The recent NRF Retail’s Big Show in New York was the 109th edition of the largest annual industry Conference in North America. It featured approximately 40,000 attendees, including 16,000 retailers, 800 exhibitors, 200 sessions, and more than 100 hours of content, sprawling across the massive Javits Centre in Midtown Manhattan.
Participating since 1996, we have viewed this as a terrific window on the mega trends that are shaping the industry. Over that time, it has become primarily a technology show on the trade floor; while some are grumbling about the narrowing of focus, this no doubt reflects technology’s role as the prime driver of change and innovation in the sector.
In the past several years, we have seen a growing contingent of retail executives attend from Canada. This is encouraging. It was not so long ago that our retail leaders tended to shun strategic level industry events, perilously believing that their businesses were “different”, that what others were doing did not apply to them. Yet as one of our client CEOs puts it: “we may not be expanding around the globe, but the best of the globe is quickly coming to compete with us!” Leaders demonstrating a thirst for knowledge outside their own bubble is one of the qualitative indicators my firm, DIG360, notes when conducting a retailer ‘health check.’
While in New York, I caught up with Piers Fawkes, the Founder and CEO of PSFK, one of the go-to retail and direct to consumer trend spotters. I attended several activities in their NY Retail Innovation Week, running concurrent to and including NRF’s Big Show. The highlight was the PSFK Conference, where carefully curated innovators present TED-style in a tight and well-delivered half-day. This is a much smaller event, but where the cool kids play, such as the Matt Alexander, Co-Founder of post-modern department store Neighbourhood Goods, and Dave Cobban, Nike’s lead for its Adventure Club – a subscription model meets circular economy shoe play. Both are betting big on physical retail.
Often the themes on this annual trek are a progression of the previous. However, this year some things are beginning to pop.
Stores are back. Oh, you may not believe me due to this month’s chain-wide store closures, but there are so many more new doors opening every week. What’s clear is that the legacy retailers who have dealt with systems-wide change, right down to who they are and who they serve, are emerging changed but renewed on the other side. At NRF, there was an endorsement of physical retail from equity analysts to CEOs of both online plays and bricks and mortar operators to a critical mass of technologies. However, how “physical” shows up is changing quickly and significantly.
Technology is not just to “keep the lights on.” This should not be news, but let’s make it official. Technology is a strategic asset. Sophistication is growing in how tech serves the business, but also shapes its definition. Erik Nordstrom, co-President of the namesake department store, acknowledged the call for retailers to become technology companies, but noted the risk of simply bolting on new technologies for their own sake. Rather, deft IT vision and management at the C-suite is now a required core competency for all. And tech is separating clearly into the big enterprise systems and the myriad new and smaller innovators driving future change. At NRF, the Innovation Lab showcased the latter. It has grown tremendously and is grabbing a critical mass of traffic at the show. As noted by Simon Foster, Founder of Toronto-based innovator Chatter Research “more and more very senior executives are walking this area [at NRF], to take a peek around the corner.” This is a good sign.
Data needs unlocking. According to Microsoft CEO, Satya Nadella, retail is already generating over 40 terabytes per hour. We are gathering plenty of data and more will come. The issue now is turning that investment into value. As we have been telling our clients, the answer lies more in culture change than it does in the tools themselves. For example, Nadella is calling for retailers to put more information and decision control in the hands of the employees, down to the front lines.
Direct-to-Consumer (D2C) brands are driving the future. Many of the innovation stories shared were drawn from consumer brands going to store and the myriad digital-first D2C plays. Doug Stephens has noted the focus on customer acquisition economics and the improving impact from a focus on stores relative to Facebook and Google ad spend. The use of built space for these businesses is inherently shape-shifting to fit a bespoke need. To paraphrase Erik Nordstrom: customers are seeking solutions not channels. There is lots of trial and error in play and I’m not sure we will lock on definitive new models in the next year. We will learn plenty though.
Diversity is a board level issue. This was a main stage staple for the second year in a row. This covers two fronts: representing a more diverse customer base (primarily in fashion and beauty categories) and developing a more diverse workplace (primarily gender and ethnicity). The case was made that these efforts do more than serve a societal demand – they are good for business. In a particularly articulate and insightful keynote on innovation, Mastercard CEO, Ajay Banga, highlighted that diversity should be more than demographics; that men and women from the same Ivy League Schools might not present very diverse perspectives, and it is perspective that leads to innovative solutions. Notably, the ShopTalk Conference in March will only feature female presenters.
In addition to these, I will share observations in subsequent articles on: the need for better retail data literacy, snapshots of some NY Innovators, fresh takes on partnerships, implications for landlords and developers, and what the future holds for leaders of legacy retail chains.
David Ian Gray is Principal of DIG360, a national advisory for retail leaders and those adding value to this evolving sector.
