I filed several pieces from the NRF show floor, but questions lingered. NRF is billed as "The Big Show" - I brought my vexing retail dilemmas to put that boast to test. Three days of wall-to-wall meetings altered my thinking.
I came into the show asking:
- Storefronts present a theoretical advantage over e-commerce giants - but with so many storefronts closing, have retailers figured out how to use that asset?
- Personalization sounds lovely - privacy issues aside - but most examples I've seen of personalization completely miss the mark. Is there progress?
- Retail is awash with the buzzwords of AI, chatbots, and virtual reality. But is the tech ready? Last time I checked, shoppers aren't wearing headsets-and-goggles.
- Omni-channel promises a seamless experience yet even the best brands have massive channel disconnects. Is omni-channel a realistic goal, or a slide deck in need of permanent retirement?
An early chat with Jeff Barnett, CEO of Salesforce Commerce Cloud brought these issues to a head. Barnett raised the problem that 75 percent of retailers are “ill-prepared” for the omni-channel. He also painted a tough picture of contrasting growth, with Amazon pushing ahead with 30 percent e-commerce growth while the overall retail sector trails with an anemic 2 percent. No niche is safe; Amazon's early toe-dip into fashion in 2002 has evolved into the dominant U.S. fashion player.
Meantime, storefronts without a strong mobile/web tie-in are losing out, with 60 percent of store purchases beginning online. Retailers must now mix the strengths of two different channels, without alienating the customer through data and service disconnects. Three days later, here's the conclusions I reached.
1. Not all storefront closings are created equal. During a day one meeting with the Cognizant retail team, Cognizant's Steven Skinner made a crucial point about the continuing rash of store closings (These major retailers are closing stores in 2017).
We've seen a lot of department stores and traditional retailers look at store closures as the way forward... Stores should be a place where I want to go and where I want to be, that includes all the different channels.
Skinner sees brands shutting stores without strategy: "It's a shotgun approach - shut 'em down- there's no science to it." He asked not to be quoted on which stores are closing in a panicked way, but he did point to one store whose store closings pass the strategic test - Macy's.
If you look at what Macy's has done, it's all about the science, it's all about building an omni-channel business. That's the differentiation we're seeing in the marketplace. Some people are using decision science to make decisions, and some people are making financial decisions and coming at it the wrong way... In some cases, Macy's has shut down a stronger store in lieu of a weaker store, because they realized they could still grab almost all of the sales from the stronger store to the weaker store, and still have the right coverage in the marketplace.
2. Storefronts aren't dead, but malls are dying. I asked several retail die-hards about the fate of that suburban mainstay, the shopping mall. I could not find a coherent argument to justify the future of malls. Granted, some will win based on perfect locales, but most are struggling. Two big factors: first, brands need to re-invent retail on their own terms. They need the freedom to rethink flagship locations and morph their physical presence. A mall is not in a position to transform/move its physical assets. But the bigger factor is the cultural loss of the mall as the center of teenagers' orbits. That's gone, and it's ain't coming back.
3. Virtual reality is limited to niche, but augmented reality has legs. Virtual reality is relegated to niche - blame gear availability and cultural resistance to ridiculous headgear. But augmented reality use cases - without need of specialized gear - are coming on strong. On day one, I shot an impromptu demo booth video with Beck Besecker, Marxent CEO. (Video link: Goggle-free VR - an informal interior design demo from NRF 2017).
The video shows a kickass interior design use case - no goggles needed. Dubbed "visual commerce," this tour could be done via web or tablet. But it's not just the flexibility of devices. It's the way that commerce services are integrated into the shopping experience, from Marxent's partnership with Quicken Loans to furniture movers. It's not just interactive fun - the numbers back it up. Besecker:
We see upwards of about 50% reduction in the time to make a purchase, so it reduces the sale cycle and gives a consumer more confidence. We see about a 30 percent increase in baskets, so once you play with the application, It's easy to want to buy more. [JR: increase in baskets means increase in items per purchase].
4. "Seamless experiences" across channels remain elusive. But: smart use of tech leads to "personalization moments." The Cognizant team talked about the need to make the practice of omni-channel easier. I'm not so sure. I like the brutal ambition of a fluid experience between channels - even if no one can vault it today. What is achievable today are what you might call - if you were in the buzzphrase business - data powered "personalization moments." These are great, if limited experiences that lead to more purchases.
I witnessed some vivid examples during a Manhattan tour of Salesforce retail customers. At hip retailer True Religion, there were numerous apps on display, including the Apple Watch app, pictured left, which store associates can use to review a customers' purchase history - and even invite them back into the store when new items that match their preferences.
At our next stop, New Balance, we saw how a big brand was pushing into next-gen storefronts. The location we visited had a glassed-in workshop area, where a shoemaker creates limited editions - only sold in that store.Another New Balance feature is the visual foot assessment (pictured right), which gives the store associate instant information on the feet of the prospect, which are then used to recommend the best brand, style, and, in some cases, shoe insert.
The New Balance team told me that almost every customer now starts there. Judging by the interest from our tour group, that's a super engaging way to give folks a fun/informative experience - and a better shoe.
I've been critical of what personalization can accomplish - too often it's just spray-and-pray email "segmentation." But these are good examples of just-enough-data and just-enough-personalization. That's plenty for most companies to aspire to.
5. Retail analytics have arrived. If the omni-channel remains a distant goal, analytics are happening now. When I met with Tableau, we discussed their Six trends in retail report:
For retailers, finding actionable insights in the field with a mobile device is no longer just a pipe dream. Instead of interfacing via legacy business intelligence systems, modern mobile analytics lives at the core of decision making for major brick and mortar stores and their distribution centers.
We discussed the example of store associates empowered via mobile to pull up real-time answers to customer queries. Then there's the impact of predictive analytics, now employed by many big box retailers to allocate peak time labor, using techniques like clustering and outlier detection to help store employees make better decisions.
Perhaps the most interesting convo on predictive was with the CEO of Proftect, who says they have moved on to "prescriptive analytics" - automating analytics decisions. I'll return to them in another piece, but "get actions, not reports" sounds right.
Retail analytics run into the same problems as personalization - lack of complete data in one easy to consume, visual environment. That's something I talked to both Tableau and Domo about - both believe they are well on the way to tackling this issue. Domo's demo of their hundreds of out-of-the-box data connectors underlined that vendors are at least making progress here and moving beyond vaporware and/or integration happy talk . (I'll be doing customer use cases from both vendors in the weeks to come - stay tuned).
Foresee, a customer analytics vendor, compiles data via a method I'm not too enamored with - surveys - but their results are super interesting. Foresee's surveys enable them to pinpoint the exact moments where prospects abandon digital commerce channels. That matters when you consider that 90 percent of visitors come into a digital experience and leave. Unless you're Amazon, you probably don't know why.
Their 2016 Experience Index comes with an interesting graphic that gives precision into how store, web and mobile intersect:
My take - the omni-channel is (still) science fiction. but small wins are piling up
I'm still skeptical of personalization at scale. Nor did my time at NRF make me more optimistic about the omni-channel. The so-called customer experience still falls apart constantly when a channel fails. But I was persuaded some retailers - big and small - are using tech in smart ways to pile up smaller wins.
One lingering question: how do retail store associates bridge the experience gap? When you put sophisticated data and preferences in the hands of store employees, aren't you asking a lot of minimum wage staff with little or no job security?
One innovative retailer I spoke with admitted turnover was a big problem. Some tech, like in-store visual aids, can be easy for customers and associates to master. But it's hard to imagine retailers offering great in-store experiences - without finding a way to invest more in store employees. That's not an easy thing when the front against Amazon rages on.
In The Digital Vortex, co-authored by several Cisco executives, the authors determined that retail was the third most digitally-disrupted industry, second only to tech and media. During my meeting with Cisco's Kathryn Howe, we discussed how retailers should respond. Howe led me through the steps of digital transformation she's identified, but she flagged the same impediment: lack of investment in employees
Companies may claim to prioritize "customer experience," but only six percent of the companies Cisco surveyed had associate productivity programs. Howe:
That's a swing and a miss... Every time you touch associate productivity, you potentially enable better customer experience. That's the number one reason customers are coming in - but you haven't invested in the associate.
Progress isn't sexy but that's where we're at. Some retailers are using digital to push ahead; others are tripping on their own resistance. Cognizant's Skinner cited the example of John Lewis in the UK: "40 percent of revenue came from online - seven years ago that would have been 0 percent." He credits their success to CEO mandate: "This was not an IT initiative, it was an initiative from their CEO." In other words - get busy competing.
End note: a big thank you to the many companies that met with me I didn't have time to include here. I'll get to most of you next.