Thoughts from NRF, Part 1: How to choose from proliferating retail tech?

Another NRF is on the books and I have finally had a chance to make some sense of all I heard and saw. This year was the first time I was not a vendor in a booth which afforded me the opportunity to wander the hall and engage with numerous vendors. Likely some of my insights (or maybe all of them) are obvious to many. I have been playing in the payments sandbox for a few years and I may have lost touch with what is happening in other areas the retail playground.

NRF attendance grew by more than 20% this year. I see this as both forward looking retail technology projection and a backward looking retail measurement. The strength of retail in 2018 allowed more retailers to send people and retailers who attended in 2018 to send more people in 2019. Looking forward, the main reason for increased attendance is retailers must be looking to invest in replacing systems, upgrading systems or installing new technologies. Good news for the vendors that attended NRF.

My summary this year comes in three parts; Part 1 on the proliferation of retail technology, how retailers can make informed decisions and who the winners might be. Part 2 will focus on where I see retail systems technology going and Part 3 will highlight some new technology and vendors at NRF that stood out to me.

Successful retailing is already very hard to achieve and maintain, and becoming more so every day driven by changing customer expectations, competitor changes and new competition. As a result, retail technology has become even more complex.

Wandering the NRF Exhibit Halls, there are so many vendors providing so much information that there is no way for a person to absorb it all. It seems every will vendor will optimize, analyze, or improve either inventory, operations or merchandising resulting in personalized offers, seamless omni-channel solutions or improved customer experiences. 

As solutions become more mature, the differences between vendor's solutions become more nuanced and layered. At a high level, all POS systems do the same top 10 or 20 things. Feature differentiation exists only when you get to the top 100 or top 500 features, and by definition, they are less critical differentiating capabilities.

As an example, its easy to explain why encryption is better than no encryption. But explaining why hardware based encryption is better than software based encryption is more challenging to both the salesperson trying to explain and the typical IT manager who is not an encryption or data security expert.

As solutions get more complex, vendors struggle to differentiate themselves and retailers are challenged to distinguish true value from hype and decide what to do.

The result is a move away from identifiable features and benefits to superlatives. I.e. Hardware encryption is more secure than software encryption. That works until one vendor says private key encryption is more secure and another vendor says that public key encryption is more secure. How is a retailer to decide which is best for them?

Compounding (or even exponentially compounding) the problem are two factors. First, there is little acknowledgement in the hype and sales cycles about the amount and challenges of integration required to make solutions work. In some cases, the vendor needs to integrate to a product sold by another vendor who also sells a competing product to the first vendor's product. Think that will go smoothly?

The second compounding factor is the solutions that proport to address a particular solution don’t all deliver the same functionality. Some solutions address the entire problem and some just a piece of the problem. In the second case the retailer will need to install a second product to solve the entire problem. 

How can retailers make informed decisions? Who will be the winners? A couple of thoughts:

1. There will always be a few retailers willing to take ownership of their full technology stack and figure out which vendors to use and how to properly integrate the solutions. 
2. I expect more retailers to move to a single commerce solutions vendor. Meaning a vendor who can handle my POS, payments, web site, analytics, merchandising, etc. They may not have all the latest functionality, they likely wont be the first to add new technology and their solutions may not be best of breed. But they should work together there shouldn't be finger pointing when something doesn’t work. Tier 3 and some tier 2 retailers used to take this approach. I expect more tier 2 and some tier 1 retailers will adopt this approach.
3. I think the big winners will be the system integrators and the consulting firms. Companies that employ people with expertise in all of the new (and old) solutions to assist retailers make good vendor and product choices. Companies that can help retailers design the correct architecture and either manage or do the system integration necessary to tie all the solutions together so they work seamlessly.

 What do you think? I would love to hear comments from both retailers and vendors.

If you are a technology vendor and you are concerned about how to differentiate your solution or making sure your sales team can deliver the proper message, contact me for information about my Fractional CMO Service, Product Positioning & Messaging or my Sales Enablement Service.