The 2017 NRF Convention and EXPO, or better known as Retail’s Big Show, was a fantastic event with many takeaways and discussions of industry trends. While many areas of the retail industry were covered, here is a recap of our top findings:
Buy Online, Pick Up In-Store (BOPIS) is Table Stakes
2016 was the year of investing in buy online, pick up in-store (BOPIS) fulfillment, especially if one wanted to be considered an omnichannel merchant. So much so, that BOPIS has become table stakes for any modern retailer who has brick-and-mortar stores. Consumers like the convenience of researching, browsing, and purchasing online, but they want the flexibility of saving money on shipping and the ability to have their product within the same day – without paying extra for it. Recent surveys suggest BOPIS fulfillment is now expected by consumers and many consumers are willing to switch vendors if their fulfillment choice is not available. At NRF, almost every retailer we spoke to had rolled out a BOPIS strategy or was in the midst of rolling one out. 2017 will be the year of optimizing the BOPIS process by investing in order management software, in-store technology, or training for sales associates.
Omnichannel Fulfillment is Stressing Supply Chains
Speaking of buying online and picking up in store, one common conversation at NRF was regarding the stress that new in-store fulfillment options are putting on store operations and supply chains. For example, several retailers experienced challenges in keeping up with BOPIS orders over the holidays – simply because their stores and associates were not ready for the high levels of traffic that BOPIS sales brought to the stores. Many had to rent out extra storage facilities, hire additional labor, and put in manual processes to keep up with the demand.
In 2017, retailers will need to assess the affect that BOPIS and other in-store fulfillment strategies have on store operations. Several elements and costs need to be taken into account – cost of inventory, store associate training, and increased staff to handle additional traffic. In addition to changes and upgrades needed in-store, there are several technology and process elements that will have to be evaluated, such as supply chain software, planning management, order management, and real-time inventory models. While in-store strategies are great for creating a unified, connected experience for consumers, retailers must invest in other areas of the business to ensure that these strategies are well supported and do not negatively impact the business.
2017 is the Year of Personalization
The retail industry and marketers have been talking about personalization for years. We believe 2017 is the year where retailers and branded manufacturers will actually invest in personalization technology – and not just talk about. Initially, the technology was not mature enough for industry-wide adoption, however recent advances in data science, algorithms, and machine learning are making the return on investment (ROI) of personalization technology a no brainer. We heard several retailers speak about double digit increases in average order values (AOV) and conversion rates that resulted in an ROI of less than 4-5 months. Personalization not only increases sales, but it also helps drive brand loyalty for retailers. In 2017, look for retailers going from personalized recommendations to 1:1 personalized experiences with content, merchandising, and promotions that span across channels and devices. Every consumer is unique and every retailer will strive to take advantage of this uniqueness to drive increased engagement.
Too Early for Virtual Reality/Augmented Reality (VR/AR)
Intel, Google, and even the CEO and President of NRF were encouraging the attendees to take advantage of the technology advances in virtual reality, augmented reality, and wearable technology. Following some fantastic keynotes and sessions, the show floor was littered with interesting and appealing demos of the latest technology. While there is a push from many technology providers to leverage these new technologies, we are still skeptical. I believe a majority of retailers still have much to implement with respect to basic modern retail strategies – mobile responsive/adaptive, mobile apps, omnichannel fulfillment, personalization – that most will opt not to invest in these advanced and unproven technologies in 2017. However, we do believe the more mature or profitable retailers will leverage 2017 as a testing bed by implementing certain sites with VR/AR technology to prove ROI – subsequently making major investments in 2018 or beyond.
The Omnichannel Vision is Still a Vision
While many will consider themselves to be an omnichannel retailer, there is still much work to do. The intentions are there, but not every retailer has implemented all the necessary components to be considered a true omnichannel merchant. Throughout our few days in NYC, we heard many stories of retailers struggling to provide consistent experiences for their consumers, specifically between the digital and the physical in-store channels. Many are still investing in mobile, whether that is mobile adaptive websites or mobile apps, and there are still a large amount of disconnected strategies when dealing with email promotions, inventory availability, and local product search. All in all, vendors are saying the right things and are trying to get there, but we did not come across any merchant who is satisfied with their omnichannel retailing.
This creates a huge opportunity for retailers as they head into 2017. Our prediction is that retailers who invest in omnichannel will be the winners in the next 18-24 months. Retailers do not have to have every element of omnichannel to win, they just need to find a handful of use cases or scenarios that are relevant to their business and ensure those are executed flawlessly. We will not make any predictions as to who those retailers might be, but we think those who are nimble, agile, and using Cloud technologies have the highest likelihood of getting there.
All in all, NRF was a great show and we are interested to see how the thought leadership presented at the show converts into real life implementations and investments. Retail is still an exciting sector and the best in user experience is yet to come.