Last week saw two notable industry events: NRF (NRF 2020: Retail’s Big Show & Expo) and ICR (ICR Conference 2020). Both shows, on the heels of year-end and holiday sales and another year of retail evolution, gave indications of what’s important today and what’s coming next.
At NRF, the theme for this year’s event was vision – vision on the future of retail – and one recurring message was that the physical store remains central to retail success, even despite all of the talk of digital transformation and online brands. It was a point made repeatedly at ICR by companies who have weathered the retail storm and are thriving.
Here are some key takeaways:
The reports of a retail apocalypse continue to be exaggerated. No one will argue that traditional retail has been unaffected by the new retail landscape, or that all large and culturally significant retailers can navigate the storm. Generally, however, physical retail remains strong. Stories of unheralded retailers continuing to grow and continuing to remain profitable abounded. These are not the stories that crowd the headlines.
A favorable shopping experience for consumers is now table stakes. The in-store shopping experience has always been key to satisfying customers, but there is increasing interest in and demand for experiencing brands and products in ways that can’t be achieved online. Brands that provide a distinctive or more sensory-rich experience off-line can capitalize. Erik Nordstrom, Co-President of Nordstrom, described how the company’s new Manhattan store is the most experiential store of all its locations. It has the most food and beverage offerings, with bars in the middle of departments, enabling customers to eat and drink as they shop.
Omnichannel has never been more important. Popular thinking has moved from the idea that online sales are the solution, to recognizing that online sales are only part of the solution. Excelling in all channels is necessary. This recognition and the process through which excellence is achieved will differ for each brand. With new channels and tools still developing, such as voice recognition and artificial intelligence, understanding how to optimize each channel will take time and will be iterative.
Blending physical and digital channels for consistency and seamlessness is a must. Between buying a product online and picking up in-store, or checking that a product is in stock at a location before visiting to touch and feel and consider purchasing, the melding of physical and digital is critical. David Dobson, the Retail, Hospitality and Consumer Goods Industry Director at Intel Corporation, described it this way: “The first wave of disruption was about how to compete with online. The next wave is really about the integrated solution. It’s not online versus in-store but rather how to deliver value to the customers wherever they want to be. It’s clear that you have to have both, and you have to merge those experiences.”
Brand and differentiation remain critical. It’s no longer enough to put out a good product or to have an attractive value proposition. Customers want to know what brands stand for and what they’re all about. Kevin Plank, founder of Under Armour, explained, “When a consumer walks into a retail store, there’s two things they need to know and understand,” he said. “What’s your personality, and what’s your point of view?”
Sustainability becomes more common and mainstream. Most brands have considered how to incorporate sustainable practices into their businesses, if not focused on ways to become more sustainable. These efforts include fair wages and better working conditions in factories, reducing packaging and waste from production or operations, and taking overt action to help or protect the environment through donating profits or cleanup efforts. The approach for many is similar to West Elm’s. Jennifer Gootman, West Elm’s Vice President of Social Consciousness explained that the company’s strategy was to “get a little greener every day.” For many, incremental steps are what’s needed to start the conversation and to begin company adoption.
The themes from both NRF and ICR tell a story of change and opportunity. Brands and retailers that recognize that the shifting landscape and do more to attract, delight, and retain valuable customers will outperform their peers.
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