Retail's Big Show - National Retail Federation

Books & Conferences

Jan 2019

New York City, U.S.A.

NRF 2019 – A selection of takeaways

Introduction

The NRF 2019 convention reached a new record with nearly 40 000 attendees (up 10%) from 100 countries.

President and CEO Matthew Shay told delegates to the Federation of International Retail Association Executives (FIRAE, now renamed FIRA), that 2018 had been a good year for retail in the US. Although no definitive figures were available because of the government shutdown, it was expected that retail sales will have grown by around 4.5% in the year. Other countries could not all report such upbeat figures.

The main issues for US retailers during the year had been tax, trade and immigration. For others around the world, issues such as uncertainty, and the consequent need for agility, customer centricity, the search for new business models, were mentioned. All agreed that the world was now characterised by increasing polarisation, and that this had a parallel in retail.

Main themes

China is the future

Chinese presence at the conference was important, both in terms of attendees and in terms of presentations. Large companies such as Alibaba, and JD.com were present, referenced, and contributed presentations. But there were a number of smaller companies also.

Stand out features were retail models, including e-commerce penetration highest in the world, and tech innovations used in business such as drones, facial recognition, robots, cashless and cardless payments….

Intelligent retail

A number of technologies appear to be on the verge in terms of implementation, and the distinction from past years is that talk is not about long-term future “wow” tech, but more about the application of technological innovation in stores. AI is now increasingly used in retail and in stores for pricing, for example.

In the same way, there is increasing talk of types of partnerships in practice such as Macy’s with Story, Marxent and B8ta.

Zalando’s Algorithmic Fashion Companion (AFC) is an example of the application of machine learning in retail: it suggests other items customers can buy, like a human stylist would. In other words much more sophisticated than a common recommendation tool, it works by identifying appropriate outfits. This increases order size, which was precisely the problem behind the recent profit warning by Asos.

Customer experience

There is increasing talk of “frictionless” shopping and the frictionless customer experience. The aim is to make retail simpler for the customer in particular in their experience of transactions, ordering, payments, deliveries… However, this emphasis on frictionless comes with a warning: a frictionless experience can generate a “slippery” or fickle customer. There is a certain amount of friction lying behind engagement and loyalty and human relationship with the customer.

The New Retail

Although this is a phrase attributed to the founder of Alibaba, there is a definite interest in exploring new business models in retail. This sense of renewal is powered partly by technology, partly by leadership, and partly by customers. Examples such as the “recurrent revenue model” in which companies bind the customer with a membership commitment, are arousing interest (partly as a result of the Amazon Prime phenomenon); similarly, the “retail as a service model” (RaaS) as used by B8ta is discussed, as well as the platform model which is now used by amazon and Alibaba as well as the tech companies. (See also Taskrabbit, Caastle, Poshmark for examples.)

Although many examples of traditional retail were presented with an emphasis on getting the basics right (notably Target and Lowe’s for example), they were nonetheless using modern methods to get those basics right. Macy’s, actively exploring collaboration and a number of presentations by more recent retail formats (see above) underlined the many-faceted aspect of retail today. Retail covers a much broader spectrum of models than it has done in the recent past.

Values in retail

Responsible retail and doing good were almost ubiquitous in the NRF conference presentations, reflecting a massive growth in retailers’ preoccupation with helping communities, “giving back”, ethical standards, sustainability, as well as authenticity and purpose. The issue of diversity, both gender and ethnicity, were a big part of the considerations of the show with a “girls’ lounge” devoted to gender questions. While some talked of foundations set up to help certain targeted groups in society, others emphasised sustainability, “woke” values, wage levels, and even inequality. Some retailers made a case for their own values such as Brandless, or Warby Parker, while commentators invoked larger political issues of ethics and the social duties of retailers (see Scott Galloway).

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