On June 21-25, retailers and business leaders gathered from across the industry to share their expertise on the future of retaila particularly urgent assembly given how much retailers have evolved over the past year to meet consumers in our new, digital-first world. At NRF Retail Converge, retail’s greatest visionaries spoke to attendees on just how much the industry has changed within such a short time.
If you missed out on Retail Converge this year, you can still register to watch the 100+ sessions on-demand from now until July 25. But to make it even easier to catch up on the highlights, we have summarized four of the event’s top themes for you.
Unified commerce is now just commerce
Unified commerce has been a heavily spotlighted strategy in retail at NRF for more than 10 years. While it’s not going away, the discussions have shifted. In the past year, retailers accelerated in their journey drastically ahead of schedule, driven by the shift in consumer behavior to operate more digitally with retail brands. Omni-channel success is what Sharon Gee, GM of omni-channel at BigCommerce calls an imperative. Retailers are laser-focused on the unique needs of their customers as they try to win the last mile battle against their competitors.
The past year has seen canal blockages, parking lots packed full of confused curbside pick-up customers and retailers inundated with a larger number of customer returns through increased online shopping. These challenges are costly to retailers but have shined a light on the growing necessity for supply chain resiliency.
Supply chain, as it relates to current consumer expectations and unified commerce, was among the hottest topics at NRF this year, and for good reason. It has always been a key strategy to meet customer expectations and to answer questions like, Where can I find a product? Is it in stock? How much will it cost to ship? And, When will it arrive or be available for pickup? All of these questions can be translated by retailers into: Is this shopping experience simple and seamless for our customers?
The COO of Under Armor Colin Browne said it best, Merchants can’t be traders anymore. We have to figure out how to link it all up. The companies that do it really well have figured out how to manage their supply chains. We agree with Colin’s statement that real-time supply chain data is essential to the future of retailers.
What’s to come in the second half of 2021 for unified commerce? We expect to see a continued push toward technology that aids in accuracy and predictability in the supply chain, with Radio-Frequency Identification (RFID) and the Internet of Things (IoT) at the center of it all.
Reinventing the role of the physical store
Lee Peterson, EVP at WD Partners chose to describe the way retailers felt over the past year by referencing Mike Tyson’s famous saying, Everyone has a plan until you get punched in the face.
For retailers, that punch in the face was the sudden business interruption and accelerated customer behavior in digital commerce. Consumer habits created in the pandemic, like BOPIS (buy-online-pickup-in-store), have flourished into new consumer practices. In fact, 84% of consumers have used BOPIS in the past three months.1
As consumers embrace a more digital buying journey, we bear witness to how the shopping experience influences the purpose of the physical store. Retailer leaders are being forced to re-strategize on geographic location, layout, design and capabilities to deliver a superior omni-channel experience to the customer.
While shopping behaviors have accelerated to digital, consumers still shop with the same desire for instant gratification. Retailers have seen a positive response to new store designs including dark stores, the sole purpose of which is to fulfill orders and allow for pick-up with no need for an in-store shopping experience. Similarly, hybrid stores (where a portion of the store is dedicated to fulfillment and a portion of the store is a traditional in-store shopping experience) have been well received during the pandemic.
The only thing certain about the purpose of physical retail stores is that change is imminent.
Increased attack surface for security threats
The bad guys never sleepnot in a pandemic, and certainly not when every retailer in existence is dedicating their focus and resources to meeting the most fast-paced and ever-changing customer expectations in history.
The digital way retailers are forced to interact opens up inherent threats to security. In a session with former Director of the National Security Agency Admiral Mike Rogers, he described what retailers are facing today as an increased surface area for attacks. Retailers increased the surface area for attacks when retailers dispersed staff and opened more VPN connections. Retailers also saw a rise in threat when they added new partnerships and new applications to respond to changes in how brands interact with consumers. And with consumers making payments on a credit card and not through in-person transactions, there’s a heightened risk. Yet these are all things retailers had more of in the past year than any year prior.
While the surface area to defend is larger than ever, Mike believes that the starting point for retailers begins here: You must truly understand your network structure. Mike went on to say that system administrators are unable to provide an accurate reflection of the actual structure. Thus, they do not understand their true vulnerabilities. Business and operational leaders need to partner to better understand their network structure, access their risk and prioritize it.
Conscious consumerism isn’t a fad
Thanks to social media core values are always on display, and consumers expect brands to pick a side. This past year saw passionate conversations around social tolerance, economic inequality, environmental consciousness and political valuesbrands were left to wonder what a smarter choice was: taking a stance, or staying out of it.
Consumer vignettes in NRF’s State of Retail and the Retail Consumer 2021 Converge event admitted they are more likely to spend with a retailer who is proactive in taking a position on worldly issues. One consumer stated, I want retailers to use their platform to influence the world for the greater good.
Retailers are met with the complex challenge of representing the core values of their entire customer demographic. Following suit with the aforementioned theme the customer is always right, retailers are looking for meaningful, authentic ways to share universal core values with their shoppers.
As an example, retailers’ response to the changing climate shows up on the shelves of brands like Ulta Beauty, with a conscious beauty line focused on sustainable ingredients and packaging. However, retailers must be more calculated when their customer demographic is more divided on an issue, for example in political and social matters. President and CEO of Sephora Jean-André Rougeot described their strategy on taking a stance after the George Floyd tragedy with their We Belong to Something Beautiful campaign, which includes a focus on diversity among leadership and within stores, a 15% brand pledge commitment to help brands that are founded by people of color, and graduating their first accelerated class consisting of eight founders who are primarily black. As Jean said, Retailers like Sephora can make a difference because their commitment will lead to financial VC’s and private equity support of those brands.
Make room for the future
As we heard from many great leaders, thinkers and futurists of retail at Retail Converge, we’ve already undergone an unbelievable amount of change. What’s been accomplished by the industry as a whole is (and should be) recognized and celebrated. But the hard part isn’t over. Brands must constantly react and transform their strategies to evolve into the next phase of the pandemic, a phase that embraces a world eager to reopen alongside one that treasures digital convenience and urgency. Retailers who build a strong network foundation for reliable and productive hybrid environments, prioritize security concerns and reduce network downtime will run into less problems down the line. Additionally, brands that eliminate the top communication challenges which impact customers and employees will see vastly improved customer engagement and gain a competitive edge.
- After the great accelerator: Research tells us what customers want from the new physical store. Lee Peterson. NRF Retail Converge. June 21, 2021.