VM EVENTS: VM Summit Consumers at the Crossroads of Retail and Tech: The Big Picture By Mary Kane, Executive Editor and Andrew Karp, Lens & Tech Editor Wednesday, April 17, 2019 2:59 PM RELATED CONTENT A Master Class in Customer Behavior Understanding New Models and Players in the Retail-Health Care Convergence Panel Explores Actionable Ideas and Themes From Summit Presenters Student Innovators of the Year Present Their Inventions at the VM Summit Navigating the Emerging Data-Scape Finding Your Voice With Smart Voice, Smart Choice Arming Consumers With More Tools to Drive the Health Care Conversation Turning Data Wealth Into Patient Health Scene at the Summit In an informative keynote presentation, global retail expert Deborah Weinswig, CEO and founder of Coresight Research, offered a detailed look at how the cross-currents of retail and technology are shaping the customer experience, and what that means for retailers, suppliers and health care companies. In her keynote, Weinswig painted a big picture about the health of retail today, saying “sales in December were not what we expected, either in the way of online or offline shopping.” She said that according to Coresight’s store closing tracker “some 4,810 stores had already closed in 2019.” However, despite the fact that major retailers, like Gap and Gymboree, were closing stores, Weinswig said she believes in general, “retail is still in positive territory.” Deborah Weinswig of Coresight Research. Reimagining Physical Retail “The physical retail landscape is changing at an accelerated pace. Shoppers are demanding newness,” she said. Retail curators like Macy’s are reinventing their companies through tech-heavy investments and improved omni-channel capabilities. Weinswig breaks the retail transformation down to four areas: spectacular retail; flexible retail; new and “boundaryless” retail; and frictionless retail. A new wave of spectacular retail focuses on urban flagship stores, where retailers such as Tiffany and Nike are making improvements. Their stores are “experience rich” with a large choice of product that offers add-ons such as customization and personalization. For example, at Nike’s flagship store in New York, NikePlus members can reserve items on their phones and have their products held for them at an in-store digital locker. The store also includes a “speed shop” that uses local data to stock its shelves and restocks them based on what the community wants. Flexible retail is marked by shorter leases, more shared spaces and more short-term stores. Weinswig advised store owners to “reshape your physical space” and urged retailers to take a chance and try something new with their stores. “Build a strong brand and make it fun for customers to shop your brand. Pop-ups are the future because they drive excitement.” New and boundaryless retail is often powered by mobile—shoppers download the app and use their phone to shop. The app is at the center of the shopping experience, offering consumers convenience and personalization. “Retail curators like B8ta, let people interact with their products using a virtual reality installment,” she said. Frictionless retail basically refers to unstaffed stores such as Wahaha which launched TakeGo, an unstaffed store that is actually a large vending machine. JD’s unstaffed stores leverage technologies such as facial recognition and image recognition. Tech Trends Reshaping Retail Artificial Intelligence (AI) underlies all aspects of the retail ecosystem cutting across four main channels: communication, optimization, rationalized inventory and experiential retail, according to Weinswig. When it comes to communication, AI is helping retailers improve their customer experience without adding staff by using chatbots that are able to respond to customer requests. “Some 95 percent of inquiries at Alibaba are handled by a chatbot. These are easy wins for a company because they translate into happy consumers,” she said. AI enables precision as pricing and promotions can be individually targeted based on market conditions, sales or even the weather. Also, price decisions can be automated for each product, by channel and store. AI yields smarter business insights—by identifying estimated and actual sales of products; forecasts demand for items; enables automatic replenishments from warehouses; and highlights products that are overstocked. Finally, AI creates better consumer experiences by eliminating friction in the shopping process and deepening engagement with customers. “It closes the information gap between e-commerce and physical stores. Mobile then acts as a personal assistant, guiding the shopper through the in-store journey,” Weinswig concluded. (L to R) Deborah Weinswig with David Hoodis of Mood Media, Nevin Raj of Grata Data, Heike Young of Salesforce and Karl Haller of IBM.She then segued into a panel discussion about tactics and tools for decoding consumer behavior which she moderated. The panelists were David Hoodis, CEO of Mood Media; Karl Haller, partner with IBM’s Consumer Industry Center of Competency; Nevin Raj, co-founder and COO, Grata Data, and Heike Young, senior manager, industry strategy and insights, Salesforce. Haller said retailers need to learn to tap into the data they already have. “They aren’t doing enough with metrics and dashboards to analyze the data they’ve already collected. It’s a quick win to pull from the data sources you already possess.” Hoodis pointed to Walmart as an example of a retailer that has reinvented itself, several times over. “Is Walmart a tech company? Yes it is. They have a legacy of reinventing themselves by making tough decisions and taking action. Complacency is what is killing some companies today.” Hoodis feels the customer experience matters, whether you are online or in-store. “Through social media, consumers have shown us they feel comfortable. More than two-thirds of 18- to 24-year olds come back to shop based on their prior experience,” he said. Young said, “We saw a great amount of influence from social. This year, we saw Instagram and Facebook combine, and they’re driving more than 90 percent of all social traffic. That overarching combination of social and retail is what’s driving traffic. “There are so many ways of engaging with mobile optimized consumers. There are all different engagement points. With Millennials and Gen Z, we think about all the types of media they engage with. A lot of it is audio. They almost always have one earpod in. They’re consuming at such a fast pace. When I think about what types of media we can use to engage those consumers, audio is underused,” Young said. Raj said “We analyze a lot of customer reviews. We’re seeing a change in focus from actual products or services to customer service. For example, with Warby Parker, we see a lot of the feedback is around customization.” As for today’s data, he said “it’s important to change your mindset. If data is part of your strategy, a lot of times it’s a second cost center. I would ask you to flip this upside down and think of yourselves as curating an experience for lifestyle segment that allows you to put data first.” Young said, “Many of us are data rich but action poor. We capture all of this great data about consumer behavior and conversion rates, but the internal piece needs to be unlocked.” Looking to the future, Young predicted, “physical retail is far from dead. At the same time, physical retail is finding its feet in this new retail era. It offers experiences you can’t find anywhere else. Look at Shinola. It’s an amazing brand, created in Detroit. What Shinola really does in the physical space is a loyalty experience driven by Salesforce, but driven in the store. When you talk to a salesperson in store, you are given a VIP experience. You can only sign up for it in the store.” Haller said, “In 2018 there was a retailer resurgence, with big and small companies competing to be successful. Having a physical retail space is important, but retailers need to know how to use that space in a different way.” Finally Haller advised retailers in the audience to pick a few things to change about their retail outlook, whether it is finding the right talent or upping their customer experience game. “Start working on a few things. Some will succeed. Get rid of the things that fail. The most important thing is to keep adding changes.” — Mary Kane, Executive Editor — Andrew Karp, Lens & Tech Editor This video includes highlights of the following Summit speakers: Deborah Weinswig, Coresight Research; David Hoodis, Mood Media; Nevin Raj, Grata Data; Heike Young, Salesforce; and Karl Haller, IBM.