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2020 NRF recap: The continuing evolution of retail

February 14th, 2020 by

Every January, the National Retail Federation (NRF) holds its Big Show at the Jacob Javits Center in New York. It’s 4 days’ worth of collaboration and idea sharing for retailers, industry thought leaders and technology vendors alike.

How Product Development is Evolving

 

NRF 2020 had an estimated 40,000 attendees and 800 vendors spread over 1.8 million square feet of exposition space. I spent the 4 days of the show meeting with customers, prospects, our business partners and industry analysts.

I came away with several observations around retailer priorities and some thoughts on 2 underlying technologies that received a significant amount of focus this year both at the show and in post-show recaps.

Retailer priorities

Based on my conversations with our customers—as well as listening to retailers present in some of the conference sessions—3 themes jump out:

A focus on convenience

Last year, a significant amount of time at NRF was dedicated to the technology required to enable the concept of unified commerce. Unified commerce is the broad term that covers buy online pick up in store, ship from store to home, curbside pickup and other variants of how retail customers order and receive products. Technologies that deliver this experience include point of sale (POS) systems and order management systems (OMSs). NRF 2020 marked a shift from specific types of transactions to a broader focus on removing friction not only for customers but for store associates as well.

Brick and mortar is not dead, the role of the store is just evolving

Digital advertising is becoming very expensive, and the cost of digital customer acquisition through tactics like email, banner ads, paid search and affiliates is increasing every day. Conversely, the online channel is becoming better at taking orders and facilitating delivery of products to customers, whether through delivery to the home or by allowing the customer to pick up their order at a store—or at an alternative site like a locker. In the past, retailers looked to online digital tactics as a customer acquisition tool and the store as an order-taking and fulfillment channel. As the cost of digital advertising has increased and e-commerce order-taking has improved, retailers are now looking at their stores as a customer acquisition tool and online channels as an order-taking vehicle. Said differently, store rent is now the cost of customer acquisition rather than Google Ad spend. As a result, retailers are now looking at their stores as destinations that combine product, entertainment, food and experiences.

Examples of this approach include:

  • Showfields, advertised as the “most interesting store in the world,” is a space in the Bowery of NYC. Showfields is a set of curated direct-to-consumer brands mixed with art installations, food and community programming.
  • Soon to open in Las Vegas, AREA15 is an experiential retail and entertainment complex offering anchor retail tenants mixed with live events, art installations and curated experiential retail.
  • Lululemon’s 25,000 square-foot experiential store in Chicago, which includes yoga studios, meditation space, health food and community space.
  • And finally, Nordstrom, which over the past year has doubled its food-service operations, including full bars with seasonal hand-crafted cocktails.

Innovation must be a core competency

One theme that came out loud and clear during NRF was that retailers must be comfortable with constant change and be capable of continuous innovation. A speaker from Crate and Barrel stated, “We’ve been around for the last 58 years. We have no right to expect that we will be around for the next 58 unless we continually innovate.” Several technology vendors highlighted their ability to work in an agile framework and support a DevOps operating model. This sounds a lot like the Windstream Enterprise transformation over the past year. It’s worth noting that our retail customers and prospects are embarking on the same organizational journey WE is. One quote that stuck in my mind was from Satya Nadella, the CEO of Microsoft: “When I think about innovation, the word that I think about is empathy.”

Underlying technologies

The influence of the digital video camera

2020 could be the year that the digital video camera influences the customer experience in retail. Video cameras in retail are no longer just closed-circuit TV cameras focused on loss prevention and security. Digital video cameras, combined with AI, visual recognition and machine learning, allow retailers to enhance customer and associate experiences as well as reduce costs through applications in:

  • Payment processing
  • Sales associate performance
  • Customer sentiment
  • Store traffic and customer segment analysis
  • E-commerce product search and ordering
  • And of course, loss prevention
  • Inventory and shelf stock management, including autonomous robots that roam the store after hours

We have a data lake, but why?

Mr. Nadella, the Microsoft CEO, suggested that 40 TB of data is created every hour. I spoke with several brands about this and all agreed that they want more data, but when asked how they would use this data, they didn’t have a lot of specific plans. Maybe a better way to think about this as a retailer is by asking, what part of our customer experience is valued most by our customers? Once we answer this question, then we can ask ourselves what data we need to deliver it.

The role of the solution provider

Retailers’ focus on convenience, the changing role of the store and the constant march of innovation—along with the emergence of digital video camera technology and the reliance on predictive data analytics—all require reliable, secure network connections that can handle a large amount of data over many locations.

In fact, the biggest change regarding the choice a retailer has for connectivity is the role that solution providers play.

In-store networks and connectivity that once had to support just an alarm POTS line and polling of POS data overnight over a single telephone line must now enable a connected customer with WiFi access, VoIP, real-time cloud-based POS and CRM systems, plus smart mirrors and digital signage to deliver a better customer experience and help retailers optimize operations—all while being highly secure following a stringent set of PCI requirements.

This means that retailers expect their connectivity partners to not only provide an IP address, but deliver the reliable and secure technology foundation they need to deliver a superior customer experience in store and online.

NRF 2020: Discover the state of retail and beyond

January 15th, 2020 by

Despite the breathtaking speed and impact of the e-commerce revolution, physical stores still play a vital role in the buying journey. While consumers will use their mobile devices to research and compare goods, they still enjoy the 360-degree experience of shopping “IRL.”

NRF 2020 and Beyond

But as Amazon and other direct-to-consumer e-merchants refine their ability to deliver immersive marketing experiences—enabled by augmented reality, virtual reality and the Internet of Things (IoT)—brick-and-mortar retailers need to keep innovating the ways they blend physical and digital shopping.

I recently had the opportunity to attend one of the largest events in retail, Retail’s Big Show & Expo, hosted by the National Retail Federation (NRF). The show highlighted the new digitally enhanced shopping experiences retailers are starting to incorporate into their stores to adapt to this hybrid sales environment. These innovations encompass both shop-floor and back-office functions.

POS & transactions

  • Self-checkout machines
  • AI-assisted shopping carts
  • Buy online, pick up in-store (BOPIS) purchases
  • Customer pickup lockers
  • Curbside pickup

Customer analytics

  • Omni-channel analytics and tools
  • Beacon-based analytics
  • Interactive aisle displays and shelf labels

Customer experience

  • Smart mirrors
  • Digital signage
  • Music management
  • Guest WiFi
  • Mixed reality tools
  • Smart dressing rooms

Store operations

  • Associate productivity apps
  • Inventory management systems
  • Visual shelf monitoring
  • Intelligent IP cameras

New experiences need new networks

All of these technologies depend on robust, resilient network connectivity. Legacy retail networks, typically MPLS-based, don’t deliver the capacity and reliability required to support them. Giving customers and sales associates new apps and systems that run sluggishly and inconsistently just leads to frustration—and lost revenue. To enable these new shopping experiences, seamless bandwidth and constant connectivity are mandatories.

For retailers, that means migrating to integrated, high-speed cloud-based networks. Depending on the size and expertise of their in-house IT staff, moving to the cloud can be challenging to implement and support. What’s more, the initial investment can seem prohibitive.

A robust, reliable network builds confidence in cloud application availability

New UCaaS- and CCaaS-based customer care and associate applications, including the ones listed above, are 100% cloud-enabled, enabling rapid deployment and scalability.

To support those apps, SD-WAN networks can provide a seamless, secure, centrally managed overlay to existing MPLS networks—no rip and replace required. This agile combination gives retailers a cost-effective way to update their customer experience capabilities and accelerate them as new technologies become available.

What’s more, by partnering with a qualified cloud networking provider, retailers can allow their IT staff to focus on what they do best, while gaining the planning, deployment and management expertise they need for a successful cloud migration.

Implementing an advanced network this way can significantly reduce both capital and operational costs, and make a strong business case for a technology upgrade.

Want to know more about what’s in store for your stores?

Experts from Windstream Enterprise are ready to answer questions about your specific business goals and the best options for achieving them—the first step toward reimagining your store of the future.

The Impacts of E-Commerce on Retail

November 12th, 2019 by

There’s no denying e-commerce has disrupted the retail industry. The advent of online shopping has transformed the buyer’s journey, forcing retailers to meet the anytime, anywhere demands of increasingly tech-savvy shoppers. While the U.S. Census Bureau concluded e-commerce sales accounted for only 10.7% of all sales1 in the second quarter of 2019, online shopping has steadily been taking a bigger piece of the retail pie every year.

impacts of e-commerce on retail

The multi-channel shopping journey

Today’s consumers have more shopping options than ever before, coupled with competitive pricing, better merchandise assortments and faster delivery. The customer journey is evolving. Consumers are moving across digital channels to research, purchase and review products, adding to the complexity retailers already face. In BRP’s 2019 Consumer Shopping Survey, we found that digital consumers have higher expectations of customer service and personalized recommendations than traditional consumers. Digital consumers use technology to make the shopping process easier and more personalized, while traditional consumers are more concerned with finding the product they need and having it available in the store they shop. Despite their varying preferences, we found that 97% of digital consumers and 90% of traditional consumers do online research before they visit a store.

Since consumers now start and stop their shopping journey on different channels, such as mobile, online or in-store, and frequently shop for the same product across different retailers, a seamless shopping experience across an entire brand is the expectation. The survey found that 82% shopped and reviewed products online and then purchased the item in the store. Each of these steps along the shopping journey is providing retailers with new opportunities to drive sales, strengthen relationships and build customer loyalty.

Converging the physical and digital shopping experience

Despite the e-commerce revolution, physical stores play a vital role in the shopping journey. Retailers that blend the physical and digital shopping experience are set to achieve greater gains over the competition. Providing a true unified commerce approach, one where digital technology is embedded into the shopping journey, requires a transformation of people, technology and processes. Retailers who find that perfect balance will not only be successful at providing customers with the information and convenience desired but will deliver a truly cohesive brand experience.

For further insight on the impacts of e-commerce on the retail industry, download the BRP Special Report: The E-Commerce Effect.
1https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf

Voice Ordering is Coming Fast – Will Your Retail Operation Be Ready?

October 4th, 2018 by

The next consumer technology wave is coming to retail, and fast. Voice-driven assistants such as Amazon’s Alexa and Google Assistant were introduced as hands‑free conveniences for playing music, controlling smart homes, and getting instant information – but they are now poised to become significant shopping conveniences. Voice ordering, also known as conversational commerce, may become a significant shopping channel – sooner than you think.

Voice ordering retail shopping via a voice assistant at home

How significant? A recent study from OC&C Strategy Consultants predicts that voice ordering will drive $40 billion in U.S. consumer spending by 2022.

Readying for the voice ordering challenge

While retailers have become nimbler and more agile in recent years, voice ordering – and its supporting AI, chatbot, and call-center integration capabilities – are unique. Solving issues with the customer experience, usability, data integration, and the management of new tools is especially challenging. Fortunately, the rise of this new $40 billion sales channel is generating tremendous interest among retailers and the solution providers that support them.

Conversational commerce, and the technology that makes it possible, is unique, and there is a learning curve that makes adoption slow from both a retailer and consumer perspective. The idea of doing a pilot of a customer service/voice commerce program is going to be difficult for most retailers because it’s so different. There’s a tendency for retailers to overthink the impact of something like this on their customers. As far as the base technology goes, you can get partners or cloud-based third-party applications to do a lot of the groundwork, but from a data integration standpoint and from an understanding of how you build and manage these tools — that’s going to be a struggle.

While it isn’t going to be an easy transition for retailers, the benefits of conversational commerce are compelling.

  • It’s fast – humans speak at about 150 wpm while a fast typist can only type about 40 wpm
  • It’s easy, hands-free, instant and its context-driven, personalized communications
  • Studies have shown that the time it takes to make a purchase using a microphone is 3X faster than a keyboard or mouse

However, it’s adoption has some technical challenges, as it requires natural language algorithms to be effective. One main metric used to judge the success of voice processing is accuracy. It is generally accepted that as accuracy moves from 90% to 98%, most consumers will migrate to voice as their primary interface. Today, Google reports to be at about 90% and Baidu says they are at 92%.

Testing the waters of conversational commerce

As retailers test conversational commerce, they may start with customer service use cases that are less dependent on accuracy. If you look at apparel or luxury, you’re seeing companies like Burberry and Tommy Hilfiger use chatbots to play the role of a stylist and provide fashion advice. That’s where you may start seeing relationship building through a chatbot, versus the stylist you’re used to going to at Polo Ralph Lauren. Not to bring this back to Amazon, but the Echo Look can take a picture of you in an outfit, and the long-term theory is to be able to combine this conversational commerce with image recognition. As you start to mix the concept of being able to have a conversation with a computer-based stylist, and then have that computer-based stylist also be able to recognize patterns and colors, and make recommendations from the existing retailer’s catalog, there are some cool opportunities available to retailers.

Let’s not forget the benefits for store associates as voice-assisted technology can also be deployed in the back office of the store. Replacing flash sales reporting and quick activities such as looking up an item in-stock or an associate schedule inquiry, could be performed quickly through voice instead of forcing a store manager to log into a back‑office PC.

As customer and retailer acceptance of this voice-assisted technology progresses, we need to be ready, so we don’t get left behind.

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