For a look ahead at the trends that will animate the retail industry this year, let’s take a look back at the 2022 National Retail Federation (NRF) “Big Show” in NYC.
Attendees at January’s event were treated to tangible examples of how retail challenges are being solved today, including new solutions to help them parse customer expectations and buying patterns, adapt stores into omni-channel experience hubs, and improve data visibility and actionability.
NRF 2022 also took the “omni-channel everything” theme of last year’s show to the logical next level: Enabling the best hybrid experiences. The message came through loud and clear of the importance of integration and interoperability in this new hybrid world – making everything work well together.
The need for modern digital infrastructure to enable this blending of physical and digital retail smoothly is paramount. To that end, technology vendors demonstrated how digital transformation initiatives, such as contactless and real time IoT and mobile applications, need to be built on cloud, edge, and secure connectivity to allow retailers to achieve the modern seamless hybrid retail that today’s consumer wants.
Other prominent themes and technologies highlighted at NRF included: extending engagement in the metaverse, sustainability, physical and digital security, and the agility and adaptability imperative.
The Metaverse and Hybrid (Omni-channel) Experiences
Today, the metaverse is an extension of our lives, enhanced by technology, which exists as a series of virtual worlds. In the future, the metaverse will be an interconnected, endless world where digital and physical lives fully converge. Imagine waiting for an appointment at a real booth on the NRF show floor while your avatar roams a fully fleshed-out digital NRF, meeting other virtual attendees, stopping for coffee at the digital Starbucks, and paying for a coffee that an in-the-flesh Starbucks employee brings to them. Digital and physical selves merge seamlessly in the metaverse, as the worlds draw closer together.
In the metaverse, brands have a digital presence, too. Nike filed seven trademarks late last year, including those for “Nike,” “Just Do It,” and its swoosh logo, and posted openings for virtual designer roles, indicating its intent to make and sell virtual branded sneakers and apparel. It subsequently purchased RTFKT Studios, a company that already makes and sells NFTs and digital sneakers. (In one collaboration with teenage artist FEWOCiOUS, the company sold 600 pair/NFTs of sneakers in just six minutes to the tune of more than $3.1 million.)
The metaverse also opens possibilities for gathering data about consumers and product demand. Imagine a sneaker drop in the virtual world. Certain styles of new kicks sell like gangbusters, giving the brand insight into what might sell IRL, intelligence that leads to trend-right production and less inventory headed for markdown or landfills. The metaverse can be a vehicle for more sustainable operations.
The metaverse further bridges the narrowing gap between digital worlds and physical worlds. Most consumers aren’t outfitting an avatar, but they are moving between online and offline and expect retailers to accommodate those hybrid omni-channel journeys seamlessly. Those demands have accelerated around last-mile delivery and experiences such as buying online and picking up in store (BOPIS) or at curbside, shopping in store and returning merchandise online, adding items to a BOPIS purchase when at the store, or communicating a substitution to the third-party grocery delivery service
Hybrid experiences open opportunities to please the consumer in new ways, but they also add expense and complexity. The need to meet this demand while enabling profitability was a major theme behind many of the technologies discussed at NRF. These included artificial intelligence (AI) for recommending the right product, return logistics software for defining and guiding product-specific reverse logistics workflows, order orchestration and fulfillment applications for omni-channel shopping, and last-mile delivery visibility for optimizing customer experience, to name a few. Also on display were task management applications help to improve and optimize in-store employee engagement, as well as touch-free applications to allow for faster payments and customer self-service checkout. RFID continues to improve inventory accuracy and inventory locating on the shelf, throughout the store, and the supply chain.
NRF 2022 saw a strong focus on sustainability. An NRF/IBV study released at the show highlighted the significant embrace of sustainable shopping by consumers. According to the survey, 62% of shoppers are “willing to change their purchasing habits to reduce environmental impacts.” About half indicated a willingness to pay a premium – on average a 70% premium – for sustainable products and brands.
Retailers are working to improve sustainability and reduce carbon footprint across operations by using sustainable sourcing through the supply chain, the store, and even returns. Tech vendors unveiled a variety of solutions enabled by cloud/edge, AI, computer vision, and IoT/RFID to allow retailers to effectively measure and record their environmental efforts, with the goal of reducing their impact.
Several cloud and digital infrastructure providers showcased sustainability clouds and other technology aimed at asset management with the goal of reducing energy consumption, water usage, waste. Examples included using IoT sensors to reduce water usage, optimizing re-use of store assets, and dashboards that allow retailers to accurately monitor and measure carbon output. However, such sustainability solutions can be most successful when running on the next-generation digital infrastructure that helps retailers better compete and differentiate in today’s omni-channel world.
Physical and Digital Security
According to a 2021 NRF survey, 57% of U.S. retailers reported the pandemic led to an increase in organized retail crime, while 50% reported an increase in shoplifting. When IDC’s Future Enterprise Resiliency & Spending Survey, Wave 10 (November 2021) asked retailers which digital infrastructure investments would provide the greatest strategic advantage in 2022, their #1 response was “cybersecurity and recovery investments.”
A wide range of technology vendors acknowledged retailer concerns with regards to security, fraud, and loss prevention:
Networking, connectivity, and edge vendors highlighted multilayer security solutions that promise to protect data from a range of IoT applications that utilize customer and associate data. Many offer security consulting services to address varied threats including ransomware, retail crime, and loss prevention.
Security and e-commerce security vendors showcased solutions to prevent fraud and abuse in e-commerce applications as well as omni-channel applications such as BOPIS and curbside pickup, using AI-based analysis for identifying “bad”/risky customers and mitigating risk.
Cloud vendors highlighted how retail clouds provide consistent, reliable identity management and data security.
POS/payments/store technology vendors emphasized their ability to handle payments securely from any platform with multifactor tokenization, improved identity techniques such as biometrics and voice authentication, as well as AI-enabled and computer vision solutions for loss prevention at checkout and at the door.
The Agility and Adaptability Imperative
On display at the show were multiple flavors of the digital infrastructure technology that retailers need to achieve agile, personalized, data-driven, integrated seamless operations across the many channels of today’s retail landscape. The emphasis was apt. More than half of retailers plan to boost investment in business agility and operational agility over the next 12 months, according to IDC’s Future Enterprise Resiliency & Spending Survey, Wave 10 (November 2021).
Technology vendors highlighted their connectivity investments to enable business and operational agility and their technology investments for better ease of integration, scalability, and the ability to more easily swap out or mix and match applications with integrated platforms, open systems, hybrid cloud, and retail industry clouds.
Vendors also showed off infrastructure to better harness data while enabling its visibility, maximizing its value, and providing the data-driven personalization essential for competitive advantage and differentiation. Highlights included fast, secure connectivity, 5G and Wifi-6, and edge- and cloud-enabled data and AI platforms to generate real-time insights – all designed to enable today’s omni-channel retail.
Advice for the technology buyer
Retailers should consider these key themes from NRF 2022 when making technology investment decisions for 2022 and beyond. To avoid lagging behind those retailers already moving toward thriving into the future, take action to:
Enable the seamless, contactless omni-channel approach that today’s consumers want and expect.
Replace legacy infrastructure that was not built to handle the modern retail environment that requires the agility and adaptability to seamlessly connect rapidly increasing volumes of data securely and more quickly than ever.
Whether sustainability, adaptability, the metaverse, or security are top concerns, addressing business needs holistically and strategically should be job #1.
Continue the conversation by downloading our Transforming retail and CPG markets whitepaper today.
Cloud BlogRead More