NRF Top 10 Takeaways

The National Retail Federation just wrapped its 103rd annual Big Show last week in New York City. If you didn't make it, here's what you missed.    

1. The Future Is Almost Here. Cognitive systems ? those that learn — will rapidly change your industry. Think War Games, but instead of playing tic-tac-toe to learn the concept of a cat's game and save the world just in the nick of time, cognitive systems will be doing everything from offering diagnoses for cancer patients to determining fashion trends. This month, IBM announced a new division focused exclusively on cognitive systems. You've all probably seen IBM's Watson compete on Jeopardy, but recently the company has been working with oncologists to create a new "Watson" for the medical community that can offer diagnosis and treatment recommendations. "It takes seven to 15 years to get information in the system," says Ginni  Rometty, IBM's (9th) president and CEO, but ultimately, interaction with the supercomputer is "almost like a person." In a much simplified, retail example, Rometti demonstrated cognitive systems at work on the Fluid for North Face site, which, when asked questions about "gearing up for a 14-day camping trip," very accurately narrowed down its responses to meet the specific line of questioning it was given ? including inquiries that dealt with everything from length- and location-appropriate apparel and gear to abs (avalanche air bag system) technology to ratings. "You build trust that way," says Rometty. "This is not just technology. This is a new era of commerce."

2. Big Data Advantages Will Flow to Those Who Refine the Natural Resource of Data. The phrase may be overused, but what "big data" means for your industry, and the world at large, is almost inconceivable (see No. 1!). Today there are 2.5 billion gigabytes of data created every day, with 80 percent of the world's data created in just the past two years! Data is expected to grow 800 percent in the next five years, and information will be "our generation's next natural resource," says Rometty, who adds that there will soon be a need for a CDO (Chief Data Officer). The companies that can effectively harness, analyze and use their data (structured and unstructured) to engage with their clients in a prescriptive way will be the winners, she says, contrasting descriptive (your GPS shows you two points on a map) with predictive (it provides directions) and prescriptive (it changes your course midway based on traffic). "Information is going to be the basis of your competition," she says.

Technology is moving from the back office to the front, noted Rometty, pointing to Kohl's as an example of a retailer that is engaging its consumers by offering promotions on mobile based on very specific consumer information. Standing in the shoe department at Kohl's, a customer may receive an offer, on her smartphone, based on a pair of shoes she viewed previously online. We are entering a period where stores will be a great source of data and online intelligence will be combined with the tactical immediacy of being in store, she says. The best retailers will use analytics to increase basket size and reduce shopping-cart abandonment (currently at 70 percent), engage consumers via one-to-one marketing and build a better workforce by understanding the best people for the particular job at hand.

*Manthan Systems has enhanced ARC TargetOne, part of the ARC Customer Analytics portfolio, to allow retailers to execute personalized promotions across multiple channels. It can now recommend best offers based on customers' purchase histories using a patent-pending recommendation engine which will allow retailers to target offers only to customers who are likely to respond while taking into account any anti-spamming requirements and offer rules.  

*SAP is working closely with a group of retail clients including Tommy Hilfiger, adidas and Luxottica, to bring to market a planned collaboration fashion management solution that will bring apparel and fashion wholesale, retail and manufacturing into one set of business processes. Driving the solution is SAP's HANA in-memory platform, which allows the processing of master data at massively high speeds.  The new solution will allow users to aggregate on the fly, and will allow for the creation of one global inventory across the enterprise, and one set of processes for operations such as planning and allocation.

*Levi Strauss & Co. is working with Teradata to upgrade its global BI architecture. Based on the Teradata foundation product, this new architecture will run SAP NetWeaver Business Warehouse directly on the data warehouse — it's one of the first organizations to do so. This convergence will help Levi Strauss consolidate its enterprise information and experience faster decision making.

3. Everyone's Data Is Getting Breached, and That's the Biggest Threat to Security, in a Different Way Than You Might Think. It's like "The Incredibles" philosophy of data security: If everybody's special, then no one is, and if everyone's data is getting breached, then no one is really responsible for fixing the problem, because we're all in the same mess together, and consumers will face the same hazards wherever they shop, so we don't really have to get on this problem. Not that anyone said that, but there's often a sense of relief and a lowering of urgency when you know you're not alone. Important point: It is true that the retailers Target and Neiman Marcus most recently — and their customers! ? are the victims, not the perpetrators. As Carter's CIO Janet Sherlock reminded, "The term ‘breach' is not what we should be using; it is theft. It makes it sound as if we have done something." Still, if the companies that take our data can't stay one step ahead of the thieves at all times, everything will fall apart, and it won't just be consumer trust that is lost, but a functioning economy. And no one wants that. "We all want to ensure security of our customer data. The focus should be on criminals," says Sherlock. "That being said, there should be reform in some of the practices that we follow. We are all excited about chip and pin and how it will lower losses. PCI alone is not enough and more needs to be done."

4. No One Wants to Hear the Word Omnichannel Ever Again. (But Retailers Still Want to Give Their Consumers an Omnichannel Experience.) Cue Woody Allen. This food is horrible. And the portions are so small. Dave Finnegan, chief inBearmation officer of Build-a-Bear, summed up the general sentiment:   "It's not omnichannel; it's retail." Finnegan moderated a panel of retail CIOs who continue to strive for the omnichannel customer experience — and supply chain? while facing the challenges of integrating the channels and other supporting systems that will make this a reality.  There is a constant need to balance business process with technology. For example, relative to fulfillment, if an item was used to fulfill an online order from the store, you have to decide if you want to replenish that item at the store level, says Janet Sherlock, CIO, Carter's. This requires a modification of replenishment algorithms, and that is more complicated when you are running "different systems in different channels, and you have a transaction that starts in one and ends in another."

Omnichannel can only be achieved by "embracing the consumer 100 percent," said Matt Marcotte, SVP, Global Retail, Tory Burch LLC. Achieving that requires cross-functional collaboration across the company. At the ultra-high end retailer, Marcotte and CIO Mike Giresi built a team from all areas of the business to talk about what the customer liked, didn't like, what she bought and didn't buy. Discussing divergent ideas is "difficult," says Giresi, but it allowed the company to achieve a shared vision as they worked to build an in-store and digital experience that revolves around the needs of the customer.  When everyone understands and has a stake in how the picture comes together, it "becomes a mission vs. a project," says Marcotte.

*Manhattan Associates demonstrated via its Store Inventory & Fulfillment solution how the store can sit at the center of the omnichannel retailing experience by bringing the entire network's inventory into every potential selling opportunity. It highlighted 1) In-store clienteling, order capture and store checkout — with a single credit card swipe; 2) Store and online transactions available to customer service personnel enterprise-wide; and 3) Easy-to-use ship from store, pickup in-store and store inventory management — entirely on a mobile device. Manhattan has also integrated Starmount Engage, Starmount's Mobile Selling Assistant, and Starmount Connect, into its omnichannel commerce platform.

*Oracle has released Oracle Retail Release 14, offering new features throughout its suite of retail solutions that address customer engagements across touchpoints, and allow for more targeted assortment planning and greater inventory efficiency. The release offers new operational and planning processes that allow customers to buy, pick-up or return items in any channel and equip retailers to fulfill demand without channel constraints. The planning solution offers advanced clustering, microspace optimization, assortment and item planning, size-and-pack and clearance capabilities and uses retailers' own customer data to identify the factors driving buying patterns, allowing them to get even closer to the unique preferences of their customers.

5. We Live in a Mobile-First World. Looking at omnichannel from the customer-facing perspective, mobile and digital are disruptors, says Michael Kingston, SVP and CIO of The Neiman Marcus Group. "The Neiman's customer values a differentiated experience that allows us to give them highly personalized, high-touch service, and give them access to all our products. … [but] the way that customers engage with us is increasingly reliant on mobile and digital." How Neiman's applies in-store values to mobile devices is a challenge. "You have to understand who that customer is. When you're delivering on mobile, you're taking all of the customer's visits to the web site, call center and store and using that information to serve them. We're all trying to figure out where mobile apps fit in. Not every customer is going to want to engage via apps." It's still a learning process, he says, requiring a lot of testing and learning. As for mobile payments, Neiman's thinks it has a role in the mobile customer experience, but says that, "for mobile payments to become big, we have to find something that's easier. It has to be as frictionless as possible."

6. You Can't Do Quick-and-Dirty Global Expansion. A Deloitte study of 90 publicly traded U.S.-based retailers found that they actually fell behind their domestic counterparts when expanding globally. You must understand and have the resources to deal with the cultural, regulatory and financial challenges of new markets ? without neglecting your home market, says Alison Kenney Paul, Vice Chairman, U.S. Retail & Distribution, Deloitte. She emphasizes the importance of a well-planned strategy that takes into account your own appetite for risk and focuses on markets where your brand will resonate with the consumer. It's also crucial to select an effective market-entry strategy — will you go it alone, with a joint-venture partner or a franchisee?

7. Expanding Digitally is a Smart Way to Start. The 21st Century really has it good over Marco Polo and Christopher Columbus when it comes to following trade winds. If you don't yet have the stomach or the resources for on-the-ground expansion, but want to put your brand in front of a few million or billion more customers, start with a digital presence. TOM's shoes, which donates one pair of shoes for every one purchased, expanded via its web presence initially into English-speaking countries (Canada and the UK) and then to the Netherlands, France and Germany, with plans soon to blanket the globe. This too, requires a smartly executed strategy, and the importance of testing, measuring, learning, and then refining and repeating the process, cannot be overstated, said Zita Cassizzi, chief digital officer of TOMS. For example, she says, when it rolled out a digital presence in the Netherlands, the company experienced problems with the bank transfer payment option popular in that country. Users did not understand that they had to hit "submit" after making the transfer. "We would have found this out with more usability testing," says Cassizzi. 

8. RFID Is No Longer a Choice. A ChainLink Research report, "Use Cases Driving the Current Surge in RFID Adoption" revealed that the top three reasons among retailers for implementing RFID now are 1) improving inventory accuracy; 2) reducing out of stocks and 3) increasing on-floor availability. RFID used to be considered an option, but not using RFID is rapidly being viewed as a competitive disadvantage, says Shawn Neville, president, Avery Dennison RBIS. For some time, RFID stalled because it was typically an isolated pilot program inside a larger enterprise; that simply added a layer to operations, and made it a hassle. But as RFID is rolled out store-wide, "life changes," and it becomes a positive enabler because it makes peoples' lives easier and allows the whole store to operate differently, positively affecting everything from inventory management to POS to loss prevention and even how the dressing room operates. Currently there are two billion RFID tags being applied to apparel annually, but there are 100 billion apparel items produced each year. Even if the market for RFID tags only hits 20 percent, that is 10 times the current level, says Neville, adding that "the RFID evolution could triple in size in the next five years."

What's the future? RFID's role will be quite significant. Imagine the "closet of the future," where consumers use RFID for closet management (where is that purple silk blouse?) or to find out more information about a brand.

*Avery Dennison: Offering a full suite of RFID tags and labels and services, including SmartFace RFID technology, which allows for the elimination of two layers of PET, resulting in thinner RFID-enabled tags and labels with a lower environmental impact.

*Checkpoint: The company's RFID solutions have been deployed across select departments at Kohl's, including footwear, denim and men's basics. Kohl's deployed Checkpoint's Merchandise Visibility enterprise software centrally in Kohl's data center, handheld RFID readers to perform regular in-store inventory counts, RFID printers and handheld readers for tagging at distribution centers and Checkpoint's RFID tags and labels for initial store tagging, tagging at distribution centers and source tagging. 

*Motorola: Piloting a dressing-room solution that knows what is brought into the dressing room, what is left behind, and that allows shoppers trying on clothes to select a different size and have it brought to them by a sales associate, without leaving the dressing room.

* TexTrace: Offering a brand tracking solution that discreetly incorporates RFID technology into an apparel manufacturer's woven brand label.

*Tyco: Released a new set of RFID-based applications available on its TrueVUE platform, including Display Execution and Storefront Visibility. Macy's, which previously rolled out Tyco's TrueVUE Display Execution application on the largest shoe-selling floor in the world — its Herald Square 63,000-square-foot shoe department is home to more than 300,000 pair of shoes, more than 500 customer chairs and more than 400 shoe store staff — to accurately inventory the shoes on display each day, increasing show compliance from 65 percent to 70 percent to nearly 100 percent, has now rolled out the application across its 850-store chain.

9. You Must Empower Your Store Associates. The Tory Burch site, which includes a blog covering everything from entertainment tips to must-read books, now features a "wish list" function, where clients can place the items they desire (and sales associates can place items they believe their clients will like) ? or create wish lists for their friends and loved ones. Like birthday pop-ups on Facebook, information about clients' anniversaries, birthdays and 30-days-after-purchase days is built in, taking some of the work off the associates so that they can connect more easily with their customers. Equipped with iPads, sales associates are able to stay on the floor with their customers at all times. (See "We Live in a Mobile-First World" above.)

*One Epicor apparel and footwear customer used Epicor Retail Mobile Store to expedite their lines and check out their customers on Black Friday. The sales rung through Mobile Store saw an average sales per transaction increase of 11 percent and average units sold per transaction increase of 8 percent.

*Technology start-up Theatro has launched the Communicator Software-as-a-Service (SaaS) offering, a mobile workforce productivity application suite that uses Theatro's new enterprise wearable. The store operations solution is delivered as a cloud-based SaaS service over the in-store WiFi network to every retail associate, providing brick-and-mortar retailers a voice-activated enterprise wearable with critical management command and control and analytics to increase sales associate productivity, conversion rates and store profitability.

10. Life Is Good, and Capitalism is a Great Tool for Making Lives Even Better. Optimism unleashes superpowers. So do fun, simplicity, gratitude, authenticity, creativity, love and courage, says Bert Jacobs, co-founder of lifestyle brand Life is Good. More than one billion people are connected and sharing advice on social networks, and consumers have more power and choice than ever before. Consumers, particularly Millennials, value corporate and social responsibility over profit. They care how companies treat their employees, the environment and their customers, and winning retailers know this, says Jacobs. Top CEOs are obsessed with their customers, and care deeply about what they think and feel. To engage the customer, you must work at the level of emotions and feelings, and identify the images in your customers' hearts. Successful retailers will radiate happiness, show genuine empathy for others and rally around hopefulness and confidence about the future. "Capitalism is the most practical tool in the world for solving social problems." Life is Good gives 10 percent of its profits to Playmakers, a foundation it started for kids in need. "If your organization doesn't have a strong social cause, get one. Do it for yourself, and because your customers will appreciate it," he says. "You have to connect with people emotionally. You have to blow their minds."

Jordan K. Speer is editor in chief of Apparel. She can be reached at [email protected].

Click here for additional NRF reporting.
This ad will auto-close in 10 seconds