Retailers and technology providers recently rolled into New York City for the annual jamboree that is Retail’s Big Show, organised by the NRF.
New Mobility
Retailers and technology providers recently rolled into New York City for the annual jamboree that is Retail’s Big Show, organised by the National Retail Federation (NRF), which showcases the latest solutions and provides insights into the latest trends and themes impacting the retail sector.
Around 40,000 people from 104 countries representing 6,200 brands converged on the Javits Centre in the city’s mid-town district. During previous years the event has had key themes around the likes of sustainability, robotics, the metaverse, NFTs, and gimmicks like magic mirrors but for 2024 it has all been about Artificial intelligence (AI).
Every technology solution on the Expo floors, as well as each presentation made on the various stages at the event, was either fundamentally based on AI or at the very least had the technology injected into it in some way. Beneath this AI-driven obsession at NRF 2024 we have been able to detect some underlying themes and trends.
There was widespread recognition at NRF that AI can be at its most powerful for retailers when there is a blending of humans with the technology. Clodagh Moriarty, chief retail and technology officer at Sainsbury’s, says: “We’re a people centric business. We’re bringing people and technology together. I think about it as being an ‘and’ and not an ‘or’. We combine AI with the teams in Sainsbury’s.”
David Kimball, CEO of Ulta Beauty, agrees: “Innovation starts with the human connection. Despite all the technology, there’s a strong desire to connect on human terms. AI can complement the human. We’ve virtual chat tools and AI can do guest services to bring more data, more personalisation and a more human experience to this.”
The ability of AI technology to trawl through mountains of data is bringing in an era of empowerment to retail employees – whether on the shop floor or in the back-office and support centres. Like many retailers Sainsbury’s has been experimenting with Microsoft’s Copilot – an AI companion – with the initial use-case around improving the efficiency of meetings as it enables the interrogation of data from within the business and then helps determine the relevant follow-up steps.
Among the various companies at NRF developing these types of digital assistant solutions was Kore.ai with its Retail Assist and Food Assist products that pull in data from myriad sources – including through tools such as Salesforce and Zendesk – and then allows employees to mine this data with information requests. This can enhance the service retailers provide their customers as well as boosting the efficiency of employees internally. By placing QR codes in-store the service can be made available to shoppers.
Chris Rupp, chief customer officer at Victoria’s Secret, agrees it is all about boosting the customer experience in-store and online: “We’re looking at how AI makes the in-store better. We’ve 50,000 SKUs so how do we match them to customers and bring all the data we have to bear.”
Empowerment of employees does not necessarily need technology. James Daunt, CEO of Barnes & Noble and Waterstones in the UK, highlighted a strategy where autonomy is given to the store teams who can very much tailor their offers to their specific locations.
The ability of the store managers to understand their local customer bases has helped the company to dramatically reduce the unsold books it returns to publishers. “The old model [in book retail] was to send back 30%. We’ve got it down to 10% but it should be at 5%,” he suggests.
This empowerment has also enabled the company to operate a wide variety of different store types. “It gives the local teams the freedom to be able to operate different types of site. Recently we opened a 35,000 sq ft store and also one at only 6,000 sq ft,” says Daunt.
Even though pricing is a fundamental part of retail there remains great sensitivity to the adoption of intelligent pricing strategies, especially when it involves any form of dynamic pricing.
Norway-based supermarket REMA 1000 is a very active user of a dynamic pricing solution from Revionics, which currently enables it to change prices to maintain its position as the cheapest supermarket in Norway.
It undertakes price comparison scanning at its competitors and from this it identifies where it is not cheapest and adjusts its prices accordingly on the electronic shelf-edge labels (ESLs) that it has rolled out to its 675 stores. The whole process takes only 15 minutes and it typically undertakes 100 price changes per day in each store.
Partap Sandhu, head of pricing at REMA 1000, has plans to go much further with dynamic pricing and high on the agenda is initiating markdowns on perishable goods as their sell-by-dates approach.
Pricing has also been leveraged at beauty brand Iconic London in partnership with automated AI negotiating tool Nibble. Kathleen Loftus, global digital director at Iconic, says the company had suffered from a fall in its average order value (AOV) and its plan was to use Nibble to nudge customers into purchasing three items by offering discounts on the additional products added to their online basket.
Nibble helped it drive a 50% increase in AOV and the average discount was 9% compared with the company’s usual discounts of 15-20%. The Nibble tool’s effectiveness is enhanced by it adopting the tone of voice of the brands it works with. Even though it is an automated process the company says this helps to “humanise the brand”.
Robotics was very much a bit part player at this year’s NRF with a much sparser representation on the Expo floor and fewer references made to it in the presentations. Among the retailers active in the area is Ulta Beauty where elements of robotics are coming into play through the likes of a robotic eyelash extension service that automates the process – that is faster and more consistent than if undertaken by a human. Also, in the trial stage, is an automated manicure service. David Kimball, CEO of Ulta Beauty, says: “In-store and at home [via digital] we’re investing in beauty technology. We’re very excited.”
Among the solutions on the Expo floor was Bionic Hive that can automate the warehouse without wholesale changes having to be made as it can be simply attached to the existing racking. The company has received investment from Amazon and management suggest the ROI can be achieved in as little as 18 months.
Looking to stand out, literally, was humanoid robot, Apollo, from Apptronik that was showcased as a solution that is very much multi-functional rather than being limited to undertaking a specific, repetitive task.
Jeff Cardenas, co-founder & CEO of Apptronik, says: “Many robots are very limited. With the Apollo it can do different things – in the warehouse moving boxes and totes – and also move from the back-of-house to the front-end. As the technology improves then there will be more complex tasks it can achieve. With labour shortages it’s not about savings from robots, it’s about getting tasks done.”
Addressing the ongoing labour shortages, as well as delivering the ultimate 24/7 convenience, are vending machines, which are moving well beyond their traditional proposition of delivering cold snack foods and soft drinks.
In the hot food vending space is Roboburger that is currently engaged in various pilots within colleges, shopping malls and petrol stations in the US. It has automated the process of cooking a burger from frozen, placing it in a bun, and adding various condiments before dispensing it to the customer within minutes.
The solution can also be sold on a white-label basis to food brands who can utilise the technology for other foods beyond burgers, according to Audley Wilson, CEO of Roboburger, who says it is effectively set up to produce any sandwich-type dishes: “Any retailer or brand can customise it because the bun is effectively a four-inch canvas for housing burgers, chicken, eggs or other foods.”
Another vending machine supplier represented at NRF was Boxxtech that dispenses alcoholic drinks and relies on facial recognition to verify the customer’s credentials. This not only involves identifying their age but also, arguably much more controversially, it can track the number of times a person has used the machine as well as determining their level of intoxication from various facial cues.
Having previously enjoyed a phenomenally buoyant period online-only Direct-to-Consumer (DTC) brands have been in the doldrums of late because attracting new customers from a broader base has become prohibitively expensive and more difficult to achieve.
Billy May, CEO of Brooklinen, has experienced some pain: “The notion of building a market is through keeping identifying new customer and it gets harder. The privacy change made it even harder and caught traditional DTC brands by surprise. Many had not built the technology, marketing and product development. They had just spent [time and money] on acquiring new customers.”
As well as creating a new pillows brand, Marlow, as part of a diversification strategy the company also moved into selling through wholesale. But this came with its challenges. “Like a lot of brands born on the internet we thought we could just sell through wholesale but our systems are not set up for shipping pallets to [US-based] Walmart. We started with our sub-brand and used this to get into Walmart. There was a lot of work that went into it. We’re building up our capabilities before we go wholesale with Brooklinen,” explains May.
In contrast, many traditional brand owners continue to reduce their reliance on wholesale and move into DTC – both online and through their own physical stores, although they face their own set of challenges.
Michelle Gass, CEO of Levi Strauss, says: “DTC is thriving as consumers are looking for the full expression of Levi’s whereas wholesale is under more pressure. We’ve a DTC-first strategy but as we’re not wired to operate like a retailer we’re rewiring to be faster and more agile like retailers. There is a huge pivot to DTC at Levi’s.”
Although RFID is a long established technology its adoption has enjoyed a significant boost post-Covid-19 on the back of customer demand for BOPIS (buy online, pick-up in-store) that was taken-up by dramatic numbers of shoppers during the lockdown periods.
Dean Frew, group CTO at SML, says the rise in the use of BOPIS by consumers post-pandemic is driving demand for RFID as retailers recognise they need to dramatically improve the accuracy of their tracking of inventory across their multiple channels.
Typically retailers have between 55-75% inventory accuracy, according to Frew, who says this can lead to serious issues when fulfilling online orders and BOPIS, with many orders having to be cancelled through a lack of availability of stock.
“Retailers can’t live with the cancel rates of BOPIS orders because of stock not being available. They either beef up their inventory [with more stock held as a buffer] or they cancel the orders. For some retailers it can be 50% cancel rates. More retailers realise the ramifications of compensating for poor accuracy,” says Frew. The solution for a growing number of retailers is to invest in RFID to better track their inventory.
Once implemented he says retailers can also use the technology to help them handle returns more efficiently and to boost the customer experience in-store through implementing various innovations such as smart dressing rooms and faster checkouts.
