Impressions from NRF 2019 Retail’s Big Show and Expo
New York City is always worth a visit, even in January, when the wind chill in your face makes it feel even colder than it actually is.
I returned to the Big Apple a few days ago to attend the 2019 edition of the National Retail Federation Retail’s Big Show & EXPO. Every year, professionals from around the world flock to the impressive Javits Center to take the pulse of the sector, exchange ideas and learn about what is going on and what is coming next – or, as someone rightly said to me, to learn about “what makes the buzz and what makes the dollar” in the retail industry.
I have attended the NRF annual gathering many times in the past. However, on this occasion, I had the feeling that I was not just “visiting” the expo. This time I was part of the conversation and I really enjoyed it.
It was my privilege to meet with seasoned professionals who generously shared with me their deep knowledge and insightful analysis. These are world-class experts like David Katz and Jeff Sward, who stay fresh to stay ahead of the curve and who understand the underlying trends shaping the transformation of retail. It’s no coincidence that the most valuable and substantive insights came from current or former practitioners, whose intellectual heft is based on years of professional experience in the industry.
I was also impressed by the inspiring energy that I felt in the space devoted to innovation and the work of startups. I met with some of those bright minds who, despite the difficulties and the rocky path ahead, are pushing the envelope. Their entrepreneurship and audacity deserve our attention and support.
Let me outline a few thoughts and ideas extracted from my discussions at NRF with thinkers and doers. Let us skip the critics – they are just boring.
Are we inching towards the retail Apocalypse?
No, not at all.
We are all coping with an unprecedented pace of change, both in the way consumers buy and the way retailers sell, but disruption and transformation do not mean that the end of retail is near. What we are witnessing is actually retail’s new dawn. As Steve Dennis notes, “it will become crystal clear to all but the most click-bait hungry that much of physical retail is pretty darn healthy and that the overall idea of retail apocalypse is ridiculous.” While is expected that in 2019 hundreds of stores will, sadly, close, traditional retailers will also open thousands of brick-and-mortar stores in the same period.
Retail is always challenging, and it is always marked by disruption. Those who fail to adapt cannot use technology as an excuse. We need to comprehend the digital transformation of retail, so that we can surf the wave instead of idly wait for the e-commerce tsunami to arrive and sweep us all away.
Those who fail to adapt cannot use technology as an excuse. We need to comprehend the digital transformation of retail, so that we can surf the wave instead of idly wait for the e-commerce tsunami to arrive and sweep us all away.
Some traditional retailers are not merely resisting, they are actually thriving. Take Costco for instance, a warehouse club that happens to be the second largest retailer in the world. Its sales and profits will continue to climb in 2019. The secret is as old as retail: a good business model, in which both consumers and Costco win. The key is its so-called “membership model.”
I approach retail as an economic and social process, which pushes us to adapt to changes happening at a breathtaking pace. However, as Columbia University Professor Mark Cohen rightly pointed out to me: “in the end, it is still all about having the right product, the right price and friendly and clean stores to sell it.” That store could very well be a website, but it still needs to be frictionless to those who arrive there as potential buyers.
Let me stress this again: technology cannot be an excuse to explain why some retail businesses fail. The real issues in the sector are whether retailers have a good business model that adapts to the velocity of change and how new technology solutions are integrated with existing management and marketing tools.
Cooperation is the new capitalism
This aphorism was among the many interesting thoughts that New York University Professor Joshua Rockoff shared during our discussions in the margins of NRF. I cannot agree more.
During my visit to the impressive Salesforce booth, I spent some time learning about the consumer experience in Brunello Cuccinelli, Rituals, Crocs, Mulberry, Shinola and The Container Store. The San Francisco-based cloud software company was exhibiting its offering for retail in cooperation with a number of brands and retailers. This would have been simply unthinkable just a few years ago. In the past, when one visited a company booth in a trade fair one expected to learn about that company’s offering. However, in the NRF 2019 Salesforce booth, the products and logos of those retailers were not just mentioned, they were actually showcased. They were visible and occupied a significant portion of the space.
I am convinced that this cooperative and synergistic approach will develop further in the next few years, giving way to more sophisticated and cooperative ventures.
I am convinced that this cooperative and synergistic approach will develop further in the next few years, giving way to more sophisticated and cooperative ventures.
By the way, this was the case not only with Salesforce, but also with most of the exhibitors – both large and small – that I visited. Better together seems to be the way forward.
In my opinion, another key takeaway from NRF 2019 is the critical importance of systems integration in the digital transformation of retail. Within any retail business, the IT solutions used on a day-to-day basis require integration, which is very different from interfacing. If we consider, for instance, retail stock management, a simply interfaced solution may include product files in two separate locations being used by different systems. By contrast, an integrated solution based on a single database will bring better stock management and reduce costs.
There are in the market many new and effective tools and solutions. But, for both big and small retailers, the key is the convergence of these technologies. Perhaps with the sole exception of Blockchain, it is almost impossible to use any of these technologies in isolation from the others now. The retail sector needs smart IT solutions which converge and naturally begin to integrate well with each other.
Turning a bright idea into a workable plan
I know I am pointing out the obvious, but a good idea and a workable project are not the same thing.
Technology not only occupied a larger-than-ever space on the NRF EXPO floor this year, but disruptive technologies and smart solutions actually set the agenda. This should not come as a surprise. Disruptive innovation is probably the most consequential trend for retail today and tomorrow. For a good review of what is new, I suggest reading Tony D’Onofrio’s “The Seven Impactful Retail Transformation Takeaways from NRF 2019.”
I believe that we should not conflate disruptive innovation with any breakthrough that changes our industry, as the path to success for a disruptive innovator will not apply to every market.
Thousands of startups are born every year, but just a handful of them succeed in a challenging and shifting the market. Before selling “everything and anything,” Amazon was just (Just?) a book-selling website. No breakthrough comes by accident. A venture meets a worthwhile need and success arrives after many trials. As Thomas Edison once said, genius “is 1 percent inspiration and 99 percent perspiration.”
Whenever I talk to some of those brave entrepreneurs who invest their life in a startup project, I feel admiration.
In New York, I met with UK’s Richard Hammond, the author of Smart Retail (fourth edition coming soon), a very useful retailing how-to. Richard is now busy launching Uncrowd, a startup developing a customer behavior metric that, in his own words “kills friction and innovates reward.” Richard is a good example of how an expert can also roll up his sleeves and use his knowledge to put forward a good idea with a workable plan.
I also met with Yaron Shavit from IntraPosition, a young company from Israel. Yaron explained to me how simple integration with the company’s proprietary, accurate to within 1 foot, indoor-positioning system enables shopper-marketing apps to offer in-store location-based services and enhance shoppers’ experience in brick-and-mortar grocery stores. This helps retailers and consumer packaged goods manufacturers boost their bottom line.
I was also impressed by the work of Sergey Klimentyev and the Texel team, a Russian software developer and manufacturer of 3D scanners that is offering a fully-fledged virtual fitting room for online apparel retailers.
Richard, Yaron and Sergey are just a few examples of how creativity, hard work and perseverance can push forward bright ideas. These and many other startups need financial support and nurturing conditions. However, I have realized that funding, which of course remains a critical need, is not the main issue for startups. Sometimes, the way forward requires an opportunity for their products and solutions to be tested.
There are some creative platforms connecting the retail industry to innovation. One of them is CART, which retailers, wholesalers and brands utilize to find, research and connect with solutions appropriate for their businesses. As Sterling Hawkins, CART’s head of operations and venture relations, explained to me, solution providers use it as a go-to-market tool that connects them directly to their target retail audience, all the way into the brick-and-mortar store itself.
After attending NRF 2019, I am convinced that there is a pressing need to bridge the gap between the startup world and the retail “big guys,” and I am determined to join the effort and do my part.
I will return to New York again next year to attend the 2020 edition of the NRF Retail’s Big Show & EXPO, ready to make a richer and more meaningful contribution to the global retail conversation, to stay fresh and to feel the reinvigorating breeze of new ideas in my face.