May 9 2022 ...
RTS 2022 wrapped: The 3 most interesting insights
The Retail Technology Show (RTS) brought everyone back to Olympia, London for the latest industry innovations and insights from key experts. If you missed the show or were too busy talking shop and shaking hands on the showfloor, here are three of the top themes of #RTS2022!
Sustainability: A retail, rather than niche, concern
A few years ago, sustainability surfaced as a concern for retailers but its reach was limited to those already interested in the subject or to retailers looking for positive press.
Today, with customers demanding environmental responsibility as well as growing industry scrutiny, sustainability is at the top of the agenda for many brands and retailers who are trying to build a strategy at warp speed that can balance these measures with profit.
At RTS, retailers shared their learnings to help guide other industry members. In fact, rare was the session in which the sustainability question was not raised at least once. It has clearly led to a philosophical awakening as well as the development of new tech to create sustainable products, reduce emissions, measure sustainability efforts, and set new goals.
Hannah Fox, Senior Property Manager for Energy for the Morrisons supermarket chain detailed the UK grocer’s current strategy. She spoke of putting sustainability at the heart of the company culture and across the entire product chain by first understanding what customers expect in terms of sustainability, using data and metrics to measure results, and getting teams and supplies aligned on the journey. The idea is to enable a truly end-to-end strategy that can balance profit with environmentally-friendly product distribution and happier customers.
On the other hand, “born circular” brands, such as the relatively young D2C materials science company, Pangaia, exemplified retailers with a sustainability ethos firmly embedded into their DNA – something older brands are now trying to emulate.
At RTS, Pangaia’s Head of Analytics and Insights, Daniel Smith, spoke about the brand’s plans to go “Earth positive” by understanding and reducing their carbon footprint and by sourcing and producing products responsibly. Key to this roadmap is the brand’s use of data for identifying areas of high performance or improvement, setting strategic goals, and then executing on them.
Speaking of sustainability and the transport of goods, Damian Dowling, Segment Lead of Logistics for the UK & Ireland at Schneider Electric predicted that current UK regulations and skyrocketing electricity prices will inspire more green infrastructure so that retailers will be able to use their own grids and become more autonomous. That way, they’ll be able to do things such as charge green transportation and delivery vehicles in order to meet both customer expectations and organizational responsibilities regarding sustainability.
Nextail is also helping retailers to engineer out the waste in their operations by increasing efficiency that ultimately reduces excess and waste. In this way, retailers achieve more sustainable practices through data that delivers more accurate, short-term demand forecasting. For example, Hackett London is able to sell more products at full price for longer, lowering coverage, avoiding overallocation, and lessening waste. They’ve also reduced international shipments by 50% each week.
Retailers who enter these intelligent feedback loops see positive implications further upstream. With smaller allocations and more efficient stock movements, you learn to buy only what you’ll need, and can produce more responsibly as a result.
AI lessons: Challenges, filling the gaps & transformation
According to the Gartner Hype Cycle, technologies pass through different phases before finding mainstream acceptance. In 2021, Gartner rated AI in Retail in the “trough of disillusionment” where new technologies, after reaching peak expectations or “hype”, may fall as retailers are actually able to sort through the actual usefulness and ROI it brings.
Arguably, “AI in Retail” is such a broad category that certainly some use cases have likely fallen to the wayside or have been deprioritized over the last few years, such as sexier customer-facing, in-store applications (though they might be coming out of hibernation, more on this below). However, the volatility and uncertainty of the last few years have certainly made other operational AI use cases more essential, such as inventory and management and algorithmic retailing, speed more quickly toward the next phase, the “slope of enlightenment”.
This sentiment seemed to be reflected as well in the conversations around AI at RTS 2022. Much like the sustainability topic, experts shared how they’re currently using AI to grapple with current logistical challenges and how they are embedding such massive change across their organizations – also a common theme at January’s NRF Big Show.
For example, Managing Director of Land’s End Europe, Constanze Freienstein, discussed how the brand moved beyond less practical AI use cases and is not just using it for the sake of doing so. Today, the brand is applying AI to make data accessible and usable for the true benefits of boosting revenues, improving efficiencies, and cutting down on manual processes, all leading to a better customer experience.
On the other hand, retailers can also use AI to fill in the gaps where other important retail tech lacks intelligence. For example, Richard Jenkins, Head of Loss Prevention Strategy & Projects and Zarah Adato-Barbar, LP Product Owner: RFID Strategic Development for Marks & Spencer made a great case for how RFID technology is helping them to bring transparency to the supply chain, understand efficiency of the flow of goods from end to end, and to maximize sales opportunities.
However, part of the RFID roadmap that is currently on hold/in an exploratory phase, likely the case for many retailers, is that of inventory management. This is where AI solutions could quickly fill in the intelligence gap for capabilities such as hyper-local demand forecasting and decision making. In other words, if RFID were the eyes for tracking, AI solutions like those of Nextail would act as the brain for processing data and delivering decisions.
Yet again, in order for AI and other advanced retail tech to thrive however, many speakers at RTS detailed how they are creating a culture of innovation within their organizations. According to Land’s End Europe, this is a culture that must be nurtured and fostered and made accessible to even non-tech members of the team.
CTO Florian Westerdahl of Swedish lingerie and womenswear retailer Lindex shared a similar experience. He remarked that since the brand’s heritage had been entirely informed by the business of physical networks, the brand’s increasing global reach through ecommerce and marketplaces was a reality check. Lindex could no longer rely on familiar ways of working when it came to this new business model and had to reexamine the existing cultural model as a result.
Given such a volatile, uncertain, complex, and ambiguous future, the brand has been prioritizing organizational agility and truly rethinking their structure to deliver on promises to both employees and customers. While they quickly adopted high-performing tech and teams, they needed to make it stick through a cultural transformation. By doing so, they would set the foundation for future innovation.
Looking forward and backwards to 2025
Like all conferences, several sessions centered around predictions for the future of retail 5-10 years down the line. What was interesting about the RTS sessions was that many ideas and predictions sounded eerily similar to those we were having pre-pandemic.
On the one hand, this is likely a reflection of the re-emergence of physical retail after coming to a crashing halt in 2020, and the new “emotional era” of retail that Warren Richmond, CEO & Founder of Situ Live, described as a result of people’s excitement about getting out of their homes and experiencing life again.
While it seemed a bit like deja vu, a new focus on experiential retail in physical locations was broadly discussed at RTS 2022. However, the difference is that it was driven less by a looming “retailpocalypse” and more to fulfill a human desire to find purpose and meaning in their shopping experiences. In other words, there seems to be a renewed passion for physical retail again that we haven’t seen since pre-pandemic and maybe even longer.
Other familiar innovations were mentioned in a panel on “future gazing” toward 2025 in which Ken Daly, CEO of JML spoke enthusiastically about in-store screens controlled by shoppers as well as the possibility of offering customers video content about products through in-store QR codes, though it’s true that the pandemic has proliferated the use of QR codes.
Similarly, speakers such as Kathryn Malloch, Head of Group Customer Experience at Halfords spoke of how retailers will continue looking for ways to become both faster and more flexible around reaching customers, either from a fulfillment standpoint or in terms of response time to provide a better customer experience. And of course many sessions centered around the seemingly ever-elusive omnichannel and how to create a frictionless experience for customers.
But some speakers also took on more futuristic predictions. For example, Daily of JML also spoke of the possibilities for facial recognition and chip implants for more seamless payment transactions and tech companies (Apple Pay, Paypal, Google Pay) becoming banks themselves instead of relying on Mastercard. He also brought up the example of taking on a “Walmart approach” in which fulfillment might eventually include retailers entering the homes of customers and unpacking their orders for them.
Given these possibilities, as well as those offered by new advances in contactless and crypto payments, Dowling of Schneider Electric followed up with the significance of cybersecurity going forward.
While only time will tell if these predictions will come to pass, we know by now that anything can happen. In the meantime, it seems that brands and retailers are starting to bet on physical retail once again while forever altered by the proliferation of ecommerce and channel expansion which has helped them surmount the uncertainty and unpredictable nature of the last few years.
According to Richmond of Situ Live, we can live in both worlds where the physical will be about experience and transformation, while the digital world will be about transactions.