Interviews, insight & analysis on Ecommerce

Thoughts, themes and insights from Retail’s Big Show

Retailers and technology providers from around the world traditionally converge on New York City for the annual Retail’s Big Show, organised by the National Retail Federation (NRF), to showcase the latest solutions and also gain some insight into what the future might look like for the industry.

NDA took a trip to New York to witness the retail industry’s current attitude to innovation.

Although the impact of Omicron reduced the number of attendees this year the event still provided much to be excited about for those retailers willing to deploy new technology solutions across their channels.

It is well understood that Covid-19 has boosted online sales and against this backdrop many multi-channel retailers have found it a challenge to handle the increased volumes. Part of the problem has been the poor visibility many retailers have of their stock and this has caused great problems when dealing with the increased adoption of click & collect services by consumers.

Dean Frew, CTO at RFID specialist SML Group, says: “There is a realisation by many retailers that they have an inventory problem. When customers buy online they expect to be able to go to the store within a few hours to collect the goods. But with inventory accuracy for clothing and footwear at 65/60%, and in some cases as low as 50%, retailers simply don’t know where the right items are in the supply chain.”

SML has worked with many retailers including Tesco and Matalan in the UK to implement RFID tags on goods in order to dramatically enhance visibility of stock across their supply chains, which has significantly boosted their ability to provide click & collect across their store estates. “When online went crazy with Covid retailers realised they could not just use their warehouses for [fulfilling] online orders. They needed to be able to use their stores too,” explains Frew.

This highlights how the increase in online sales has boosted the role of the physical store. This has certainly been the case for Brian Cornell, CEO of Target Group, who says: “Early in 2017 we talked about a different approach and it was not well received [by investors]. We said we’re putting billions of dollars into remodelling our stores and also building new ones. We planned to use these stores as fulfilment hubs. This investment has helped us accelerate our sales during the pandemic thorough in-store pick-up and also drive-up. It’s paid back in a big way and it will be sticky going forward.”

Pete Nordstrom, president & chief brand officer at upmarket US department store chain Nordstrom, agrees with this view and has been adding small ‘Local’ branded stores in urban locations, which have been developed to provide services such as click & collect and also collection points for customers to return goods.

Returns were certainly on the agenda at NRF as the increased online sales have dramatically driven up return rates. Frew highlighted how RFID technology was enhancing retailers’ ability to handle returns. It makes it easier to bring returned products back into a retailer’s supply chain and therefore improve the margin opportunity by increasing the prospects of reselling the items.

It is well known that returns are frequently caused by the ordering of incorrect sizes online and although many tech-based solutions have appeared over the years the problem has persisted. Whereas in the past these solutions often involved shoppers taking photos of themselves Morgan Linton, co-founder of Bold Metrics, has developed an alternative sizing tool that uses machine learning technology.

Customers are asked five questions – including their height, weight and shoe size – and from this Bold Metrics can ascertain 50 body measurements. It uses the machine learning capability to constantly increase it’s level of accuracy. Working with brands including Canada Goose it has helped reduce their returns by 32% – as well as increasing conversion rates by 20%.

Another solution to the sizing problem involves a new spin on the very old school service of tailoring. Allison Lee, founder of Hemster, provides a tech-enabled tailoring service that works with 100 brands and has reduced return rates by 20%: “We’re making tailoring accessible at the Point of Sale – both in-store and online. Instead of customers returning an item we ask if they would like it tailored-to-fit for free.”

At the Hemster workshop the company has reduced the tailoring process down to only seven steps whereby each garment takes only 10 minutes to make the relevant changes. Using the data it generates on the customers Lee says it is possible to create a ‘silhouette’ of the individual that can be shared with the brand in order to ensure future purchases are a perfect fit for the customer.

The reduction of returns clearly feeds into the sustainability agenda and among other solutions at NRF was Returnity that cuts down packaging waste through circularity. Michael Newman, CEO of Returnity, is supplying retailers including Walmart and the Estée Lauder brands with its circular packaging solution that involves reusable containers being used for goods that are high frequency purchases, such as refills, and also for subscription services. “Retailers need to identify the areas of high return rates and introduce circularity,” he recommends.

One of the failings of ecommerce is around the potential loss of impulse purchases that represent a sizeable amount of revenues in physical stores. One tech-driven solution that addresses this issue, and also ticks the convenience box, is Robomart – an interesting store-hailing solution.

Carson Denbow, responsible for marketing at Robomart, says customers hail the mobile shop (a customised van) via an app where they can view the available items to buy – but not complete the transaction. On arrival the process is all contactless – including RFID tags on the items and payment being made through the app. Clearly the potential to purchase more items (from the assortment of between 50 and 80 items) than originally intended is high. The service is currently operating within Los Angeles, with the typical delivery made in around 10 minutes, from locations hosted by REEF Technologies. They will shortly be opening their first UK locations.

There is no dispute about the buzzword of NRF this year – the Metaverse. The retail sector has been dealing with the online and offline channels but things could be about to change big-time as there is now a third route to selling goods – Metaversecommerce. This decentralised, virtual world involving NFTs, the blockchain and avatars has certainly caught the imagination of tech providers.

For retailers the order of the day is experimentation involving established Metaverses such as Roblox and Fortnite where individuals are represented by their avatars. Among those engaging with this new area is France-based supermarket chain Carrefour that has built a store in Roblox, involving gamification with people receiving credits when their avatars eat healthily. Meanwhile Nike, which is renowned for its experimental activity, has created a virtual representation of its Oregon-based headquarters in Roblox.

Even established names like Ralph Lauren are getting involved. Patrice Louvet, CEO of Ralph Lauren Corporation, says the company regards it as a great way to engage with a younger audience: “We have to innovate, experiment and try new things. This is what we’re doing in the Metaverse. Firstly it’s about engaging with customers to create an experience. On Roblox you can have a virtual coffee in a virtual Ralph Lauren store. How big a revenue source it will be I don’t know,” he says, which undoubtedly reflects the thinking of many people in the retail industry.

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