Industry

Reporting from NRF: Retailers Look to Technology to Support Sustainable, Omnichannel, Consumer-Centric Enterprises

The Key Take-Aways from NRF 2022
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I think The Clash said it best: “Should I stay or should I go?” That was the question heard round the retail world leading up to NRF 2022, as the Omicron variant of Covid-19 spiked in New York City, home to the Javits Center and the NRF Big Show, leaving hospitals overwhelmed and potential attendees and exhibitors fearful of getting sick and stuck in quarantine in a city not their own. In the end, some selected the former and some the latter, which made for lower attendance and some wide-open vistas on the exhibit floor, but also created the opportunity for a less frenetic pace, with longer, more in-depth conversations and a place to sit down to have them. Surprisingly, Omicron did not keep all international visitors away. Many small groups traveled the show speaking Spanish, Portuguese, German, French. 

The show had a unique energy, and it was good. The past two years have been challenging for retailers but have also sharpened their focus, accelerating decision making around strategies and technologies to address specific problems that some might otherwise have let languish. As we saw starting in 2020, the pandemic was the final nail in the coffin for some retailers, but it also likely saved many others from the same fate. Retailers have become more vigilant when it comes to how they run their businesses — and even why ― and this blog will address just few of the most prominent themes and technologies that retailers are focusing on to address those issues, with more NRF takeaways coming soon from me and my IDC Retail Insights colleagues Leslie Hand, Dorothy Creamer, and Margot Juros.

Sustainability/ESG takes center stage. Ralph Lauren CEO Patrice Louvet may have tapped into the essence of sustainability best when he tied it to the Ralph Lauren ethos of timelessness. Just as the company’s garments are designed to be worn not for two years, but for two decades, so should companies take the long view in general, recognizing their responsibility to be good stewards of their organizations and the larger ecosystems in which they operate.

If you feared that rising focus on sustainability/ESG issues might have been a casualty of the pandemic, you thought wrong. The focus on sustainability was perhaps more prevalent than any other at NRF, which says a lot, given the steady drumbeat of conversation around topical concerns such as Covid, inflation, and labor shortages, as well as technology-driven goals including supply chain visibility and automation, customer engagement, digital store operations, omnichannel fulfillment, and data security and privacy. The thread of sustainability wound through each of these topics, and is clearly top of mind from the retail C-suite to all points beyond.

Driven by consumer as well as employee demands, by the investor community, and by clear and pressing need for change, companies want to know, “How do I create a more sustainable organization?” and “How do I ensure that those actions lead to meaningful outcomes?” There are many answers to these questions. Some come through direct efforts to mitigate carbon pollution and water use, to design and create product with the end in mind, to treat workers with respect, and to hire from a wide pool of people with diverse perspectives and backgrounds. Ralph Lauren, for example, recently partnered with Dow to develop a sustainable method of dyeing cotton on demand that dramatically reduces water use and eliminates waste. The company also has invested in sustainable material science startup Natural Fiber Welding, which treats cotton waste in such a way that it can be leveraged as a performance fabric — a feature not offered by cotton in its natural state.

Looking broadly at sustainability, as organizations must do, another solution is found in digital transformation, which, through the connectivity, visibility, agility and optimization it enables, contributes to sustainable operations around entire business ecosystems. This includes product planning and design, development and production, facility and asset management, and the end-to-end retail operations including transportation, cold chain, returns, and reverse logistics.

Digitalization, enabled and enhanced by cloud, AI, computer vision, IoT/RFID, AR/VR, and edge computing, also provides a means to see, measure, record, benchmark, and report environmental and social efforts, setting the stage for companies to understand what they are doing more holistically and improve upon it.

Welcome to the Metaverse. You’re already there. Today, the metaverse is an extension of our lives, enhanced by technology, that currently exists as a series of virtual worlds. Your teenage son buying skins for his avatar in Minecraft? Metaverse. In the future, the metaverse will be an interconnected, endless world where digital and physical lives fully converge. Imagine waiting for an appointment at a real booth on the NRF show floor while your avatar roams a fully fleshed-out digital NRF, meeting other attendees (who may or may not be there in person), stopping for coffee at the digital Starbucks, and paying for a coffee that an in-the-flesh Starbucks employee brings from the mezzanine of the Javits Center. Digital and physical selves merge seamlessly in the metaverse, as the worlds draw closer together.

What does the metaverse mean for retail? In the metaverse, brands have a digital presence, too. There are virtual possessions. And consumers. Nike filed seven trademarks late last year, including those for “Nike,” “Just Do It,” and its swoosh logo, and posted openings for virtual designer roles, indicating its intent to make and sell virtual branded sneakers and apparel. It subsequently purchased RTFKT Studios, a company that already makes and sells NFTS and digital sneakers. (In one collaboration with teenage artist FEWOCiOUS, the company sold 600 pair/NFTs of sneakers in just six minutes to the tune of more than $3.1 million.)

Further, outside of its role as a sales channel, the metaverse opens possibilities for gathering data about consumers and product demand. Imagine a sneaker drop in the virtual world, where certain styles of new kicks sell like gangbusters, giving the brand insight into what might sell IRL, thereby offering intelligence that leads to trend-right production and not a lot of inventory headed for markdown or landfills. In other words, the metaverse can be a vehicle for more sustainable operations.  

Either/Or Is Out. Hybrid Experiences Are In. It’s the era of ‘both/and.’Not only does the metaverse open up a huge world of selling opportunities for retailers, it further bridges the narrowing gap between digital and physical worlds. While most consumers may not be outfitting an avatar in the universe, they are nonetheless moving between online and offline at whim and expect retailers to accommodate those hybrid omnichannel journeys seamlessly. Today, those demands have accelerated around last mile, and include experiences such as shopping online and picking up in-store or curbside, or shopping in-store and returning merchandise online; they include endless journey varieties such as adding items to your BOPIS purchase when you arrive at the store, or communicating with the third-party delivery service that’s picking and delivering your groceries to approve a substitution.

Hybrid experiences open opportunities to please the consumer in new ways, but they also add expense and complexity, including the need for upgraded connectivity to enable secure experiences. The need to meet the demands of hybrid while also enabling profitability was a major theme behind many of the technologies discussed at NRF, including AI for recommending right product, return logistics software for defining and guiding product-specific reverse logistics workflows, order orchestration and fulfillment applications for omnichannel shopping, last-mile delivery visibility for optimizing customer experience and even autonomous, driverless cars for handling those deliveries quickly, efficiently and labor free. Task management applications help to improve and optimize in-store employee engagement, while touch-free applications allow for faster payments and customer self-service checkout. RFID is enabling improved inventory accuracy and inventory locating, on the shelf, throughout the store, and into the supply chain.

Across it all, retailers are seeking unified platforms that interoperate across omnichannel, microservices that enable them to easily swap modules in or out, visibility of data across the enterprise or ecosystem, the ability to integrate systems quickly, with all applications working together well regardless of cloud provider, and security and fraud protection across data and all systems and infrastructure.

It’s a tall order. Retailers and their technology partners are on it. While my IDC’s Retail Insights colleagues, Margot Juros, Dorothy Creamer and I were at NRF, we vlogged our experiences. In these videos we share our personal experiences and feedback in real-time, offer important findings and insights and hold interesting interviews. Click the button below to watch the vlog.

Research Manager, Global Supply Chain