Jan 26 2021

NRF 2021: From Retail’s Big Show, 4 Important Lessons

The retail landscape has changed forever, and smart players are using tech to build digital relationships, revamp supply chains and more.

NRF 2021: Retail’s Big Show, the virtual version of the industry’s biggest annual event, has ended. But the new world that retailers find themselves in — the dimensions of which dominated discussion at this year’s event — is here to stay, experts said, even after the public health crisis that accelerated its arrival abates.

Several themes emerged during the Big Show about the state of the industry and its near-term direction.

MORE FROM BIZTECH: What retailers need for superior BOPIS amid social distancing restrictions.

Digital Transformation Is Retailers' Top Priority

The global pandemic that forced the closure of many storefronts required retailers in a range of sectors to get creative overnight — and they did.

Overall, U.S. retail sales plunged 14.8 percent in 2020 from the year prior, according to U.S. census data. However, online sales increased by 15 percent, according to research by The Economist, marking 2020 as the year the industry finally completed its long-expected big flip: when the delivery of digital experiences became the industry’s driving force, with brick-and-mortar retail serving as an extension of online retail for most brands, rather than the other way around.

“COVID-19 has really been the chief innovation officer of this industry,” said Shelley Bransten, corporate vice president of retail and consumer goods industries for Microsoft.

Mitch Joel, an author, speaker and founder of Six Pixels Group, argued that retailers have moved up their digital transformation projects, perhaps by as many as 10 years. He referred to the rapid rollout of features such as curbside pickup and the transformation of older consumers into fans of online shopping as the industry’s “great compression.”

“What we’ve seen is a true acceleration of digital transformation, in terms of innovation and in terms of where the world is at,” Joel said. “Everything has compressed. The stuff we expected to take until 2030 happened in the space of a few months last year.”

Data Is Now Retailers’ Most Important Asset

Building multichannel experiences that capture consumers, however they wish to shop, requires data that informs brands of shopper preferences. Moreover, retailers need the ability to process the data quickly — not just to build popular online experiences for large consumer segments, but also to build relationships with individual shoppers. 

The “tricky thing” is that most of the data retailers possess is unstructured, Bransten said: “Our machines are only designed to make sense of about 10 to 20 percent of it. Retailers are increasingly asking, ‘How do I make sense of this data so I spend less time preparing data and more time responding to it and personalizing it?’”

Consumers Will Continue Their New-Found Shopping Habits

Retailers thinking that 2020 was an exercise in survival, with their industry returning to “normal” when restrictions on in-person shopping lift, will discover they’re mistaken, according to experts. Younger consumers have long been devoted to online shopping; the pandemic forced older shoppers to join them, and the latter group has seen the light.

“My 80-plus-year-old father now does online shopping, and he enjoys it, and he doesn’t see any way to go back,” said Sunil Gupta, Harvard Business School professor and author of “Driving Digital Strategy: A Guide to Reimagining Your Business,” in an interview.

McKinsey found that 75 percent of consumers have reported a new shopping behavior during the pandemic. That might include shopping online for the first time or buying an item online that they had previously only bought in person. According The Economist’s research, about 55 percent of baby boomers “will retain some of their new online shopping habits,” said Melanie Noronha, a senior editor for The Economist Intelligence Unit, the publisher’s research and analysis division.

The Right Supply Chain Tech Is a Vital Competitive Advantage

As the pandemic prompted big upticks in online shopping, retailers struggled with bottlenecked supply chains that have challenged their ability to complete deliveries on time. Technologies such as data analytics and artificial intelligence will be key elements of the solution, as brands realize that fulfilling orders is a critical competitive differentiator.

“We’re seeing just how data analytics and artificial intelligence-based predictive technology is going to have a huge role to play in the orchestration of the supply chain and optimizing upstream and downstream,” said Miya Knights, publisher of Retail Technology magazine. “It makes sense to move to a supply chain that’s better built to meet actual demand than producing goods in the hope that someone will buy them.”

Knights noted that as in-store shopping declines in popularity, retailers will reimagine their existing storefronts to function as “mini distribution” centers, helping bridge the last-mile problem — getting products to doorsteps — that plagues some brands.

“If COVID has taught us anything, it’s that stores have a role to play in the rapid — and profitable — fulfillment of online orders,” Knights said.

Explore all of our articles and videos from the event here. Follow us on Twitter @BizTechMagazine, or the official conference Twitter account, @NRFBigShow, and join the conversation using the hashtag #NRF2021.

Getty Images/ ipopba