3 Trends to Watch for at NRF's Big Show

Building a digital-first culture will dominate this year’s NRF Big Show as retailers advance the immersion of digital experiences for shoppers in-store. It’s easy to see why. It’s a common sight to see shoppers today scanning their mobile devices for deals while in-store.

Shoppers also have the expectation that retailers should cater to their habits, providing experiences that are localized, personalized and timely. From beacon technology to smart dressing rooms to digital signage, digital stores are squarely at the center of retail.

This year’s NRF Big Show should be the largest ever. Attendees will be excited by the retail sector’s impressive performance during the holiday season, but also concerned with the pace of their digital transformation relative to competitors. Furthermore, attendees are eager to tap bigger profits from their relationships with the largest online sales providers.

Here are three trends to watch for at NRF.

Big Expectations, Big Pressure for 2018

Retailers will enter 2018 riding the momentum of the biggest holiday shopping season in U.S. history, with more than $5 billion in online sales on Black Friday, more than $6.5 billion in online sales on Cyber Monday, and more than one in three Americans shopping either in-store or online during the holidays. Let’s take a closer look at the numbers.

Black Friday and Cyber Monday produced staggering sales that reveal both new trends about shopping behavior and old habits that are likely to help retailers start off strongly in 2018.

While well off the 2017 Singles Day mark of $25 billion, the Black Friday and Cyber Monday sales figures showed US retailers making strong gains primarily due to the strength of mobile shopping. Mobile is powering online sales and it hasn’t peaked. Retailers should continue to expect growth in mobile shopping year-round, with significant spikes in activity during the weeks surrounding major holidays. This is no major surprise, but shouldn’t be interpreted as online shopping only; mobile devices are a significant part of the in-store experience as well.

Still, the holiday season spike will create added pressure on retail’s business and technology leaders to increase profits through 2018. This requires further innovation with technology, such as adding barcode scanners or price checkers in-store, and improved associate-facing systems that offer faster checkout, among other advancements, to enable customers to self-serve with mobile.

Disruptive Technology is Separating Winners and Losers

Companies using loosely coupled architecture driven by micro-services that isolate different capabilities, as seen with Netflix, Spotify and eBay, are best positioned for continuous innovation.

Most retailers are using legacy technologies and tightly coupled/monolithic stacks. As a result, changes are very cumbersome and time consuming to make, requiring massive regression testing and IT efforts. The end goal can't be to introduce a shiny new technology; it has to be to deliver a new, and great, customer experience.

One of the biggest challenges separating the winners from the losers in retail is reliable capacity on demand. No retailer wants to be in the news for a down quarter related to scalability or lack of efficiency matching customer demand. Retailers will need to show gains in 2018 with using technology to understand their customers’ behavioral and attitudinal data, which allows businesses to better predict customer churn and calculate a buyer's share of wallet. In-store improvements will include arming associates with the tools they need to service customers anywhere on the floor. These include price and inventory lookup, mobile point of sale, and giving customers self-serve options, online and in-store, to relieve the burden on staff. In addition, expect to see technologies such as single page applications (SPA) and accelerated mobile pages (AMP) get more attention at NRF.

Amazon Rules

Amazon.com dominated holiday sales, beginning with a Black Friday promotions onslaught that began 50 days before the day arrived. The effort paid off in a big way:

• On Black Friday, Amazon accounted for 45 percent to 50 percent of all online transactions.
• Cyber Monday topped Amazon Prime Day in total sales.
• Perhaps most sobering for retailers, orders from the Amazon app increased more than 50 percent worldwide over last year.

The National Retail Federation reported that 174 million customers shopped both online and in-store during the five-day period from Thanksgiving to Cyber Monday. This volume across the board for the retail industry — in-store, online, and via mobile or in-app — is a measure of the obvious: consumers want deals online and in-store. People love shopping around the Thanksgiving holiday, whether that means signing into Amazon, using a retailer’s discount for an ad-hoc purchase, or visiting their favorite store in person.

With Amazon’s influence showing no signs of slowing down, what’s less clear is how retailers will align moving forward. Some will see Amazon as a distribution channel for products, while others may be wary of putting too many resources into an Amazon-first strategy. There’s no one right way to survive in the age of Amazon, and most of the retailers gathered at NRF are still figuring it out.

 Amitabh Mudaliar is vice president and head of client relationships, Retail, CPG and Logistics, Americas at Infosys, a technology services and consulting firm.