As was majority of 2020, NRF 2021 Retail’s Big Show (Chapter One) looked nothing like any of us have experienced in our careers. No rushing in the muddy snow, just to wait on the long coat check. No anxiety as you scan for an empty seat, just to eat in the stuffy basement cafeteria. But this virtual event also meant no running into former colleagues or coming across a useful solution while in search of a booth coffee. Putting all the nostalgia aside, let’s get to this show’s theme:
As expected, Chapter One was filled with talk of how retailers adapted to survive throughout the pandemic. Companies across the board have seen their tech roadmaps accelerated by upwards of five years. Now, retailers and brands are rethinking their plans for the near future as the pandemic has highlighted changing consumer expectations and preferences like nothing before. Here, we will reiterate some characteristics of the retail ecosystem to come in the next few years and share our learnings.
To prepare for the road ahead, retailers must first understand consumers’ expectations.
Everyone knows the adage: the customer is always right. It is the responsibility of all retailers to meet the consumers where they would like to be met. To do so going forward, retailers must embrace offering consumers more than just the traditional value core. As explained by Gouvea Ecosystem COO Eduardo Yamashita, the pandemic has emphasized the beginning of a new social contract, one concerned with sustainability, wellness, and efficiency.
These trends are especially seen as younger Millennials and Gen Z become more prominent in the business world. According to mosaiclab, we also see that 78% Millennials and Gen Z expect to be involved in actions to solve social problems. These statistics demonstrate the emerging trend of human and environmental sustainability, with people valuing well-being, emotional security, and educational development like never before.
For the retail ecosystem specifically, consumers expect their retailers to also be active in solving social or environmental problems. As P&G Brazil President Juliana Azevedo puts it, “caring should be seen as a competitive advantage.” Beyond addressing macro concerns, shoppers also expect measures to help their own lives; according to mosaiclab, 50% of tomorrow’s consumers expect more digital services and customization in the next 5-10 years, alongside 45% who expect interactive smart shop experiences, and 29% who expect drone delivery. With people focusing on life improvement, they expect retailers to help them along the way, with innovation catering towards ease and personalization.
Consumers are expecting different methods to connect with brands, combining the new with the old.
By understanding tomorrow’s consumer, the goals for retailers to strive towards become clear. Consumers want to be actively engaged during their shopping experience, with “Experiential Connection” identified as a retail macro driver by mosaiclab co-founder Karen Cavalcanti. Shoppers expect an authentic connection to their brands, with shared values a part of the shopping experience. Part of the solution involves brands joining the fight against social issues, but brands must also strive to replace the current lack of human connection. Many shoppers have enjoyed small or local businesses having the ability to understand their individual preferences and make recommendations accordingly, but this is becoming a possibility for larger merchants as well.
Seen throughout the pandemic and shared by nearly all retailers presenting at Chapter One was the massive return of appointment shopping. While many retailers brought appointments back as a measure for health and safety concerns, consumers and retailers alike have seen major benefits to the shopping experience. With scheduled appointments, consumers can ensure they will have face-to-face time with an associate or stylist, while the stylist can use previous customer data to prepare for the consultation.
Many retailers, like Suitsupply, are offering these appointments both in person and virtually, with customers able to connect with their favorite stylists through both channels. As Suitsupply CEO Fokke de Jong explains it, omnichannel is “not only products, [it’s] also [about] people… when governments are saying ‘test, test, test,’ we are saying ‘train, train, train’ to our employees to be more prepared and productive through multiple channels.” By leveraging in-store stylists across different platforms, retailers can engage customers how they want to, offering a more personalized experience than ever before.
Livestreaming, the process of broadcasting video in real-time, is quickly becoming an integral part of the online world. Already, the majority of popular social media sites (Instagram, Facebook, Tiktok, etc.) have some form of live video service that allows influencers to interact with their followers. The pandemic has certainly done nothing but help accelerate this trend, and livestreaming has become such a widely-used social media feature that some retailers are beginning to explore the realm of livestream shopping — a way to create live shopping experiences for consumers to interact and make purchases from anywhere.
During the “Technologies Bridging the E-Tail-Retail Gap” session, Al Sambar, General Partner at XRC Labs, shared some stats about China’s booming livestream shopping industry. In 2019, 37% (Forbes) of China’s online shoppers made at least one livestream purchase, and in 2020 livestream shopping saw a massive 250% jump in revenue, increasing from $60B (Forbes) to an estimated $140B.
While the US is lagging behind, only bringing in around $5B last year through livestream shopping, it is easy to see how this is a blossoming market, especially for younger generations. Instagram and Facebook have already incorporated live shopping experiences into their sites, ensuring that it’s only a matter of time until livestream retail skyrockets in the US.
The Estee Lauder Companies, realizing the potential in this situation, are already capitalizing on this opportunity. VP of Digital Technology & Innovation Group at Estee Lauder, Ophelia Ceradini, states that Estee Lauder wanted to provide consumers with personal and interactive experiences even after physical stores closed, and livestream shopping was the perfect solution. Ceradini says that the pandemic accelerated growth of their livestream feature for beauty and skincare products in particular, and helped foster a double-digit growth. Beauty and skincare products are perfectly suited for livestream experiences since influencers are able to effectively showcase products while simultaneously engaging with the customers.
With no true end in sight, the pandemic will continue forcing retailers and brands to innovate and find new ways to provide their customers with desirable and entertaining experiences. For Estee Lauder, livestream shopping was a key part of their response. For the future, Ceradini is hoping to expand livestream experiences into their fragrance and hair care products and continue to support the growth of all Estee Lauder omnichannel operations.
COVID-19 has accelerated the convergence of livestreaming and retail, and companies like Estee Lauder have capitalized on this opportunity. As more and more customers begin to make the switch to ecommerce, one can only expect livestream shopping to become another vital part of retail.
Innovating for the Next Normal
NRF Chapter One was flooded with talk of what pandemic trends are here to stay and shape the new normal. However, the idea of the new normal is a bit misguided, with Marc Metrick, President & CEO of Saks Fifth Avenue, explaining it best: “it’s not the new normal, but the ‘next normal’ because things are always changing.” Change is the only constant in the world, but particularly within the retail sphere as businesses adapt to meet the changing consumer preferences that are developed outside their control. Innovation is a necessity to keep up in the retail space, and the store experience is one element that is expected to see exciting new designs and technologies in the near future.
For every exciting new technology, there’s a dozen failures along the way.
When people think of innovation, they think of groundbreaking products, something along the lines of the first iPhone or flying cars. From a business’s perspective, however, innovation must be treated differently. Most innovation work never leaves the back offices of businesses. Melanie F. Nuce, SVP of GS1 US, began 2020 with a proclamation: “I aspire to fail in 2020.” She understands that the most important part of innovation is the ability to cut your losses on projects with no futures. Looking back on the year, Nuce launched two successful projects, but also killed 17 projects. The ability to acknowledge when to move on as a team is crucial to innovation in a business environment.
Another key element of innovation is the people. All employees should feel comfortable simply raising their hand and sharing their ideas. In virtual environments, like most companies currently face, this can be more difficult than usual. One way Metrick has addressed this with Saks Fifth Avenue is by making sure to build feedback mechanisms into meetings to replace the casual office interactions the pandemic has curtailed. He also encourages employees to attend his monthly open office hours, events that have seen massive turnout virtually. By giving employees an open forum to share ideas as equals, new ideas from new perspectives can emerge.
As we kick-off the year together, NRF 2021 Retail’s Big Show Chapter One is only the beginning of what’s to come this year. With digital transformation (forcefully) accelerated for most retailers and brands, we’re here to help you adapt to survive, and thrive in 2021.
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