Each January, I look forward to my pilgrimage to the Big Apple to attend the annual conference hosted by the National Retail Federation (NRF). It is a rare opportunity to hear from many of the industry’s best and brightest across a wide array of retail formats.
The theme of this year BIG SHOW was “Retail’s New Rules: Engage and Evolve.” While I don’t necessarily think these are new rules (I heard many speakers talk about these topics at the show last year), I do think that as more retailers become confident that consumer spending is going to return to pre-recession levels, they are truly seeking to connect with their customers and adapt in advance of customer wants and needs to be ready to serve at any moment.
Now, I will be the first to admit that I am good at painting broad brushstrokes and making sweeping generalities based upon the data points I gather during the course of my day job, but this is my blog and so you’re stuck with my opinion! I want to take this opportunity to highlight some of the key takeaways I found compelling from the content provided at this year’s show. And yet I offer you the prior caveat so that you can determine whatever level of statistical applicability you believe these themes have for your organization.
- What’s the word: multi-channel, cross-channel, omni-channel?
- Well, I started 2010 fully embracing the concept of multi-channel, only to learn that it implies that a retail is running disparate systems and presenting consumers with different experiences across their different sales channels. So, industry analysts and though leaders directed me to adapt to “cross-channel.” I like the term and am now a convert. Cross-channel is all about integrating the way you connect with your customers, so that you have a single view of the individual consumer, yet still offer them a differentiated experience among the varied interactions they have with your business.
- Omni-channel was new to me at the show. I believe this is a bit of an adaptation of cross-channel, though I think the term “omni” implies a global view of the consumer, or global information taken into account when devising new consumer engagement strategies. I am all for change, so I say go with it. Omni is a big word and can support big strategies (think omnipresent), but don’t forget that it starts with the single view and integrated processes that I think cross-channel has been trying to teach us over the past year or so. And we have a long way to go.
- Speaking of big: BIG data is getting a lot of attention
- I am certainly a newbie to this topic. I know that there is a lot of information out there and that retailers and brand owners are challenged with trying to capture it all, distill it, and act on it. But I feel more convinced than ever that there are companies out there who have already thought this through and are making tools available to support companies in their efforts to gain 100% access to everything being said about them, sort the wheat from the weeds, and then make sound business decisions.
- One of the most interesting use cases I learned about was offered by Nihal Mehta, the CEO and co-Founder of LocalResponse, Inc. The panel session he sat in consisted of some real retail visionaries, something NRF brings forth every year and that amazes me each time I attend. These are industry leaders that aren’t afraid to take risks, who literally start companies with a desk and blank sheet of paper, and that have such great passion and a deep seeded belief in what they do. Anyway, Mr. Mehta described how overwhelming big data can be for an organization. However, he pointed out it’s critical to get access to the information provided by the various social applications with which consumers are interacting and use it to drive intelligent change back into the business, as well as provide local marketing and targeted offers to customers, individualizing the experience and creating a more loyal consumer base.
- Automation
- You’ve heard the old adage “you have to spend money to make money”. I am not sure any of us like to hear this, but in many cases, it rings true and the case studies bear it out. Ripley, a Chilean department store with 50 brick-and-mortar locations in addition to their online presence, overhauled their entire distribution center operation and has seen incredible improvements in personnel productivity (from 62 % to 98%) and order accuracy (now operating at 99%), while reducing costs by 40%.
- The success of any automation initiative is the accessibility of supply chain information and the ability to act upon the data. Note: see “supplier partnerships” below.
- And last but not least (really, this one’s my favorite): let’s not forget about B2B. Yes, industry leaders still believe in the importance of supplier partnerships! The connected consumer is driving the need for increased collaboration between supply chain trading partners.
- Communication – Michelle Klingensmith, shopper marketing manager at GlaxoSmithKline Consumer Healthcare commented in one session that retailers need to communicate their long-term plans to their manufacturers and vendors, determine how best to incorporate tools that suppliers may create or have available, vs. those developed internally by the retailer.
- Collaboration and enablement – in a session where Bessie Peppas, the Supply Chain Operations Program Manager at New Balance, spoke, the comment was made that most sourcing systems (and I would argue that ERPs fall into this category, as well) don’t have effective tools to support buyer/supplier collaboration. And in a private label operation, or even from a brand manufacturer’s perspective, there is now, more than ever, a need to connect not just to direct Tier 1 suppliers, but also Tier 2 and Tier 3 component suppliers – to improve supply chain visibility as well as meet ever-increasing regulatory requirements.
- The collective value chain – while retailers and suppliers argue over trade funds management, consumers are just looking for value. I had the good fortune to sit in a BIG! Ideas session where Kevin O’Marah, an industry thought leader whom I consider one of the best in the field, gave a great presentation on 5 key strategies for the industry. He stated that brand loyalty is up for grabs as consumer demand more flexibility. They are looking for options related to product choice, price point, availability and convenience. And the truth is that all of these are jointly delivered by the retailer and the manufacturer through a variety of means, including packaging agreements, size run variations offered, palletized delivery capabilities, and value added services provided prior to product arrival at retailer. Buyers and suppliers should be designing supply chains for joint performance, because when the consumer wins, the value chain wins.
- Inventory visibility – if it’s not on the shelf, consumers will move on. Retailers need to have a keen awareness of their inventory positions across all locations, and partners closely with suppliers to monitor demand signals and tightly manage replenishment cycles. In addition, social media is adding a new dimension to gaining visibility directly from consumers. Companies like Indian snack market Hippo are monitoring tweets from customers to quickly discover out of stock situations and have promised to restock unavailable items within hours. To capitalize on the feedback of consumers, retailers and their supplier community will need to strengthen their data sharing relationships to be able to respond quickly.
There was so much great information at NRF’s convention this year. I have hardly done justice to the wealth of ideas and successes that were shared in the many sessions. While January in New York is not my idea of a hot spot destination (it was around 18 degrees most of the week), you could certainly feel the electricity as many of the industry’s top brands came together to share strategies and motivate one another to really seek out change in 2012 and beyond.
