This year’s Shoptalk was the largest yet — over 8,000 global professionals hit Las Vegas to share their insights from the front line of retail.
The event highlights just how much innovation and passion there is in this industry — you’d be hard pressed to leave feeling uninspired!
What makes Shoptalk the leading industry event is the collaborative environment its organizers create. Businesses gather to share ideas on the problems facing retail — it’s here that the future of commerce is truly shaped.
Our team is now back at Nextail HQ with no shortage of favorite moments. But it was these three themes which stood out as retail’s C-suite top tips for success in 2019’s retail world.
Three common beliefs of retail’s c-suite:
1. The store’s new success metrics
Shoptalk speakers unanimously agreed that the traditional methods of analyzing store performance are no longer relevant. We’re in an age of retail where brick and mortar locations must be so much more than sales drivers.
Instead, storefronts are a space for value-added customer interaction — they’re hubs for product discovery, brand storytelling, click and collect fulfillment and customer loyalty generating. Increasingly, stores are also a place to collect consumer data and feed insight.
This omnichannel nature of retailing, and the focus it places on customer experience and excellence in customer service means that footfall and sales per square meter don’t give the full picture of a stores’ performance or true value within the network.
Doug Gardner, CIO of River Island, spoke of the impact the company’s wholehearted adoption of omnichannel has had on the function of the store. He stated that the “nature and role of the store has changed dramatically” and “the role of the store staff has changed radically”, resulting in spaces which are now “store as service center”.
River Island, an early adopter of click and collect, has implemented “endless aisle” to help the customer browse products not in store, has invested in hand held tech on the shop floor and is using Google beacons to help shoppers locate products they want.
To understand how those innovations have transformed the business, its stores needed new KPIs. Gardner spoke of a store that was ranked 128th in traditional performance metrics. But the same store, when looked at for its customer service credentials, came 2nd.
Gardner spoke of a store that was ranked 128th in traditional performance metrics. But the same store, when looked at for its customer service credentials, came 2nd
Gap’s Chief Executive, Art Peck, also spoke of the increasing responsibilities of the store, sharing that although the retailer is closing many of its larger format stores, it’s also opening new ones, in locations that are meaningful and convenient to its customers, like beside a Trader Joe’s.
Old Navy GM Blair Dunn is in agreement, emphasizing that retailers need to take into account metrics like BOPIS (buy online pick-up in store), ship from store and in-store ordering. Metrics which reframe physical locations in terms of what contributions the store makes to the business overall. What indicators are you measuring store performance on?
2. Inventory displacement needs fixing
Consistently heard across the stages of Shoptalk 2019 was the stress that returns to store places on inventory. Given that the store’s role has changed, retail’s c-suite were in agreement that there is a strong need for smart returns and a unified view of stock.
As Gap’s Peck explained, these returns lead to “the wrong inventory in the wrong place, at the wrong time,” which “manifests in our business as markdowns and clearance”.
“Having the wrong inventory in the wrong place, at the wrong time manifests in our business as markdowns and clearance” Art Peck, Chief Executive, Gap.
The retailer is using smart systems that allow them “to connect the highest volume of demand with the lowest yield of inventory”, effectively “sucking inventory out of a store that was over-allocated against full price demand online”.
River Island’s Gardner agrees that click and collect has “put inventory all over the place”. At first the retailer tried to tackle the issue by leaving the product in the stores they were returned to, to sell there. But the retailer soon found this didn’t work, as its fast fashion product is incredibly perishable and wouldn’t move if it found its way to the wrong location.
Now they’ve invested heavily in updating their “antiquated merchandising and planning” tools. Gardner says of the shift, “one of our key programs is to put AI and machine learning into our replenishment, allocation and assortment planning to hyper-localize what goes into stores and to hyper-tune the assortment to the customer in store.”
“One of our key programs is to put AI and machine learning into our replenishment, allocation and assortment planning to hyper-localize what goes into stores and to hyper-tune the assortment to the customer in store.” Doug Gardener, CIO River Island.
Today River Island is able to seamlessly scan, refund the customer, return the product to distribution centre and get it back into inventory faster, “to have a single view of customer and a single view of inventory.” That’s something very dear to our hearts!
3. Data and AI call for new organizational culture
It’s clear that with so much change in the industry, there needs to be big internal transformation. One of the key areas for that mindset shift right now is the organizational alignment around data.
With retailers scrambling to be data-driven, their efforts will only be as good as their culture. Janie Yu, a partner at Fung Capital, makes a simple calculation for “good retail” that is “AI + data + people”, and underlines that it comes from both artificial and human intelligence.
“Good retail is AI + data + people”, Janie Yu, Partner Fung Capital
This kind of thinking is central to agile retail, which places high value on empowering teams. A culture which encourages intellectual curiosity is a big part of a company’s transformation.
That was echoed by Gardner, who at River Island is achieving excellence in agile. But it hasn’t been plain sailing. “This is not easy — nobody in the business feels this is easy”, but critical he says is that River Island has “a leadership in our business that has really supported the tech transformation — they’ve invested heavily, allowed us time and allowed us to make mistakes.”
It all hinges on having a solid data and AI strategy backed from the top. As Vidya Jwala, Chief eCommerce & Supply Chain Officer at Dick’s Sporting Goods, says, “reporting is not analytics”, instead retailers must “extract actionable measures and customer insights”.
“This is not easy — nobody in the business feels this is easy” says Gardner of transformational change.
And that means no data science team until you’re ready to connect that strategy business-wide!
Art Peck quoted Gap’s founder, Don Fisher, as frequently saying “change or fail”. At this year’s Shoptalk it was inspiring to see so many retailers opting for action.
Nextail is a smart platform for retail merchandising. Developed by retail experts, it delivers agile data-driven decisions to meet increasing consumer demands. Using Nextail’s AI and advanced analytics, global retailers like Pepe Jeans, Neck & Neck and Gocco are automating dynamic buying and merchandising. Within weeks, sales and margins increase while stock levels are reduced.
Visit our website to see some of the retailers already using AI and machine learning to improve their decisions.