Progress Scouting Report: NRF's Big Show 2018 and Retail's Revolution
NEW YORK, NY – February 2018 – NRF 2018 Retail's Big Show last month weclomed some of retail’s top talent, ranging from Ebay to IBM. There, heavy hitters contented with the Media’s unrelenting onslaught of negativity as headlines continue to depict retail’s dire future. The forecast for retail should not read so bleak; rather, the retail ecosystem has reached a critical moment where the outlook should be optimistic. Yes, physical retail is changing and is not growing as fast as e-commerce, but it is how brick-and-mortar stores approach these fluctuations in consumption pattern – and alter their business models to incorporate automation, personalization, and Artificial Intelligence into their strategies – that they will prevail. And for e-commerce platforms, who have persisted with outsized growth for over a decade, the time is now to innovate their tech to adapt to modern consumption habits; every side of commerce is in a point of inflection.
In line with previous conferences, one principle theme at this year’s show was the integration of AI to provide a more personalized customer experience. While the push for AI in physical retail stores is emerging, the value of AI is thriving as a ‘must-have’ behind-the-curtain. Much of the NRF discussion focused on AI’s ability to better provide strong personal interaction with customers. Companies like Alibaba, 1-800-Flowers.com, and Ebay all experienced higher conversion rates and customer engagement when AI integrated with their online customer service centers. Alibaba’s AI service helped them obtained a 20% higher conversion on their platform through suggestions based on consumer data. Additionally, on Couples Day – one of their busiest days – the AI service handled 95% of the customer service issues, automatically. As customers come to expect a more personalized and tailored shopping experience, retailers must adapt and adopt technologies to meet these demands. While the bulk of the movement today is reactive, we expect to see more adoption of AI to be a proactive framework for customer engagement.
In line with this trend, NRF presented new applications of AI in physical retail stores. Innovations like facial recognition, with Alibaba's ‘Pay-with-Selfie’ check-outs, are already in use in public transits systems and fast food chains like some KFC's. Big brands like New Balance have brought VR experiences to consumers, taking them inside their design studios and showing them the manufacturing process behind the shoe they are considering for purchase. New Balance (using Salesforce technology) is also implementing new technology for their mobile site to reduce the time it takes a customer to check-out. Retailers have not only realized the need to improve the customer shopping experience to increase retention rates, but to also to improve customer acquisition.
Retail’s Big Show also provided a forum for discussion about the future uses of digital data, in particular, within automation applications to further develop personalized experiences for consumers. IBM presented their application of blockchain, the encryption technology that allows for total visibility around transactions shared between vendor and customer, sharing their insights on smart contracts. Integrating blockchain into contracts eliminates extraneous time spent on faxing, spreadsheets, or phone compliance; explaining it could reduce the time spent on financial disputes by 75%. For retailers, the applications are seemingly endless, with the possibility of eliminating mysterious transactions due to blockchain-backed records. IBM also presented its MetroPulse System, which stores data on demographics, geography, weather, and commercials. For any given day, this system can forecast a variety of information, ranging from the daily inventory to customer demographic insights. IBM made it clear that their platform’s ultimate goal is to automate and digitize the entire supply-chain to be able to respond dynamically to external demands.
The excitement around mobile retail platforms continued at NRF, with the growth of e-commerce and mobile shopping top of mind for many industry leaders. Mobile platform companies like New Store, SwiftGo, and Mad Mobile are rolling out their platforms for companies to maximize their performance both in-store and on mobile. New Store brings a mobile platform that thinks about retail ‘from the small screen up.’ New Store has found that native mobile applications – because of the built-in capacity to auto-complete – receive 30% higher engagement and 27% more consumer dollars. These apps solve for the inefficiencies seen in the aging native apps retailers use. The New Store platform works to enable quick checkouts and eliminate the average 21 fields that most online checkouts require. In turn, as retailers endeavor to gain consumer engagement, insights will come from an ability to gather real-time information. Ultimately, we see platforms like this providing unique experiences, both online and in-store, for retailers who optimize and upgrade their mobile consumer as the lowest hanging fruit.
The consensus from the conference confirmed that e-commerce and retail tech advancements are not the death of the pure-retail play, but a chance for brick-and-mortar to reinvent themselves. With companies like Amazon converting consumers to shopping online, retailers should view this as a validation, and justification to find new channels, to add further value to their physical stores. Physical retail can keep up with the changing market by providing consumers with a differentiated experience. If companies embrace emerging new technology, they will be able to build stronger relationships with their customers, and therefore win in the battle for the consumer.
For more information about NRF, check out their website here: https://nrf.com/