In just 4 quick years, Shoptalk has grown from an intimate retail conference to attend, to the must-attend retail event of the year. Digital natives, mass retailers, technologists and investors alike all descend to Las Vegas for 4 days of conversation on how retail is transforming and what lies on the road ahead. Retail as a whole is in a highly transformational time as technology and industry leaders like Amazon and Apple have shifted customers expectations. Here are a few takeaways on the industry as it shifts to cater to today’s on-demand, experiential, expectation filled economy.
Physical is not dead
During the conference, the phrase “Retail Ice Age” echoed in the halls, but this time it was mostly in rebute of a statement made during a keynote session early in the day. As brands and retailers understand the role of physical is evolving they are acknowledging stores are not dead, bad retail is. Those who are closing doors were plagued by a lack of investment in omnichannel capabilities, poor store layouts, and ugly debt structures. The fact is that purchases are still primarily emotionally driven and the physical store is where the stickiest relationships are created. Digital brands are leading the charge in reshaping what physical retail looks like with brands like The RealReal who has a progress take on merchandising and partner curation, and recently raised $115M to fuel their brick and mortar expansion and wedding company Zola who had their in-store staffers ordained so they could conduct wedding ceremonies at their new 5th Avenue flagship, in addition to selling wedding registry items and printing out a personalized 3D cake topper.
Experience per square foot is today’s KPI
When accessing four-wall profitability brands are now valuing and investing in ways to measure attribution from physical to all channels. They are investing in experiences that drive well time and are leading to increases in website traffic in nearby zip codes, growth in the lifetime value of multi-channel customers, and the emergence of “super consumers” who serve as brand evangelists as well as shoppers. Through technology integration such as camera vision and RFID, brands and retailers are continuing to learn more about the halo effect of experiences to drive customer purchase intent and conversions.
D2C brands aren’t the only ones thinking D2C
Retailers and mass brands have quickly realized that in order to win over today’s customer they need to go back to building an emotional connection with their customers. They are rethinking the products they offer as well as in-store experiences. They are creating more interactive stores that give customers a voice, like Nike’s new flagship destination that dedicates multiple floors to DIY and customization. They are learning from data and investing in private label merchandise like Macy’s who cited they are growing their private label assortment to 40% of their merchandising mix, from 29%. They are integrating services to drive engagement, like Nordstrom who have experienced longer dwell times and repeat visits at their new Nordstrom local stores leading to increases in sales at nearby flagship locations. They also understand there are silos of customers as with Sephora, which presented their take on three scenarios for the Sephora shopper: inspiration, mission-driven and quick stop recognizing each of these things requires a focus on merchandising in stores, expertise among beauty consultants and digital tools.
#FriendGoals is today’s approach to growth
Partnerships are the new competitive advantage and we continue to see collaborations that show traditional retailers are thinking outside the box in targeting digital natives and tech savvy brands to increase their speed towards innovation Like Rent the Runway and West Elm, announced a day after the conference. Or unexpected collaborations to create cultural relevance to a younger demographic like Barneys with Fila or Ralph Lauren’s collaboration with British skatewear label Palace. And they are also helping brands accelerate the growth of their physical footprint to test new store formats in strategic geographies like Build-A-Bear, who is expanding it’s pop-in shop strategy with Walmart, Bass Pro Shops and Great wolf lodge resorts.
Internal accelerator programs are retail’s new R&D
Target + Tech Stars, CVS with XRC, Walmart with Store No. 8 – we are seeing internal accelerators fueling in-house innovation making it easier for corporate infrastructures to test, fail or succeed, and iterate. Of focus the top priorities within R&D we are seeing include: robotics for speed alleviating the need for human labor to pick-and-pack, AI to fuel personalization, digital and dynamic shelving and scan-and-go systems to deliver more frictionless environments.
Cultural Innovation will be the strategy that drives results
While innovative thinking is all the talk, it’s those companies focusing on cultural change from leadership down that will truly see results. We will continue to see job descriptions evolve and those in leadership positions will need to have the skills sets to run a technology company, not just a retail company as illustrated with the “New Walmart” being assembled by Doug McMillon and Marc Lore.
Data scientists, AI experts and digital expertise will be core component of retail’s transformation. Companies will need to function with more internal collaboration as data and technology innovation will impact merchandising and marketing decisions as well as store layout and website design. Organizations will also be welcoming more of the Gen Z demographic into the workforce and they will infuse their desire for inclusivity, creativity and a more open mindedness to gender fluidity.
Today’s transformation in retail is moving on many cylinders. Those who come out successful will have a holistic focus from the outside in, with the customer at the nucleus of their initiatives. It will take constant iteration over the next 5 to 10 years and we will see continue to see consolidation as well as an emergence of the new breed of brands and retailers.
A regular contributor on ABC LA Radio, Cheddar TV, Glossy, Shopify and Forbes, Melissa Gonzalez, is one of IBM’s Retail Futurists and she serves on Rutgers University’s Design Thinking Advisory Board. In 2017 she was awarded Design:Retail’s 40 under 40 for her work in pioneering the pop-up retail format and was awarded Retail Touch Point’s 2015 Retail Innovator of the Year. Her company has also been awarded the Clio Image for Experiential Engagement and the New York Design Award for Branded Experiences and she was just named one of the top 20 Most Inspiring People in New York City.
Learn more at www.lionesquegroup.com and connect with Gonzalez on Facebook, LinkedIn, and Twitter.