TECHNOLOGY

NRF 2018: Key Takeaways

BY Deena M. Amato-McCoy

The message was clear at the National Retail Federation’s annual “Big Show in New York: Retailers need to adopt disruptive technology if they want to remain relevant among digitally savvy shoppers.

With customers in the driver’s seat, retailers find themselves in the hot seat not only to keep these consumers engaged, but to streamline the shopping experience. The only way to do so is to adopt innovative technologies that can meet — and exceed — customer expectations and remove friction from their shopping journeys.

Here are some other key takeaways from the NRF show:

• Artificial intelligence emerged as an over-arching theme at the show — and quite understandably. AI is a process that “trains” computers to process large amounts of data and recognize — and predict — patterns, including customer behavior and channel navigation.

Information derived from these predictive analytics can be used to accomplish — and improve — specific tasks. Its value is so strong that 85% of interactions will be AI-based by 2020, according to Gartner.

• The value of conversational commerce is heating up, and more retailers are taking notice. A concept fueled by a foundation of AI, customers are growing increasingly comfortable with digital voice assistants found on their personal devices — from the Amazon Echo and Dot to Google Home, among others.

Retailers are increasingly adopting the technology as a means of engaging consumers and personalizing the shopping experience. Voice is actually the user interface of choice among 1-800-Flowers.com customers, Chris McCann, the company’s president and CEO, said at NRF.

In addition to being accessible via chatbot on Facebook Messenger, the company has also launched “Gifts When you Need Them (GWEN) — a Watson-based AI chatbot that helps shoppers make a purchase. The company’s site also features voice shopping via Amazon’s digital assistant Alexa.

• Customers are increasingly comfortable using augmented reality (AR) and virtual reality (VR) to “test-drive” merchandise prior to making a purchase — and they are ready to use these tools more often. Knowing AR enables shoppers to envision merchandise within their own personal space and settings, retailers from Ashley Furniture to Toys “R” Us are testing the concept. Walmart’s recent acquisition, Hayneedle, also uses AR as a tool that empowers shoppers to make an educated home furnishing purchase.

VR is gaining just as much attention. Being a tool that creates a simulated environment, VR holds many opportunities for retailers from enabling shoppers to virtually try on clothes to supporting “virtual classes” that teach consumers how to remodel or make repairs in their homes.

• More store-level associates are using mobile devices. By giving employees access to devices they are already familiar with, they are more easily completing store-level operations — including confirming inbound shipments, managing inventory, locating out-of-stock merchandise for shoppers and tendering customer orders — without leaving the sales floor.

Target is the newest retailer to join the ranks. The discounter offers My Checkout, an Android-based mobile solution that keeps associates out of the back room and in front of customers. Currently used to “save the sale,” employees can use the handheld device to digitally locate out-of-stock merchandise, and place an order that will be shipped to the customer’s home.

Stores chainwide feature up to 40 devices, depending on the size of the location, according to Eddie Baeb, a Target spokesman told Chain Store Age at the show.

Target integrated the device’s functionality this fall within its “Drive Up” curbside pickup pilot (in the Minneapolis-St. Paul market). The device’s geofencing technology alerts associates to customers’ arrivals, which streamlines the delivery of prepared orders to their cars.

• Perhaps the biggest takeaway from the annual confab was the optimistic attitude displayed by retailers and suppliers alike. The feeling was reinforced during the show’s Retail Economic Roundtable panel discussion, during which industry experts and economists agreed that the current economic climate supports a positive outlook for retail in 2018. They noted that the retail industry benefited from a strong macroeconomic environment during the 2017 holiday shopping season, and that the scenario is likely to continue in 2018. Gad Levanon, chief economist of The Conference Board’s North America division, predicted that consumer confidence will continue to rise and reach a record high.

Levanon and Brian Nagel, analyst at Oppenheimer & Co., both agreed that retail growth in 2018 is likely to exceed the 4.2% gain made in 2017.

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TECHNOLOGY

Study: The top retailers that used print ads to drive holiday sales are…

BY Deena M. Amato-McCoy

Despite the accelerated adoption of digital advertisements, print circular ads spurred 2017 holiday sales — both in-store and online.

Rather than eliminate print circulars, retailers including Target, Macy’s and J.C. Penney, still used the ads to drive holiday shoppers into stores and online, according to data from Market Track. The study analyzed campaigns from a variety of retailers.

Unlike Target, which stepped up its holiday season circulars from nine to 16 in 2017, four retailers dropped significantly fewer circulars during 2017. Macy’s sent 15 ads, down from 24 in 2016; J.C. Penney sent 14 vs. 21; Sears sent eight vs. 19, and Toys “R” Us only sent a single “book” format, rather than eight in 2016, data revealed.

The apparel category was the most featured category in print circulars (6.8%), followed by mens’ apparel (4.8%), and large appliances (4.3%). Yet, all three categories slipped from 7.3%, 5.4% and 4.6%, respectively.

Several retailers also leveraged the exclusivity of their private label offerings during holiday 2017, promoting these items as unique reasons to visit their stores. For example, Target, Walmart, Macy’s, Toys “R” Us and Sears all increased their share of ads devoted to private label offerings in 2017 vs. 2016.

“Further, Target’s promotions for exclusive new home and apparel brands during Holiday 2017 marked a turning point in its strategic holiday promotions, which others may follow, if it proves successful,” the report said.

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Innovation at Walmart—in Store No. 8 and beyond

BY Deena M. Amato-McCoy

Walmart is relying on its innovation lab to leverage disruptive technology — but it’s not on the journey alone.

While some industry observers define Walmart’s Store No. 8 tech as an innovation hub, the division has a very specific role. The discount giant is using the tech incubator to build strategic partnerships that can develop the next generation of retail solutions — a move that could give Walmart a leg up in the innovation race.

“There is no one Walmart organization responsible for all innovation,” Lori Flees, senior VP and principal of Store No.8, said during the “Building the More Innovative Innovation Lab” session at the National Retail Federation’s annual “Big Show” in New York.

The discounter’s in-house technology team currently tackles short-term innovation projects — those with a two-year window — across the supply chain, store operations and e-commerce. The Store No. 8 unit is tasked with finding innovative solutions that can be applied to business operations over the next three-to-five years, according to Flees.

“If you don’t find innovation early, you fall behind,” Flees said. “When you are behind, you have to get innovation from other places. But then you lack the opportunity to customize it for your company. And building everything ourselves also isn’t the right strategy.”

With an eye on speed, Store No. 8 takes a different approach. It attracts entrepreneurs onto its team, and uses an incubator’s start-up mentality — and dedicated budget — as its bait. In addition to earning a steady salary, entrepreneurs are also lured by the lab’s supportive and collaborative environment.

Despite its access to these savvy innovation partners, Walmart is not limiting its opportunities exclusively to those developed within the lab’s four walls. For example, when it was ready to delve into conver-sational commerce, Walmart looked to an established partner: Google.

By tapping Google’s AI-based virtual personal assistant, Google Assistant, Walmart was able to hit the voice commerce ground running. “It was an easier option than creating a new partnership or building our own solution,” Flees explained. “Google has enough capabilities that we were able to leverage to deliver a seamless shopping experience for the customer.”

Flees plans to continue leveraging conversational commerce — especially since she expects the concept to continue expanding.

“Right now, shoppers connect with Google and order one general merchandise item. This is very different than ordering groceries,” she explained, adding that she envisions a day when customers can use their voice to place an entire e-commerce order while on the go.

“The shopper will be able to start an order, and since the AI-based assistant knows the customer’s patterns, it will begin to question if she needs additional items — and add those to the list,” Flees added. “Today, they can order an item or two, but conversational commerce will expand — and it will all be controlled with simple voice commands.”

The next evolution of voice could also integrate a visual component. While this is an evolving concept, augmented reality could enable shoppers to envision merchandise — such as furniture — in their home, and then use their voice to place an order, according to Flees.

“The shopping experience is becoming much more interactive,” she added. “Visual technology is just another solution that will change the way customers want to shop.”

In fact, the concept may not be so far away based on Google’s recent launch of a new line of “smart screens” that will support voice-controlled tasks, including shopping.

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