NRF '23: Top Five Takeaways, Reflections

NRF ‘23 wrapped Tuesday, and it’s safe to say, the Big Show is back.

Yes, retail faces tough economic and supply chain headwinds. Yes, big tech is cutting staff. And, yes, consumers remain fickle.

This backdrop actually makes the show more meaningful.

Here are my five distilled takeaways (if you care mostly about sustainability, skip to the last section).

Merchants back to being merchants.?

The themes of simplicity and back-to-basics were everywhere. Right products, right place, right price, wrappered in the right consumer experience (Cx). And Cx is the main competitive ground because consumers are the ones putting dollars into pockets. All other capabilities serve that end.

What else?:

• Channels are gone - consumers use 4 devices and touch 5.3 (!) channels according to 凯捷咨询 . Forget it. We’re post-channel now .
• Grocery e-com is here to stay. Not at 15-20%, but double-digits.
• Delivery speed as part of Cx is getting very nuanced. Blanket “match-Prime” is done (looking at you Ryan Kelly ).
• Loyalty isn’t dead, but it’s not healthy, as inflation-pounded shoppers squeeze pennies and try new brands.
• Who’s afraid of Jeff Bezos? - I remember the NRF when Walmart stopped being the bogeyman of retail and shifted into “the anti-Amazon” mode. This year … it almost felt like Amazon’s (perceived) indomitably stopped being a thing, or at least the thing.

Doing more with fewer (people).

Covid drove retailers to do more with fewer people because most couldn’t afford to maintain large armies of store associates. Now, they can’t hire them. The labor shortage is real, and most forecasters project it will continue for years. This is increasing pressure to simplify the lives of store associates while supplementing and/or supporting them with automation (example: Kroger Technology & Digital partnering with 谷歌 and Deloitte Digital for a suite of associate tools, announcement feat. Jim Clendenen >>> here).

How else is this showing up:

• Automated BOPIS order picking
• Automated store ( TRIGO + Wakefern's Charles McWeeney showcased a cool example)
• Perennial battle against returns continues, but now has added urgency because of the impact returns have on store labor
• Convertible checkout lanes (that actually convert), which along with modular lanes swappable at the part-level really made 迪堡 shine
• AI/ML in fresh produce management ( Afresh + Albertsons Companies showcased one example, Toshiba Global Commerce Solutions had a cool item/produce identifier in their booth)

Roko’s BFF - AI as sidekick and supporter.

AI/ML was everywhere, from the (highly practical) Innovation Lab to the large tech vendors booth and Big Idea sessions ( Google Cloud 's Tuesday session is worth a rewatch for sheer vertical relevance). Related to the theme above around doing more with fewer people, most of these applications are designed to either augment human-driven processes (fresh produce management) or to concentrate human intervention into areas where it has comparative advantage (handling exceptions, dealing with very specific local context/timing). This drives a shift to relatively (not completely) touchless processes, where humans are brought in when the algo’s don’t have a high degree of confidence (internal uncertainty about being right) or when humans express a high degree of disagreement (external uncertainty about being wrong).

How is this showing up:

• Questions of building trust in algos will continue to come up, as well as change management around this - and, a bit distant from store ops, the best session on this was hosted by 赛仕软件 and featured Jackie Long from Beall's re: merchandising and how to get close to zero-touch
• Overall, the art / science of when and how to involve humans will continue to evolve
• Stress on data infrastructure to enable data gathering and decisioning outside batch processes and in near-real time when appropriate
• Related pushing of compute power to the edge for speed-sensitive decision, with the necessary infrastructure costs
• Overall, the quest for 100% automation is slow … limits include store size, required interventions, manual back-up (a lot of chatter about Amazon Just-Walk-Out receipt latency)
• Digital twins of everything will be become table stakes, with the obvious implication that an X (product, store, shopper, process, interaction) without data is incomplete and at some level, defective

Retailer-supplier collaboration revolution.

Covid and subsequent supply chains shocks have both (a) highlighted retailers’ utter dependence on suppliers to thrive/survive and (b) emphasized the need for mutually beneficial partnership and investment in supply chain resilience. In fact, one commentator predicts we’re at the start of a capability-driven investment cycle (the huge Salesforce + 沃尔玛 news underscores this), and moving out of a price-driven (ie, VC’s funding CAC, ie, free meal-kits and cut-rate Uber rides) acquisition cycle, in part because the ability to acquire customers is increasingly so dependent on capabilities.?

Much of this investment will benefit suppliers, in the form of:

• improved visibility
• ease of interaction / item set-up / speed-to-shelf
• rapid performance feedback
• granular product-level insights about price, promotion, ingredients, and even packaging.

In the other direction, part of the value exchange here will be suppliers sharing insights and best practices (around sustainability and other areas) with their retail partners, as well as data on products and shipments before they leave the supplier's custody (cool example here, check out OneThird and their food waste prevention solution, a connection I made courtesy of 凯捷咨询 ... again, fresh is ripe for innovation).

W(h)ither Sustainability?

Sustainability more or less limped into NRF ‘23, largely because of two things: the beating the apparel sector has taken over vague or flat out false claims that go far beyond greenwashing into outright lying coupled with skyrocketing return rates and the collapse of internal standards like the Higgs Index; and increasing confirmation that carbon offsets (a favorite go-to) generate little-to-no net benefit for the planet (Last Week Tonight, Guardian).

These are necessary developments, because they move retail beyond the making of hand-wavy, flimsy claims (to say nothing of the wasted investment and effort to clean up collateral damage) and into concrete, meaningful, and measurable steps - even if those are boring or unsexy.

Three NRF sessions nailed it.

• Holt Renfrew's CEO Sebastian Ricardo demonstrated deep familiarity with all three emission scopes and the importance of HR's extended enterprise of suppliers and partners. Ricardo also landed the second best line on the topic: "Sustainability is the new digital."

Sustainability is the new digital. S. Ricardo, CEO, Holt Renfrew
        

• L’Oreal and Levi's executives Marissa (Pagnani) McGowan and Jeffrey Hogue kept it real, acknowledging the complex and category-specific nuances of sustainability, but also grounding good behavior in things retailers should already be doing. Marissa made the most blunt statement - real sustainability starts with compliance (and good data!).?

Scot Case ’s closing session with Kal Penn really framed the issue echoing themes from the rest of the show: sustainability starts with supply chain, has to be reflected in concrete actions (how you handle specific items in specific places), and only advances when we celebrate wins (can’t just be negative).

So what other takeaways on sustainability? A few (and I'll be posting a longer missive next Wednesday or Thursday, Jan 25 or 26):

• There's a wide spread of seriousness, realism, engagement.
• Consumer pressure is uneven as stated willingness to pay more diverges from behavior, and inherently unsustainable activities persist.
• Many of things that support efficiency, automation, and intelligence in stores and in the supply chain either inherently or effectively drive sustainability. Supplier/retailer collaborations that take out waste are particularly interesting here.
• The simplicity and back-to-basics themes tie directly to making sustainability part of retail DNA - the drive to generate less waste, handle it in the best way, give back what can be donated and reuse as much as possible without burdening associates ... all have sustainability impact.

Last thought: it takes an industry (of people)

Retail is nothing without personal relationships, some spanning multiple decades and multiple companies. It was great to see (and in some cases meet for the first time) after years …. Rob Garf Brandon Rael Kirk Goldman Jamie McDonald Brad Ledy CASEY GOLDEN Gautham Vadakkepatt Nicole Hoffman Fredrik Carlegren Matt Miles Hector Rivera Manuel Monserrate Dustin Rash Hannah Jones Arvin Jawa Thomas J. Vosper Jeff Roster Jeff Mergy ShiSh S. Vicki Cantrell Brendan Proctor ?? Ricardo Belmar Erin Dorshorst Todd Scarpato Matthew Zeiler Katie Howard Shinae M. Liz Miller ... just to name a few.