As the curtain comes down on Shoptalk 2022 – and the bright lights of Vegas fade away as attendees depart home – we are prompted to reflect on the big themes from the last three days. With so much content, coupled with a two-year break due to COVID, this year more than ever we feel compelled to distill all the information we learned over the course of the conference and wrap it up for you here.
Three big themes we heard across sessions, along with examples from the broader retail universe, provide salient takeaways to help bring this all together.
Retailers are finding new ways to expand the relationship they have with customers
Many retailers seem inspired by the Amazon flywheel effect, which is built on a virtuous cycle of delivering value to customers so they keep coming back. Examples abound of retailers thinking more creatively about their customers and the long-term relationship they have with them in a way that seems quite different than pre-COVID days.
Retailers are thinking about how to expand their offerings to bring more value to customers and retain their loyalty while satisfying different needs. Newfound retail partnerships through store-in-store models (Petco and Lowe’s, Ulta and Target, to name a few) and online marketplaces (Macy’s) are ways that retailers are expanding product choice for customers, both in-store and online.
The creation of media networks (Nordstrom, Macy’s, Kroger, Instacart, etc.) is another vehicle for retailers to better serve customers through personalization and online discovery. Of course, these networks are a massive profit center for retailers, but they are built on existing relationships with customers and will only succeed if the media network brings value to them.
Lastly, retailers are experimenting with new commerce models, such as livestream shopping or virtual reality (Metaverse), to bring the brand to customers in different ways and simplify the shopping experience. Some of these innovative ecommerce models are unproven in the US – and some may not succeed (voice commerce from Alexa being the most prominent example) – but if the goal is to expand the relationship with the customer, it’s important to evaluate different opportunities.
So, what does this mean for you? Consider what opportunities exist to better serve your customers, focusing less on a transactional basis and more on a long-term basis. Numerous retailers talked about how omnichannel customers spend more within their ecosystem, which means that you want customers shopping and engaging with your brand in different ways.
Thinking about the long-term relationship with your customer provides room for more creative thinking when it comes to testing new ideas. Target’s curbside returns service is a great example of this transactional innovation since the offering itself does not make money (in fact, it incurs extra costs!). However, it makes it easier for customers to shop at Target, which builds loyalty and keeps them coming back more frequently.
If your organization does not have robust capabilities to gather and share customer insights on a regular basis (covered in the Day Two Recap) to identify these opportunities, start there. Step one is a system that looks at customer pain points on a regular basis to identify new opportunities.
Retailers are now tech companies…and tech companies want to be in retail
What stood out from the conference was how many of the top tech companies – Google, Uber, DoorDash, Meta – made their presence known as they woo and seek to partner with retailers. Or to paraphrase Michael Scott (Steve Carrell) from the Office: “My, how the turntables have turned.” Retail is now cool to tech companies.
The message was oft-repeated throughout the show that every retailer is now a technology firm. The pandemic made it clear that retailers with strong technology capabilities and investments outperform their competitors. According to Ken Worzel, COO of Nordstrom, how customers are served is powered by lots of technology even if they don’t see it.
As a customer, it may be easy to miss this innovation since you may not see all the technology in action, but it is foundational to growth through improvements in your experience. From enhanced order forecasting that smooths out economic volatility, to automated order fulfillment that improves your order capacity, technology enables better and faster commerce.
Beyond consumer-facing technology (livestream shopping, Metaverse, etc.), what tech-enabled areas are worth paying attention to going forward? Two ideas caught our attention: last-mile delivery and supply chains.
We heard a couple of speakers remark how last-mile delivery is “ripe for disruption.” Rising fuel costs and labor shortages are increasing last-mile costs which, coupled with the growth of ecommerce volume, present a perfect storm for companies to re-think last-mile delivery. Uber and DoorDash made their pitch at the conference as partners for retailers, with just these factors in mind. That said, the next few years may bring changes that will disrupt delivery altogether as driverless cars or drone delivery continue to be tested. With costs continuing to climb across all providers, it’s safe to say that last-mile delivery is a space to monitor.
Secondly, across the entire supply chain, opportunities abound to drive improvements, from forecasting to order fulfillment via automation. Retail partnerships are a potential avenue for retailers to capitalize on these opportunities through sharing information and technology costs. How might this be done?
- Shared last-mile delivery among non-competitors (think grocers and apparel retailers) to reduce last-mile costs
- Collaboration when it comes to demand planning or forecasting among non-competitors to drive integrated planning – and even supply chains – through increased information accuracy
- Hybrid fulfillment operations to improve costs for picking orders while reducing last-mile distance to customers
These partnerships did not exist a few years ago, but with shop-in-shops as the first entry point, the potential for more collaboration among retailers exists as highlighted by Shekar Natarajan, American Eagle’s Chief Supply Chain Officer.
American Eagle Outfitters supply chain chief wants to create a shared supply chain so companies without Amazon or Walmarts clout can be more efficient. $AEO even bought 2 companies to do so. Could spin out this company it’s building later. Interesting idea. @shoptalk pic.twitter.com/6pRF5G1EiN
— Phil Wahba (@philwahba) March 29, 2022
The war for talent now includes more competitors as retailers become technology companies
Of course, the flip side to retailers becoming technology companies is that the competition for talent has intensified as retailers jockey with tech giants for the same talent given business needs. Numerous panelists remarked in some form or fashion that the key for retailers to attract and retain talent is to create an environment where employees can learn and grow.
This may sound soft and squishy to you – and it is – but it is important to think through the broader culture and opportunities for attracting talent over the long-run. Add to this list decisions around return-to-work plans – and how these policies affect talent acquisition and retention – and the challenges are very real.
We did not hear any helpful guidelines for navigating through these complicated decisions. However, one common – and perhaps overlooked – path was mentioned by several folks: automate rote or easy tasks for employees so they can work on higher-level activities. Amazon is famous for this in terms of building systems to remove simple, repetitive tasks.
You can view automation as both a way to elevate the experiences for employees while also reducing costs in your business. It’s a classic win-win and can be looked at in every level of the organization, from associates stocking shelves or picking online orders to senior-level managers pulling regular reports or data.
Each organization will have its own view of culture and the post-COVID work setup, but removing points of friction for employees (as you already do with customers) pays dividends in attracting and retaining talent. If you haven’t already, consider what areas you can address in your organization to remove challenges or repeated tasks for employees to help them grow and better serve your customers.