We are back in Las Vegas, Nevada, for our semi-annual conference circuit pilgrimage. If you were unable to attend – or are just curious about what our team observes – we have you covered just like prior years.
So, without further ado, here are some of the highlights from the first day.
- Lots of consumer uncertainty makes for a challenging retail environment.
The days of panel discussions, deliberating the merits of the Metaverse and unproven frontier technologies, such as smart shopping carts, seem a distant memory of Shoptalks past.
Instead, the topic underpinning many of this year’s discussions is how to navigate an uncertain consumer environment.
Michelle Meyer, Chief Economist for MasterCard in the U.S., referred to recent consumer spending as the “bifurcated economy” where consumers have continued to spend on services but product purchases have generally fallen from their pandemic highs.
The first day’s panels did not yield a consensus on what experts believe consumer behavior will hold for the rest of the year, but it’s clear that retailers are staying lean (with lower inventory) and nimble (data-oriented) to navigate 2023.
- The bottom line comes back into focus.
Economic uncertainty has been, in large part, a result of the fastest interest rate hikes in the history of the Fed to combat high inflation post-pandemic. This, of course, has resulted in the intended effect of tightening credit and consumer consumption.
At the same time, higher rates have increased the pressure on brands and retailers to deliver improved profitability.
For many brands, according to Simeon Siegel from investment bank BMO Capital Markets, this means a greater focus on wholesale distribution, which is almost always more profitable than direct-to-consumer (DTC). He emphasized that “DTC is a channel, not a business model,” and the right wholesale partners/retailers matter.
Scott Friend of Bain Capital Ventures went so far as to say that venture funding for DTC business is “dead.” This survival of the fittest can now be seen playing out across the retail landscape as DTC businesses, and some established retailers struggle to stay afloat because they have not generated enough cash flow.
Many of the discussions over the coming days will tie back to improved profitability which means ancillary topics, such as retail media networks, digital fulfillment, and supply chain, will be viewed through this prism.
The importance of profitability, from distribution to supply chain and everything in between, cannot be overstated this year amid all the changes taking place.
- This time it’s different: AI & Automation
If you were blissfully immune from the barrage of tech developments over the last few months, most notably with the launch of a consumer version of an artificial intelligence (AI) chatbot, ChatGPT, and previously, AI art generators, Dall-E and Midjourney, you would be well aware after Shoptalk.
Of course, AI and automation have been topics at Shoptalk as far back as 2017, but what makes this moment feel different is how accessible the technology is now to average person.
The power of AI to transform almost all functions, from the customer experience (imagine personalized ads for every one of your customers) to supply chains (improved forecasting and/or allocation based on real-time point-of-sale data), appears unbounded right now.
Of course, many complex questions exist, such as ones around data privacy, competitiveness, and equity. Still, the promise of the technology – along with the broader market emphasis on profitability – makes it likely that it will diffuse into many aspects of retail.