As the curtains close on yet another great Shoptalk, we like to take time – as is custom – to pause and synthesize all the content from the past few days.
Looking past the buzzword bingo and clichés, we try to identify emerging themes and what to make of it all. Or, in consulting parlance, “So what?”
Without further ado, here are three of the takeaways we identified from this year’s conference and the implications for you going forward.
1. The oft-mentioned “customer-first” mindset often requires agility and a generalist skillset
A customer-first mindset was a phrase often repeated during the conference in relation to evaluating new opportunities and the decision-making process throughout organizations.
Retailers, like Sears in its heyday, would reserve a seat at the conference room table for “The Customer” in meetings, but of course, Amazon was the first retailer to talk about the “customer-centric” mindset and make it stick, going so far as to embed it in the mission statement.
Given Amazon’s success – and the universal value of the principle – it’s no surprise that many retailers and executives now emphasize this customer-first mindset.
Underneath this all, though, is an important takeaway: capitalizing on opportunities that appear, through the customer lens, means having a diverse skillset to tie together multi-functional solutions.
Said another way, meeting the customer’s needs means you cannot approach a problem from a merchandising-first or technology-first mindset but rather how everything comes together for the end-consumer.
In that sense, generalist skills and diverse functional experiences are critical – and will be more in demand – for organizations.
An early indicator of this shift comes from Best Buy, which recently re-organized its merchandising teams under a general manager (GM) for categories. As Jason Bonfig, Chief Merchandising Officer at Best Buy, laid out, the GM is in charge of demand planning and buying for the category across stores and digital channels.
Bonfig also mentioned that, in the future, the GM at Best Buy might also assume additional responsibilities for order fulfillment and analytics to maintain that customer-first mindset for product categories.
A related idea from the Shoptalk team was the concept of a unified shopping experience, rather than “omnichannel,” given how many touchpoints customers often have before making a purchase and throughout the year.
In the unified shopping world, generalist skillsets are critical to bring different functions together and create seamless experiences for customers that connect everything, from supply chain to marketing.
2. AI is deservedly hyped; figure out what this means for you and your organization
We have yet to see a word cloud for Shoptalk 2023 but were one to be created, “AI” – or some derivative of artificial intelligence – would likely be the most popular term.
AI was hyped at Shoptalk and appropriately so.
On the panel discussion hosted by Omnitalk’s Chris Walton, “Debating Nine Trending Retail Technologies,” the panelists agreed on the importance of AI as a technology for retailers going forward.
A commonly-cited application across multiple panels was personalization for customers, along with supply chain improvements. As Laura Kennedy from CB Insights noted, there are many applications for AI around content and media which will be good for creative endeavors.
Many retailers are evaluating the application of AI and automation solutions, such as Open AI’s ChatGPT – and other similar systems – for their business, accompanied by lots of debate around access to first-party data (more on that below).
This doesn’t mean that you should jump straight into figuring out how to integrate ChatGPT into your day-to-day work. However, like anything else in your business, identifying where automation and technology can reduce time-consuming tasks or bubble up the need for action is important for any leader.
Perhaps one way to think about AI and automation is that it can help with a few dimensions of output:
- Speed – (known as cycle time) the total time it takes to complete a process or set of operations
- Capacity – (or throughput) the maximum amount that can be produced through a process or set of operations in a set time period
- Efficiency – the cost (time, money, etc.) it takes to complete a process or set of operations
While many people gravitate towards efficiency in the above scenario – and what that might mean for jobs in the future – perhaps more compelling is the ability to increase speed or capacity.
Imagine being able to churn out more sales through better marketing or serve more customers through reduced supply chain lead times. Aren’t increased sales more desirable than just cost-cutting for most retailers?
AI and automation will have a large impact on how business is run over the next 10-20 years, so it is important to embrace it and identify areas of opportunity within your organization.
3. First-party data is valuable to most retailers today (retail media networks!) which presents complicated implications for AI in the future.
An important consideration related to AI and automation is access to first-party data.
The question for retailers is how much they are willing to allow other entities to access that data in exchange for better algorithms.
Data is a topic that bores many, but it is a significant competitive and strategic question that must be answered in relation to AI and automation given the value of data today.
Surprisingly, this was not widely discussed by executives at Shoptalk, but it will be central to decision-making going forward – and perhaps a topic for Shoptalk 2024.
First-party data is incredibly valuable today since, after all, it powers retail media networks (or RMNs, the second-most talked about idea across the conference) and the associated monetization that yields high margins.
That data is only increasing in value as tech players, like Meta and Google, have slowly lost access to first-party data sources to measure sales.
The tension, of course, is that first-party data on one side is held as exclusive and monetized by retailers. On the other side, access to this data is paramount to the dynamism of AI algorithms to be most relevant to a retailer’s specific context.
Google’s recent misstep in this area – using data from competitor ChatGPT for its own AI tool – highlights the complexity around data.
This brings up questions around privacy, competition and confidentiality if AI algorithms are created from your own data and if that algorithm can then be used to benefit competitors through an improved algorithm (and vice-versa).
We are just at the tip of the iceberg as it relates to these questions. As first-party data increases in value, the topic of data access will be a strategic imperative for many retailers down the road.