NRF’s Big Show 2019 should have been held in Phoenix. Like that city’s namesake, a long-lived bird of mythology, retail cyclically regenerates, arising from the ashes of its predecessor. While retail is clearly not in ashes, it is being reinvented before our eyes.
The real news lies behind headlines of missed quarters, falling market values, and shuttered stores. Retail is arising from the first chapter of digital transformation—upheavals of shopping behaviors, business models, and industry structure. New retail formats are emerging as customer behaviors change, and newcomers shake things up. Retail’s next regeneration is taking shape.
Following are our high-level take-aways from conversations with retailers and their technology partners during the 2019 NRF Big Show:
• Business and IT Investment decisions are driven by clear outcome expectations. An unprecedented cadence of retail business transformation is being driven by a clear focus on what today’s consumer expects, and KPIs for IT investments are well defined. See recent news about how Macy’s and Nordstrom are adapting strategy to the consumer’s need for bespoke relationships. Individuals that had full conference passes were treated to story after story of transformation. Hopefully, you caught IDC and Ahold’s presentations during the NRF Sunrise breakfast – if not contact us for a copy of the presentation.
• Physical presence is taking new forms (stores, pop-ups, stand-alone kiosks) and is integral to a retailers “Marketplace“ approach. Digitally-determined retailers are hell-bent on IT modernization of physical consumer touchpoints, pursuing end-to-end initiatives and finding solid use cases for transformational technologies—compute at the edge, artificial intelligence, robots, drones, computer vision, facial recognition, and augmented reality to name a few. Refer to the examples from Amazon, Alibaba, Walmart and Target. Great multi-vendor showcases of digital stores at NRF could be found in the following booths: Intel, Cisco, Microsoft, Panasonic, Zebra, NEC, NCR and Fujitsu.
• There’s no shortage of attractive transformational use cases that improve experiences. Some examples—quantum gains in convenience through radical store automation, contextualized mobile services, hyper-localized assortments, orchestration of global manufacturing, material, and carrier networks, transparent field-to-fork food safety and sourcing assurance. Refer to what Walmart, Kroger and Ahold are doing. AT&T, HP, IBM, Oracle, SAP, and Verizon demonstrated transformative capabilities at NRF.
• Integrators are becoming orchestrators, enabling the complex web of retail ecosystems to work seamlessly together. There’s a new fabric of experience and commerce with threads of search, social, stores, marketplaces, and mobility, but taken alone, each of these technologies fails to meet consumer experience expectations. Integrators leverage platforms, AI and microservices to weave these together for seamless customer experience and efficient operations. Integration partners include Accenture, Avanade, CapGemini, Deloitte, HCL, IBM, Infosys, PWC, TCS, and Wipro.
• Retailers are busy reconfiguring their ecosystems to meet consumer expectations. Some examples include retailers as unlikely partners (Walgreens-Kroger fulfillment partnership), retailers as service providers (Target’s acquisition of Shipt), and retailers as technology platform companies (Alibaba, Amazon).
• Artificial intelligence (AI) and machine learning (ML) surfaced in marketing, merchandising, and supply chain, improving processes and outcomes, for what we call contextual innovation. To be sure, the scale of contextual innovation impact can be impressive, e.g., improving item sales forecasts by day-part across hundreds of stores. Accenture, IBM, JDA, McKinsey Periscope, Oracle, and SAP.
The IDC Retail Insights team will be releasing more deeper dives on our NRF experience with a focus on the following:
• The platform foundations and orchestration / integration enablers
• The shifting retail marketplace paradigm – Search, social and shopping today
• Moving from theory to practice: the intelligent supply chain and workforce
• Infrastructure restraints to IT modernization overcome with edge computing and 5G on the horizon
• Shift the conversation to outcomes – the reality of AIs strengths
• The store as bespoke engagement engine
Leslie Hand is Vice President of IDC’s Retail Insights group. Learn more about research offered by Leslie and her team of analysts by visiting idc.com/retail .