If there’s one major takeaway from last week's National Retail Federation's (NRF) Big Show, it’s that the accelerated evolution of the retail industry and shift to digital channels isn’t letting up anytime soon. NRF announced that e-commerce spending was up 11.3 percent during the 2021 holiday season, providing further evidence that online shopping continues to grow in popularity. Below are five key themes from the event that retailers must not ignore if they want to thrive in this new digital age of retail:
Metaverse and NFTs
The metaverse — a collection of digital universes co-created by the community — was perhaps the most significant innovative area at NRF this year. Crypto was emphasized as a key building block for success in the metaverse. NCR’s recent acquisition of LibertyX, a cryptocurrency software provider, indicates that even some of the established players are on the crypto bandwagon. As the metaverse becomes increasingly prominent, it will be critical for retailers to think through their crypto strategy. They should consider whether they will accept payments in crypto for products and if they will allow shoppers to buy certain digital products for their avatar in the metaverse. The option to buy digital products can enable a unique experience where shoppers can bring the product into their video games or wear it on a runway in virtual reality. Retailers should also consider how the metaverse can link to their physical locations. For example, when a retailer launches a flagship store, should it also create a digital copy in Decentraland?
Furthermore, the next generation of shoppers — Generation Alpha (ages 8 to 14 today) — will be the first generation to grow up in the metaverse. Their online behaviors and preferences are being shaped by Minecraft (where they share and collaboratively explore worlds they’ve created with their friends), Fortnite (watching a live show online with their friends), and creating their avatars (for example, building a digital wardrobe at Ready Player Me). And these behaviors are increasingly mainstream. There are 48 million daily active users on social gaming platform Roblox, a leading metaverse, and two-thirds are under 16 years old. Socializing in the future for this generation will happen in the metaverse (and in fact it already is), and retailers need to consider their best strategy for reaching and driving promotions in this new virtual world.
While there remain more unknowns than knowns about the metaverse, it's important for retailers — especially those in the apparel, specialty, and big-box sectors — to start developing a strategy and experimenting with different concepts that can come to life in the metaverse. It's expected that we’ll see massive developments in this space over the next two years, so the time to act is now.
As you walked into the Javits Center, "Just Walk Out Technology" was the first thing you saw. An Amazon.com and Javits Fresh & Fast 1,000-square-feet working convenience store allowed visitors to enter and just walk out with pre-made snacks and drinks. Elsewhere at the show, multiple other vendors, including NCR, Accuvia Software Group’s Touchless Shopping, and even barcode scanner companies such as Opticon, offered complete solutions. We're seeing this technology as parallel with significant developments of modern point-of-sale systems on commodity hardware, sales associate self-checkout, and consumer checkout/bring your own device. Ultimately, this frictionless technology will be the new normal, and that time to market has been shortened considerably by COVID-19. This type of technology is here to stay and should remain a top priority for retailers.
Diversity and Inclusion
Falling on Martin Luther King Day, NRF assembled a strong group of presenters on diversity and inclusion. Highlights include Pymetrics, which uses behavioral science and artificial intelligence to reduce bias from the hiring process, and Paige Thomas of Saks OFF 5TH, who discussed the connect between diversity and inclusion and fashion, noting that “[our product] allows people to show up in their authentic way and show off who they are.” Thomas explained that designing great products for a diverse audience requires having people from varied backgrounds at the table and contributing meaningfully.
The importance of bringing your whole self and authenticity was also highlighted in the opening keynote, “The New Face of Leadership,” with three women leaders highlighting lessons from their experiences and how leadership during the pandemic has made these more important for all leaders. Retailers need to recruit, promote and support diverse candidates. For example, the presenters emphasized leading by example, but also reinforcing the message that employees should show up as their whole selves (and that you’re not going to get it right the whole time).
MFCs and Robotics
The continued development of micro-fulfillment centers and robotics was another theme at NRF. Multiple vendors brought autonomous robots to the event and highlighted the business opportunities they present. From the latest technology in pick-and-pack with robotic arms — now more accurate and better image recognition than ever — to high-speed scanners that improve tracking of inventories without RFID, and back-office and aisle cleaning during closed hours.
A few examples that stood out included Avidbots, who offer “Neo,” a floor-cleaning robot; Pal Robotics' "Stockbot," which combined RFID and vision, and was seen driving around the first floor; Locus Robotics’ co-bots that were designed to collaborate with humans in fulfillment warehouses; and PopShop, which sets up discrete autonomous lockers on campuses and in flexible spaces for digital pure-plays. One other intriguing benefit was theft prevention. Badger Technology’s robots in one store during peak shrinkage times observed a 14 percent decline in theft, as would-be thieves were dissuaded because they thought the robots were monitoring them. Additionally, given the pressures on profitability and difficulty finding workers, robotics and the broader shift towards more self-service was a trend during NRF. Retailers should look at these solutions as part of future store designs and do a break-even analysis as costs drop.
Sustainability and the Inbound Supply Chain
Close to 30 percent of all e-commerce orders are returned, and for some retailers that number is closer to 50 percent. Too often these products go to landfill or disposal partners instead of being resold. As a result of these pressures, the industry is looking for a way to reuse. There were many startups at NRF that focused on this issue, from Recurate, which is creating a marketplace of resale products on retailers’ websites, to Returnity, which offers a process optimization and reusable shipping and packaging solution that reduces waste. And as we move more towards ever-faster delivery (often under 20 minutes now in some urban locations), there was discussion around creating a similar process to speed up returns and offer product pickups. Planning for the circular economy, enabling resale, and exploring product fabric re-use will become even more important over the next decade and should be part of retailers’ planning today.
This will be remembered as one of the most unique NRF Big Show's in a generation. Despite the smaller size and COVID restrictions, we saw significant developments in the metaverse and NFT, frictionless and POS technology, robotics, diversity and inclusion, and sustainability and the inbound supply chain. It was clear that the retail industry is emerging from COVID stronger than it has been in a long time.
Hilding Anderson is the head of retail strategy at Publicis Sapient, a digital transformation partner helping established organizations get to their future, digitally-enabled state.
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Hilding Anderson, Publicis Sapient’s Head of Retail Strategy, works with Fortune 500 companies and top global retailers to advise them on digital business transformation and how to drive higher performance in the changing digital landscape. Particular strengths are in digital business transformation, retail strategy for the data-driven retailer (CDP, algorithmic retail), engineering modernization, and growth strategy.
Hilding’s 20-year career started as an entrepreneur, founding a technology consulting services firm in Cambridge, Massachusetts focused on the retail and healthcare spaces. After a brief stint at a dot-com, he pursued an MBA at the University of Texas in Austin graduating in 2005 with a 3.8 GPA and specializing in Management and the entrepreneurial growth.
Following graduate school, he joined Publicis Sapient’s management consulting practice, working with boards and CEOs in the retail and financial services industries to transform their business. Partnering closely with clients, he developed digital and omnichannel business strategies, working closely with technologists to define and execute business strategy.
In addition, over the past decade, he has researched and published 5 books that document the changing digital landscape and consumer behaviors for retail. He also conducted annual in-depth evaluations of 70+ retailers omnichannel strategies in North America. Building on that expertise, he now leads the business strategy for Retail North America, guiding 40+ accounts on the right business strategy and path forward. His recent indicative work includes shaping a business transformation road map for a large department store, engaging with the chief digital officer of a top luxury apparel retailer in NY on GTM digital strategy and business justification, as well as partnering with a large home improvement retailer on the East Coast in experience strategy and innovation.