NRF 2023 Wash-Up: What were our highlights?
NRF trend reports are everywhere this week, so we thought we’d do something different. Highlight the 5 things we actually enjoyed most about NRF.
As we enter a new year, futurists go into overdrive. Predictions around the retail trends for 2022 and beyond feel particularly fervent as we enter our first series of events and activities post-pandemic.
The more visionary futurists may tell you that the future store will be about robots, computer vision, VR/AR, and grand technology-driven experiences. While it paints an exciting future, it might not be of much use just yet. As Jeff Bezos states as a core pillar of Amazon’s strategy:
"I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time."
So what will remain stable in the store over the next decade? Here’s our prediction of the five trends we think will persist.
Not a week goes by that you don’t get a message in your inbox around how the shopping habits of Boomers, Gen X, Millennials, Gen Z, or now even Generation Alpha (those just entering teen years) will change retail. Regardless, the core desires of customers have always remained remarkably consistent and human.
Firstly, we’ll always want things on our terms. 97% of shoppers will abandon a shopping trip from lack of convenience, no matter what the generation. People want to buy what they want, when they want, how they want, and at the price they want.
And we demand a nice time while we’re getting all that. The shopping experience is important to us and brands can cement a sense of belonging and loyalty through brand values and service. 56% of shoppers say they’d stop shopping totally with a brand after a single bad experience. But these levers all have a trade-off. Great brand and experience come at a price, and that impacts a core element of convenience. Understanding how to optimize on both these levers will always be central to any retailer’s strategy.
Even despite the pandemic and growth of eCommerce, over 90% of transactions still go through local stores. Although the traditional role of the store is changing to become a central hub of different activities, retail remains about physical goods and inventory rather than just pure services. It will always require physical locations to store, fulfill and merchandise their products.
You don’t have to go all-in on the metaverse to understand the importance of digital today. 81% of shoppers research a product online before purchasing it. The greatest challenge to retail, however, is that physical and digital are one and the same for the customer. For many retailers, the approach internally between these channels has been to separate and silo them, which has failed to deliver a seamless experience for the customer.
Covid-19 impacted stores, customers, and supply chains in a mere matter of days. And the inflation and shortages that are continuing to unfold remind us that any return to certainty is at best “far off” and more realistically, just a plain illusion.
Retailers today have to navigate a range of potential uncertainties: changing customer demands and employee expectations, the need to be more sustainable, and the evolving impact of technology on society. It’s foolish to be too prescriptive around the new, but embracing adaptability and resiliency is core to responding to a changing future.
When the University of Oxford looked at those sectors at highest risk of automation, retail was deemed the highest – 40% higher than the average. Since the report came out, retail jobs have only increased and concern today is more about shortages than declining employment. The reality is that retail remains a human-driven activity as 82% of American customers want to interact with a human being. The best retail leaders have always known that the interaction between your associates and your customers is the biggest driver of your brand relationship.
Perhaps most important is that believing in automation and robotic investment isn’t contradictory to putting people at the core of the retail experience. As David Marciotte of Kantar recently put it: “Even when you have robots, you a) need humans to operate them and b) find people are a much more flexible and responsive resource to volatile environments.” One could argue that in an ideal world, store associates spend minimal time performing manual tasks like restocking shelves and focus the large majority of their time on helping and advising customers.
The engagement problem in retail is no longer something that retailers can shy away from – it is core to the long-term sustainability of their business. Unless store operations update, the future of the store doesn’t have a future. When you assess these permanent trends in retail, it becomes clear that the greatest challenges relate to store operations. Stores and store teams are not just core to a retailer’s performance, but also their ability to optimize and innovate towards their customers.
After years of directing investment towards eCommerce rather than stores, store operations have reached a critical state. With processes unchanged from 30-years ago and stores required to undertake ever more complex activities, overwhelmed colleagues have seen the greatest churn in the history of any industry.
The questions retailers should be asking themselves aren’t just about whether they should install a checkout-free store. They need to go back to asking what the purpose of stores is, and what roles store managers, district managers, and associates play in that. How do I simplify the amount of information and interaction I am sending to them? How do I ensure I am getting rapid feedback from what’s happening on the frontline to drive success? How do I engage my teams so that the customers in our physical locations are seeing the best of our brand?
So the store of the future is less about the metaverse, and more about the classics of great retail execution. Where stores are drowning in data and complexity, we need to use intelligence and automation technology to simplify things. We need to use that same technology to engage, rather than control, store teams. And we need them to see in that technology the real-time changes happening around them, with time freed up to respond with speed.