NRF & 2018 Innovation Trends in Retail Technology

By most counts, 2018 is not a year retail industry will see downward trajectory. Some corrections like store closures, bankruptcies or near-bankruptcies happened last year (please read my published 2017 NRF trends blog from last year here). While there may still be a few more blemishes left, this is the year that will usher continuous and unprecedented innovation in the retail industry. Up until November 2017, total US retail trade sales are up a healthy 4.2% over 2016. Non-store retail (10.2%), Gasoline stations (8.8%) and building materials and garden supplies (8.2%), Auto parts (4.9%) and furniture (4.6%) showed respectable gains. In all likelihood, when December sales figures are reported, retail sales will end up close to or over 5% comp over 2016. As of third quarter 2017, e-commerce sales were 8.4% of total retail sales. In order to kick-off 2018 in an insights-led way, outlined in this blog are a few key industry trends, strategies and solutions that can help retailers focus better, innovate and address the business challenges facing them today. The business challenges are several and can be classified into three groups: Organizational:   • Lack of internal and external collaboration; uninspired workforce; cultural conflicts between bricks and clicks teams Operational:   • Poor store execution; low product differentiation; high cost of digital orders; unpredictable store demand; pricing and promotions-related pains Customer:   • Unexciting loyalty programs; inaccurate segmentation; wishy-washy personalization; lack of actionable customer insights The question remains why outside of a complete lack of investible capital and executive leadership are most retailers delaying or postponing bringing a customer-led and a balanced innovation approach to the forefront? In...

Is Artificial Intelligence (AI) the most feared technology?

When it comes to retail, AI is showing signs of bringing positive disruption to the retail sector by improving the efficiency to analyze shopper demographic data, order delivery times and customer service. It is predicted that by 2020 and beyond, 85% of customer interactions in some form will be managed by AI applications like natural language processing (NLP) or by combining several different AI applications together. The term “artificial intelligence” is applied when a machine mimics “cognitive” functions that humans associate with other human minds, such as “learning” and “problem solving.” While traditional data mining extracts data for humans to analyze, AI draws conclusions on its own. Yet, despite the fact retail executives have revealed that AI has helped drive on average 3%-5% customer satisfaction improvements that in turn has driven sales, it is giving some retail executives goosebumps. The reason is the implicit fear associated with machines and algorithms. There are some who believe that AI-driven automation will take over core retail functions and some or many associates or employees who work very hard every day will lose their jobs at the headquarters, and especially in the stores, distribution centers and call centers. While it is natural such doubts creep in from time to time, such notions are removed from ground realities. Mckinsey did some really insightful research in 2017 to understand automation potential and wages for US jobs. Retailing is another sector with a high technical potential for automation and this applies to several innovative technologies such as AI and its machine learning, robotics and NLP applications. It is estimated that 53 percent of its activities are...

Strategic Advantages by Focusing on Customer-Centricity: Notes from Xcelerate Retail Forum 2017

In June 2017, EIQ Research Solutions conducted a state of category management survey among 100 retailers in the US and Europe. The results of the survey reveal that the top challenge that has hindered a customer-centric focus in the big-box retail, grocery, general merchandise is inconsistent and incomplete customer data. Symphony Retail Solutions (which is the combination of Symphony EYC and Symphony GOLD) organized their global leadership event, Xcelerate Retail Forum which was held on 12-14 September in Las Vegas and 9-11 October in Paris. This event brought together some of the world’s top retailers and manufacturers who got together to discuss the future of customer-centric retail in an era dominated by market disruptions- Amazon’s phenomenal growth, evolutionary changes in customer behavior and unprecedented retail business upheavals. This forum had a prime focus on the future of customer-centric retailing, and how to meet today’s shopper demands in the face of rapidly changing technology and ever-evolving retail trends. In addition to this theme, the user event also incorporated content regarding newer retail innovations unveiled by Symphony Retail including: customer-centric category management, virtual store and space planning, new retail-consumer goods data collaboration models, artificial intelligence, conversational insights, and other technologies that are fast becoming imperatives for successful customer-centric merchandising, marketing and supply chain planning and execution. Incidentally, Symphony Retail is one among the few retail enterprise technology providers who have introduced an AI (Artificial Intelligence) driven model for category insights and category management called CINDE (an acronym for Conversational Insights Decision Engine). The digital assistant uses Natural Language Processing (NLP) enabling category managers to ask CINDE questions and gain answers towards...

AI’s role in changing the outlook of the retail industry

Artificial Intelligence is defined as the study of “intelligent agents” and takes place when a device perceives its environment and takes actions that maximize its chance of success at some goal. Colloquially, the term “artificial intelligence” is applied when a machine mimics “cognitive” functions that humans associate with other human minds, such as “learning” and “problem solving.” While traditional data mining extracts data for humans to analyze, AI draws conclusions on its own. AI churns complex data to re-engineer simpler and more streamlined experiences for both retailers and customers at every touch point. AI uses predictive models and machine-learning to advance company strategy and relieve end-user efforts. Research shows that over 45% US retailers plan to use AI in next 3 years. In retail, AI arms retailers with sharper forecasting tools to make smarter business decisions. The use of algorithms increase visibility into ROI implications, translating to results like lower costs and higher sales. AI has brought positive disruption to the retail sector by improving efficiency and it is predicted that by 2020, 85% of customer interactions will be managed by AI. Based on a recent survey, 70% of US millennials and 62% of millennials in the UK say they would appreciate a brand or retailer using AI technology to show interesting products. Below are some of the ways in which AI is helping retail: Inventory effectiveness – Inaccurate inventory management is a high risk for retailers since having too much of inventory is a costly affair, while merchandise being out-of-stock leads to lost sales and customer frustration. The use of AI systems in inventory management reduces the uncertainty...

The Impact of Customer Analytics on Assortment

One of the most vital factors for every retailer to be successful is that they must possess the right inventory and assortment mix. Irrespective of the fact that they might be located at a busy mall or that they may have an engaging presence on social media, what matters the most is that they stock relevant products for their target customers. To add to that, online retail gives customers to chance to buy their desired product from a variety of websites, thus making assortment optimization a key priority for all retailers. The key to effective assortment optimization and achieving maximum sales is to delve into customer data and analytics to grasp useful insights. These analytics enable retailers to identify profitable growth opportunities to make the right retail decisions with the help of customer-centric merchandising. The importance of customer-centric merchandising For effective merchandising, retailers need to use customer data and buying behaviour and integrate those insights assortments and promotions. A prime aspect here is creating localized assortments as this aids retailers to determine which products to offer at which locations and through which medium. According to the EIQ Customer-Centric Merchandising and Category Management Survey, 2017, a whopping 73% of retailers attempt to customize their processes at a local or store level benefit from an increase in overall customer satisfaction. Customer-centric promotions also play an important role in assortment and customer-centric merchandising as these help retailers tap into specific customer segments after studying their buying behaviour. Metrics such as lifestyle and life stage aid retailers to place customers in specific segments and effectively design promotions for them. Thus, the buying behaviour...

The Evolution of Retailtainment: The Face of Retail Real Estate is Changing

With hundreds of stores and malls putting down their shutters, 2017 is certainly a bit of a setback. Whether it’s big names like JC Penney, Macy’s and Sears announcing store closures and numerous other like Payless and Rue 21 filing for bankruptcy, this situation is being coined as the great retail apocalypse of 2017. Retail may be having a meltdown at the moment but at the same time, this does not mean that retailers are going to shy away from brick and mortar. According to EKN’s research on The Changing Role of the Store – Is Your Workforce Ready, by 2020, traditional sales processes will reduce in importance in terms of what retailers expect from stores. At the top will be theme-based stores, fulfilment centers and pop-ups. With disruptive changes occurring in the retail industry, retailers and its workforce need to prepare for and embrace evolving retail formats and technologies to offer customers a unique and frictionless shopping experience. FTI Consulting’s 2016 Retail Outlook Report, shows that 63% of shoppers still prefer to touch and experience the product. Thus, a vast number of shoppers still prefer shopping in stores and online shopping cannot replace the allure of the shopping mall. So, what are retailers and developers doing to attract more shoppers to malls? Retailtainment is the answer. Retailtainment is the concept of adding entertainment and experiences to the retail mix. This trend started a while ago since malls started adding typical forms of entertainment and leisure activities, like gaming arcades, bowling alleys, and movie theatres to that attract consumers. Today, entertainment concepts have evolved beyond the movie theater and...