Day 2 of NRF brought inspiring stories, unique insights, and tactic strategies from leading retailers and retail experts. From Simone Biles and Petco’s CEO Ron Coughlin to Kibo’s own Head of Partnerships & Alliances, Ava Aprin, here’s an overview of the top takeaways from the day.
Simone Biles Kicks Off Day 2 With Her Athlete-Turned-Businessperson Story
The morning started with decorated athlete turned businessperson, Simone Biles. While many of us know her for her Olympic medals, she has since set out to “be bigger than just gymnastics.”
“What do you do when you reach your dream at 19?” said Simone. Most people don’t reach the peak of their career at such a young age, forcing Simone to establish new dreams outside of the gymnasium. She looked towards athletes like Shaquille O’Neal, LeBron James, and Allyson Felix, who all built platforms around their athletic successes and leveraged them for business ventures.
Simone started working with Athleta, a women’s sports clothing brand, citing the company’s inclusivity and support of her business dream as the reasons for choosing this particular partnership.
And as for Paris 2024, Simone says she will be there. But it’s undecided if it will be as a competitor or spectator.
Why Companies Like Home Hardware and Francesca’s are Choosing Composable Commerce
Ava Aprin, Kibo’s Head of Partnerships & Alliances, presented an AWS Retail TechTalk about why leading companies are choosing composable commerce.
Why move to a composable commerce strategy
With composability, retailers can be agile and flexible, and only implement the capabilities they need to meet customer expectations. “Nobody wants to be held back by their tech. You want an ecosystem that allows you to leverage best-of-breed technology and partners,” said Ava.
There are major four reasons retailers are going composable:
- Freedom from the monolith: Monolithic platforms simply cannot keep pace with the speed of change and are becoming a liability for companies who want to be agile.
- An open ecosystem: An open ecosystem means that you’re not locked into a specific vendor, framework, or programming language. It gives your developers and business users more choice and flexibility when it comes to the technologies you use.
- Lower total cost of ownership (TCO: Composable systems provide a lower TCO because you only pay for the capabilities you need. PBCs allow you to cherry-pick capabilities from formerly monolithic systems and connect them to your commerce platform.
- Performance and agility: Composable systems are inherently pluggable and flexible, allowing you to quickly adapt to market changes and customer needs.
What does composability look like in a team setting?
“What your architecture and technology should do is empower your team, not hinder them,” said Ava. By adopting a composable strategy, teams can work autonomously yet in sync — business users can perform the functions they need without heavy IT involvement, freeing developers to focus on initiatives that drive revenue.
Composability’s lower TCO and increased speed to market is often a selling point to the C-suite. A composable platform is flexible, future-proof, and gives you the ability to scale. It’s built around the capabilities specific to your business, with the end goal being to deliver a seamless customer experience across all channels.
Real-World Uses Cases of Composable Commerce
By using a composable platform like Kibo Commerce, you can:
- Integrate key systems with confidence, including your ERP
- Unify complex data with a single UI
- Use CMS data across various customer experiences for cohesive and consistent buying journeys
- Handle complex business scenarios, such as subscriptions or omnichannel fulfillment, at a lower cost than alternative market solutions
Want to see a composable commerce platform in action? Register for a 15-minute demo.
Better Deliveries Make Better Businesses
The delivery stage in the customer buying journey is the last chance to delight shoppers and convince them to purchase from you again —any misstep can result in churn or return. Elena Bernardo, SVP of Operations at HelloFresh, Phillippe Lambotte, VP of Customer Care and Field Logistics at Tonal, and Kushal Nahata, COO at FarEye, shared their strategies and insights to enhance the delivery experience.
Adjusting the customer experience for a post-COVID era
Similar to nearly every other brand and retailer, COVID massively affected the HelloFresh customer experience from a logistics perspective, but it also fostered innovation. As a subscription business model, HelloFresh needed to ensure they could set realistic expectations, provide accurate and consistent communications, and get the order to the customer on time.
“Our strategy is to embed customer-centricity into every function,” said Elena. They heavily lean on order, inventory, and customer data to make changes to their website, customer policies, and communications to ensure the end-to-end journey lived up to customer expectations.
Tonal, a home smart workout machine with a recurring subscription membership for workouts, faced similar challenges. Being a subscription business model, “it’s not just about the one-time purchase, but the recurring revenue,” said Phillipe. Tonal needs to be able to make real-time changes to the customer experience to retain customers.
If you’re not investing in delivery, you’re losing money
Even though it’s the carrier that delivers the product to the customer’s home, the fulfillment process is still very much an extension of the brand. (And the brand is often the one blamed when the order is late or damaged.) “Every retailer business is also in the logistics business,” said Kushal. Not only do shoppers want more fulfillment options, but they also want accurate delivery dates, transparent communications, and fast shipping.
The ability to tap into inventory and order data in real-time and layer it with logistics sophistication will be key for retailers to enhance the delivery experience and meet customer expectations.
Subscription commerce adds another layer of complexity to fulfillment
When a customer signs up for a subscription and sets a delivery frequency, they expect that order to arrive on the exact day they need it, and they also expect to be able to adjust the frequency. This requires your subscription, eCommerce, and inventory and order management systems to be seamlessly integrated.
By tying these systems together, HelloFresh has been able to deliver consistent and accurate order updates, self-service capabilities to change subscription preferences, and ensure orders get to the customer at the right time.
Balancing Customer Expectations and Logistics
Last-mile delivery is the most complex, costly, and high-stakes stage in the delivery process. It’d be great if you could offer same-day delivery, drop-off lockers, and drone delivery, but it’s not a cost-effective approach.
Tonal, in particular, has a unique challenge in that they sell large workout equipment that needs to be installed in the customer’s home. They have three distribution centers and 90 smaller hubs that deliver and install the equipment to various regions every two weeks. Because of the labor required to ship and install the equipment, it’d be too costly to offer a greater frequency in delivery dates.
Tonal heavily relies on its customer care team to interact with shoppers, set realistic expectations, be transparent when there are changes to delivery time, and also assess the risk of losing a customer if they can’t ship the equipment fast enough.
As cost and efficiency take center stage in 2023, Kushal is seeing more companies shift from relying on one or two large carriers to relying on several smaller regional carriers. “If you have a high dependency on one or two carriers, it’s difficult to control cost,” said Kushal. The key is having the systems in place to track the performance of each carrier and use data to improve decision-making.
Sustainability’s role in customer experience
HelloFresh’s pre-portioned meals and its ability to track inventory and monitor time-to-spoil help drive the company’s goal of ensuring no waste. And to strive for sustainability from a delivery perspective, they’re strategic about where they place products and consolidate shipments to minimize carbon emissions during the fulfillment process. Tonal is a sustainable product — by installing a home gym, consumers don’t need to drive back and forth to the local gym to workout.
2023 retail trends to watch
Elena, Phillipe, and Kushal shared the top retail trends they’re watching this year:
- Convenience – HelloFresh is shifting its meal selection towards quick-to-make meal choices.
- Managing Pricing – Still battling the effects of inflation, Tonal moved their manufacturer from Taiwan to Mexico to improve fulfillment efficiency (the product is closer to US customers) and manage costs.
- Evaluating Delivery Models – Retailers will implement more delivery options that are sustainable, quick, and cost-efficient.
Top Three Things Customer are Thinking About in the Current Landscape
The retail landscape changes early every day, and successful retailers are leaning on technology to navigate. Alysa Taylor, VP of Azure & Industry Marketing at Microsoft, shared the top three things retailers are focused on in 2023.
1. Data-Driven Customer Loyalty
Retailers generate 40 petabytes of data every hour – that’s the equivalent of 400 million photos uploaded to Instagram every hour. But many retailers still struggle with accessing the data, making it usable, and reasoning over the data. Alysa outlined a three-step approach to start leveraging data:
- Break data silos across functions and unify it in a business-friendly UI.
- Organize the data based on what you want to track and business goals.
- Use AI-models to automatically extract insights from data.
By following this approach, GNC aggregated and created 25 million unique profiles to offer custom promotions — this improved retention by 37%.
2. Visibility and Predictability in the Supply Chain
In January 2022, only 30% of container shipments were on time. This statistic increased to 57% in November, but that still leaves a significant risk of out-of-stock products and delayed shipments.
The supply chain plays a key role in the bottom line. In 2021, 60% of consumers faced out-of-stock products, and only 13% waited for a re-stock. And of that 13%, a third went to another brand. By using unified data to understand where your inventory lives and accurately predict delivery dates, you can provide transparent customer experiences.
3. Sustainable Operations
Sustainability is top of mind for retailers due to recent climate change initiatives. Companies are starting to gather data around emissions and use distributed ledgers to record sustainability practices across vendors and suppliers.
While it’s a top-down initiative, consumers are demanding sustainable practices from retailers too. 79% of consumers change buying preferences based on sustainability, but only 37% of organizations believe that to be a true fact. More consumers are staying away from companies that follow non-sustainable practices, such as single-use plastics and contributing to deforestation.
Keynote: Petco Reimagines Retail By Turning Stores into Service Centers
While Petco CEO, Ron Coughlin, was the speaker, the real star of the keynote was Reese’s — an adoptable puppy that joined Ron on stage. The puppy demonstrated Petco’s mission to provide the best products and services to pets and pet owners. Since becoming CEO, Ron has transformed Petco into a health and wellness company.
“80% of pet parents want to do what’s best for their pet, but only 50% know what that looks like,” said Ron. By turning Petco stores into service centers, which include grooming, veterinary services, and training, pet owners now have a single source for caring for their animals.
Petco isn’t afraid to make big changes to ensure the health and wellness of animals. For example, they removed all SKUs with artificial ingredients — two of these products were their number one and two top-selling cat foods.
The pandemic changed how people interact with their pets — with many people working from pet, pets became even more integrated into their day-to-day lives. To facilitate for the increase in demand for pet supplies early in the pandemic, Petco launched curbside pickup and same-day delivery in two weeks.
Some of their upcoming initiatives include working with Marriott to make it easier to travel with pets, partnering with Nationwide to offer more affordable pet insurance, and putting pet products in Lowe’s stores.
If composability was the theme on Day 1 of NRF, data and sustainability tied for Day 2. Retailers are continuing to prioritize unifying data to make better decisions around fulfillment, customer experience, and sustainability. As Ron from Petco put it, “It used to be you’re running your business and how you did; now it’s [data] running your business.” In other words, we’re no longer using data to measure past performance, but using data to inform future decisions.
If you’re inspired to evaluate eCommerce, order management, or subscription solutions, click here to register for a 15-min. demo of Kibo eCommerce and Subscription Commerce, or here to register for a 15-min. demo of Kibo Order Management.
Composable Commerce: What, Why, and How