We recently ventured to Vegas for what is now the world’s largest conference for retail and e-commerce innovations, ShopTalk. Over the course of three long days (and nights), our team had fruitful and occasionally heated discussions with leading innovators about the future of retail. Here are our key takeaways:
In-Store Experiences Will Save Retailers
Brick & mortar is far from dead. In fact, it is going through a revival. But retailers that do not invest in the store experience are missing a huge opportunity. From personal shopping to classes to launch parties to exciting installations, ensuring that the in-store experience is engaging is a crucial strategy to improve store profitability and stimulate growth. Besides capturing more value from customers during their visit, these experiences have a “halo” effect. As Wharton Professor David Bell, a speaker at Shoptalk writes: “when you have a physical footprint somewhere, 100 people come and maybe 20,000 learn about it because whatever goes on in there can be amplified through digital.”
Macy’s & Ulta both recognize this. In his Keynote speech at Shoptalk, Macy’s CEO, Jeff Gennette spoke about their investments in in-store experiences, such as using VR to shop for furniture, because “she is an optimist and at every point…she expects a great experience…she doesn’t see her store and .com as two different things.” Mary Dillon, CEO of Ulta Beauty, declared “retail is back!” and spoke about how “we center everything we do on our guests and associates.” This is evident in their focus on salon services, easy check-in, and improvements made to help salon professionals manage their schedules.
CLV is the Key
Peter Fader, the godfather of customer lifetime value (CLV), reveres customer-centric companies that can “understand customers at a fairly granular level…identify the customers or the segments of customers who are valuable from the ones who aren’t…and develop new products and services for the special focal customers—the ones who provide a lot of value for you—but not necessarily for the other ones.” For some retailers this philosophy is a hard pill to swallow: not all customers are equal.
Nike recognizes this strategy and is at the forefront of executing it. At Shoptalk, Chief Digital Officer Adam Sussman said: “when we know more about our consumers, we can celebrate them and reward them better.” Further evidence of this can be seen in their recent acquisition of Zodiac, a SaaS analytics company that creates CLV models to identify customers who will continue spending into the future. On a recent investor call, CEO Mark Parker said this was done “to be more personal at scale.”
With the vast majority of marketing leaders not knowing how much their customers are worth, we expect more retailers will catch on and start becoming truly customer-centric.
Data is Sacred
In his keynote Winning the Shopping Journey with Google, Daniel Alegre, President of retail and shopping at Google, declared “Data is the backbone of retail.” This is true and given how close brands and retailers are to their customers at the point of sale, their data is incredibly rich. And they are finally starting to analyze this data in meaningful ways—to understand the market and their customers—to move the business needle.
Shoptalk was great for many reasons. But one was because it was a melting pot of the entire industry: retailers, brands, technology startups, technology giants, marketing firms, agencies, etc. At every cocktail party and throughout the conference floor, data security seemed to be one of the most important topics of conversation.
Paranoia seems to be at an all-time high. Between Facebook’s recent debacle with Cambridge Analytica—news that broke during the conference—and Europe’s pending adoption of the General Data Protection Regulation, retailers, and technology companies must raise the bar to reach a high-security standard and manage customer data responsibly. Data may be crucial to success, but so is helping customers feel secure.
Being stuck at the Venetian for two extra days (due to a snow storm in New York) gave our team ample time for the insights and enlightenment from ShopTalk to marinate. We left inspired by forward-thinking retailers who are focused on the customer, enthusiastic about all the innovation which will define the future of retail, and energized to continue helping our customers manage the retail experience with Brickwork.