The show must go on
It seems like just yesterday that Nextail was at NRF 2020, on the brink of what was anticipated to be the most exciting, successful year yet for the industry.
Fast-forward to NRF 2022, it was slightly eerie to be back in such a familiar setting two years and an entire pandemic later.
But an industry largely battered by the pandemic was done licking its wounds and ready to move forward. And given its level of recent transformation, the industry felt, in some ways, 10 years ahead of where it was at NRF 2020, not just two.
We’d be remiss to ignore the fact that, while according to NRF, the Big Show hosted 190 sessions, 300 speakers, and 700+ exhibitors, attendance was likely the lowest in NRF history – the main culprit being the Omicron variant, highlighting COVID-19’s continued presence in our collective reality.
Nonetheless, while a much thinner crowd, most attendees repeated what would become one of the Big Show’s most-repeated lines:, it was “so good to be back in person” after facing such a remarkable set of challenges.
The hot topics at Retail’s Big Show
The NRF Big Show is a strong source of inspiration for upcoming industry trends and insights for the year ahead. So it was no surprise that the implications of the Metaverse and NFTs for retail were discussed in widely popular sessions, as well as insights on what Gen Z and Alphas are up to, making us all feel a bit old and varying degrees of out-of-touch.
On the other hand, several diversity, equality, and inclusion (DEI) conversations called for improvements in retail hiring practices, and the importance of education on unconscious bias, equality, and the voices of traditionally underrepresented groups such as BIPOC and women, among others.
This year, however, retail experts spent proportionally more time sharing learnings and lessons gained over the last two years from finding themselves embroiled in hit after hit, such as COVID-19, supply chain disruptions, and the implications of the “Great Resignation”.
Customer-centricity and lessons learned weaved into every conversation
In a session on the importance of developing a customer-centric culture in retail, Chewy CEO Sumit Singh aptly remarked that the pandemic forced retailers to “navigate the fog where there was no pattern recognition”. Retailers had to learn on their feet and fast.
One of the tough lessons was that customer loyalty and traffic were suddenly up for grabs, and to this day the relevance of customer-centricity continues to be felt at all organizational levels. A common thread woven throughout industry expert sessions, retailers shared and hypothesized about how to get as close to customers as possible.
But the approaching customer-centricity came through the most clearly when discussing strengthening investments in three particular areas: omnichannel, AI applications, and sustainability measures.
Omnichannel everything, everywhere
Outgoing NRF Chairman Mike George remarked that due to the pandemic, retailers “moved outside, we moved online, and moved out of our lanes as we always do, we experimented, we invented. We found whole new ways to serve customers better…Now that consumers know what we’re capable of, they expect it.”
That very expectation has sparked hockey stick growth in investments in omnichannel capabilities that provide flexibility, adaptability, and agility. Today, retailers across the board are adopting alternative fulfillment methods, carrying out cross-channel selling, and are empowering store staff with instant access to inventory levels and more – all in the name of putting the customer experience at the center of their strategies.
And according to the “2022 Omnichannel Leadership Report” presented at NRF 2022 by NewStore, omnichannel leaders are those retailers with particularly strong offerings in the areas of digital engagement, omnichannel convenience, customer experience, and associate enablement.
The term “omnichannel” is by no means new. But pre-pandemic, retailers were still sluggish to truly dedicate the time and resources necessary for building the framework behind a seamless shopping experience.
In a fireside chat with NRF President and CEO Matt Shay, Target CEO Brian Cornell remarked on how investments that the company made several years ago were not widely embraced at the time, but certainly paid themselves off and played a role in the American big box department store’s success during the pandemic.
Speaking of 2017 when Target decided to invest in activating 1,900 fulfillment centers across the country, Cornell said, “I was sitting in that room and it was a pretty cold reaction, but those investments that we made, certainly helped us accelerate during the pandemic…those investments in our physical stores, in using our stores as hubs, investing in a drive up service…Those investments certainly paid back in a big way during the pandemic, and I think it’ll be sticky going forward.”
Currently, retailers are already being faced with new challenges forcing them to up their omnichannel game – that is if they have somehow survived without having done so already.
Of course, one of the biggest enablers of omnichannel capabilities is that of artificial intelligence and advanced analytics for inventory management.
AI goes beyond the “pretty” and becomes standard practice for inventory management
At NRF 2020, retailers were still talking about the applications of AI – often focused primarily on showy in-store use cases and attempting to ease fears that AI would not replace humans.
Pre-pandemic, even Nextail was still making the case for AI’s (at the time) novel operational use cases in terms of process automation, inventory management and demand forecasting for the ultimate level of customer-centricity.
But 2022, after having been catapulted into challenges requiring an unprecedented level of AI-powered agility, there’s no question about AI’s potential to transform the industry in a number of ways. And large organizations from Walmart to Burlington, and even smaller retailers such as Stitch Fix were eager to share how AI is helping them grapple with uncertainty, gain flexibility, and better understand customer demands.
CEO and Chief Brand Officer of Nordstrom, Pete Nordstrom, said that the department store chain is using AI to obtain real-time insights on how units are selling, identify lost sales opportunities, pinpoint demand, and make sure they are allocating to the right places in the right amounts.
When it comes to offering many of the omnichannel capabilities discussed above, IBM Chairman and CEO Arvind Krishna pointed out that AI is crucial for building the processes behind the unified visibility, inventory optimization, and for becoming predictive about where demand is and will come from across combined channels.
Additionally, Krishna mentioned that AI is what makes it possible to tie demand signals back to the supply chain so that supply can react accordingly, avoiding markdowns, undersold goods, and inventory going “somewhere else”. This latter point, of course, suggests the ability to make more responsible use of inventory within the retail industry.
Retailers finally take a strong stance on sustainability
For those retailers looking to be truly customer-centric, the numbers speak for themselves.
According to a 2021 Deloitte survey cited at NRF, of 23,000 people across the globe, 72% of respondents believe climate change is an emergency and 57% are worried about it. A joint survey by IBM and NRF found that 62% of respondents were willing to change purchasing habits to reduce environmental impact and 50% of respondents are willing to pay a premium for sustainability.
In response, many large retailers have announced strong commitments to sustainability, including some represented at NRF 2022.
- IBM is committed to using 65% clean energy usage by 2025 without purchasing offsets
- Walmart’s goal is to target zero emissions across global operations by 2040, aiming to restore >50 million acres of land and 1 million square miles of ocean by 2030
- By 2025, all Ikea products will be circular in some way, and the company plans to scale its fleet of electric delivery vans (currently active in NYC) across the US
For once it seems as though retailers are considering not the price of taking action on sustainability, but rather the price of inaction, according to Kate Hardin, Executive Director of Deloitte’s Research Center for ER&I.
But what about smaller retailers or those just getting started who are unable to make such lofty promises? Experienced retailers passed on some advice:
Walmart Senior Director of Sustainability Zach Freeze advised retailers to focus on short, more attainable targets in the mid-term, “We have to break it down to very specific actions that each company has to take.”
In a similar fashion, Ikea US CEO and Chief Sustainability Officer Javier Quiñones provided guidance, stressing that becoming a sustainable company isn’t going to happen overnight. While also recommending a long-term plan with short-term targets, he said, “Make it a leadership issue and not only a business priority…[becoming sustainable] will only be through leaders that stand up, take action, and are fully committed.”
He warned, “If you don’t have a strong sustainability agenda, a strong social agenda today, your business…will probably disappear because you have less consumers willing to buy from you and buy into you, and your workers will begin looking somewhere else because they will not have the level of engagement you need or want.”
Click here to find out how Nextail is helping retailers embed sustainability into the core of their inventory management operations.