virtual life-size models in custom-made suits, created before a purchase is made to show how it will look
- Online booking for alterations, including an in-home styling and alterations service.
- Styling services: an online style expert will create a style board for a customer, and handpicked recommendations are sent to their mobile phones
Global retail insights: key quotations from NRF’s Big Show
“One of the beautiful things about being a retailer is you can consistently experiment and learn. RFID [radio frequency identification], for example, started as a little experiment in London, and now we’re rolling it out globally.” Chip Bergh, president and CEO, Levi Strauss
“In 2019 we will see consumers being more demanding around privacy. They know they’re being tracked and they will want to know how you’re using it.” Jessica Murphy, co-founder, True Fit
“The speed of segmentation is accelerating and flexing. The old way was by demographic, but this is changing – no-one is demographically the same.” Greg Petro, founder, digital product testing solution First Insight
“It isn’t as simple as showing up in China with a product and saying, ‘Surely somebody must be interested.’ It’s a market that requires patience. The numbers are large but building your brand takes time.” J Michael Evans, president, Alibaba Group
“In Europe, there is growing consumer resistance against giving up data, and skepticism around what it will be used for and by whom. It is the risk of breach that is the concern. Data is rarely used in a bad way - it’s the security that matters.” Jim Lofgren, chief executive, Nosto
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