In a chilly and wintery New York, the IDC Retail Insights team joined more than 30,000 attendees from technology and retail companies at Javits Convention Center for NRF 2023: Retail’s Big Show. The four-day event, which took place from January 14 through January 17, was the first since the pandemic, and everyone was excited to meet in person after two years of remote interactions.
We attended more than 150 meetings with technology vendors to learn more about their offerings and discuss the latest trends in retail technology.
Here are some of the key points from our conversations:
In-store Frictionless Experience, Next-generation Checkouts
The physical store is making a big comeback, and this was visible when browsing the floor at NRF. Customer expectations have changed in the past few years and the store can no longer operate as before.
The challenge for retailers is how to “modernise” store visits and minimise friction. Vendors are expanding their offerings to accommodate this. We saw numerous innovative solutions to make checkout frictionless, including biometric checkout (through palm scanning or face recognition), POS leveraging IoT and computer vision to recognise products and improve loss prevention, and walk-out solutions.
eCommerce-like Experience In-store and Online-offline Integration
Reinventing the POS is part of a broader narrative focusing on the digitalisation of the physical store experience and online-offline integration. Computer vision and IoT in POS, for example — aside from making it easier for shoppers to pay in-store and prevent losses — effectively connect the front end (the POS) with the back-end operations (e.g., inventory management) for better omni-channel experience and operation management. In addition, shoppers expect greater, ecommerce-like engagement in the store, such as scanning a product to gather more information like customer reviews and item features.
Payments
Payment capabilities are becoming increasingly important in retail operations, particularly with the expansion of digital commerce and omni-channel retail. We noticed how some providers were announcing new payment platform offerings and new partnerships in the area.
As for in-store checkouts, digital payment can create friction if not executed well. With the proliferation of payment types available to shoppers and regional differences in terms of preferred methods, retailers need to ensure they can offer a vast range of options.
Also, payments need to connect with the entire customer journey and its personalisation options, such as shoppers linking to their loyalty schemes or donating to their preferred charity when checking out.
Reverse Experience
There is a growing emphasis on the back-office operations that are instrumental in retailers providing great omni-channel customer experience. In conjunction with the importance of front-end customer journey personalisation, what’s behind the scenes becomes key to meeting the expectations of increasingly channel-agnostic shoppers. Reverse experience — improving operational efficiencies to provide great customer journeys — is one of the key themes of our research for 2023 (watch this space!).
One vendor told us that order management systems (OMS) are the powerhouse that enable omni-channel retail. We agree. Among back-office operations, logistics and fulfilment weigh on retail operations’ profitability.
In addition, staff shortages make it harder for retailers to expand in the area. During our conversations at NRF, we came across concepts such as automation in fulfilment (e.g., microfulfilment), democratisation and uberisation of last-mile fleets (joining forces with partners to expand last-mile delivery), and solutions for reverse logistics and returns minimisation.
Employee Engagement
Reverse experience also means focusing on people — not just the customers but also employees and how store associates can integrate the two sides of the shopping experience to offer the best customer experience leveraging the right instruments, tools and training. The role of the store associate is growing in conjunction with the pivotal role of brick-and-mortar retail in the post-pandemic omni-channel environment.
Immersive Experience
Customers expect a coherent and augmented shopping experience. This should have the power (and the mystery) to transcend any discrepancies across channels.
Visual commerce is already a reality for retailers and brands that aim to enhance 360-degree customer engagement. This includes 3D visualisation, live streaming shopping, product design, digital showrooms, virtual try-on, the creation of personalised digital objects, virtual shopping assistants, customer care agents and human-like generated content.
Data Management
Customer data remains the fuel of the retail and consumer industry. Customer data platforms (CDPs) and data lakes have been the engine for collaboration between retail peers and brands. At the same time, AI and ML analytics are the foundational elements that convert data into actionable insights, that are converted into a better customer experience and personalisation, data accuracy, data security, identity management, data privacy and regulatory compliance, and data valorisation within partners’ ecosystems to generate a new source of revenue streams (e.g., retail media networks).
Loyalty
Retailers always aim to increase and maintain loyalty to build solid and trusted relationships with clients. This has led retailers to mix and match loyalty schemes, moving beyond rewards and unlocking customer lifetime value.
The platform-based approach to loyalty capabilities that we heard about in several conversations throughout the event is a clear sign that both retailers and brands have realised how important loyalty and customer satisfaction have been, especially during the pandemic. This has raised the bar for customer expectations and has led to new forms of collaboration between brands, as in the case of delivery subscriptions, by combining convenience, personalisation and omni-channel.
Next-generation Retail Platforms
Commerce platforms are central to retailers’ technology stacks. Retailers and D2C brands are looking for agility and flexibility in their commerce architecture to achieve omni-channel-ready operations.
These were recurrent topics in our conversations with commerce platform providers during the event. Composability was the key feature of next-generation commerce platforms at NRF. Composable commerce enables merchants to combine business services or modules without affecting other parts of the architecture. Simplifying UX and reducing the cost of experimentation are key objectives of the next-generation commerce architectures we came across at NRF, as well as enabling plug-and-play capabilities by ensuring the readiness of the back-end interface, such as making product categorisation ready for use in different touchpoints with the shopper, including mobile commerce apps and social media apps such as TikTok.
Retailers are focusing on getting the foundational capabilities right to meet the requirements of an increasingly complex omni-channel environment, particularly as the physical store is again becoming the centre of omni-channel operations and there is a strong need to blend online and offline and make the brick-and-mortar experience more digital. This resonates well with the reverse experience narrative.
Themes that would probably have been more prominent during the pandemic, including the role of emerging technologies such as blockchain, NFTs, Web3 and the metaverse, were less visible this year. We don’t believe retailers are turning their back on more visionary topics, however. Rather, they are preparing their back-end operations for the future of retail — whatever form that might take.