In a cold, wintry New York, the IDC Retail Insights team joined more than 30,000 attendees from technology and retail companies at the Javits Convention Center for NRF 2023: Retail’s Big Show. The four-day event, which took place between January 14 and 17, was the first since the pandemic, and everyone was excited to meet in person after two years of remote interactions.
We attended over 150 meetings with technology providers to learn more about their offerings and discuss the latest trends in retail technology.
Here are some of the key points from our conversations:
Frictionless in-store experience, The next generation of home
The brick-and-mortar store is making a big comeback, and it was evident when browsing the floor at NRF. Customer expectations have changed in recent years and the store can no longer function as before.
The challenge for retailers is how to “modernize” store visits and minimize friction. Providers are expanding their offerings to accommodate this. We saw many innovative solutions to make checkout frictionless, including biometric checkout (via palm scan or face recognition), POS using IoT and computer vision to recognize products and improve loss prevention and check-out solutions.
E-commerce-like experience In-store and online-offline integration
Reinventing the POS is part of a larger narrative that focuses on digitizing the physical store experience and online-offline integration. Computer vision and IoT in POS, for example, in addition to making it easier for shoppers to pay in-store and prevent loss, effectively connects the front-end (POS) with back-end operations (e.g. inventory management) for a better omni-channel experience and operations management. Additionally, shoppers expect greater e-commerce-like engagement in-store, such as scanning a product to gather more information such as customer reviews and item features.
Payment
Payment capabilities are becoming increasingly important in retail operations, especially with the expansion of digital commerce and omnichannel retail. We have noticed some providers announcing new payment platform offerings and new partnerships in the area.
As for in-store orders, digital payment can create friction if not executed well. With the proliferation of payment types available to shoppers and regional differences in preferred methods, retailers need to ensure they can offer a wide range of options.
Payments also need to connect with the entire customer journey and their personalization options, such as shoppers logging into their loyalty schemes or donating to their favorite charity when they check out.
Reverse experience
There is an increasing focus on back-office operations, which are essential for retailers to deliver a great customer experience across all channels. Along with the importance of personalizing the customer journey, what goes behind the scenes becomes key to meeting the expectations of increasingly channel-agnostic buyers. The reverse experience – improving operational efficiency to deliver great customer journeys – is one of the key themes of our research for 2023 (watch this space!).
One supplier told us that order management systems (OMS) are the power that enables omnichannel retail. We agree. Among back-office operations, logistics and fulfillment weigh on the profitability of retail operations.
In addition, the lack of staff makes it difficult for retailers to expand in the area. During our conversations at NRF, we encountered concepts such as automation in fulfillment (eg microfulfillment), democratization and uberization of last-mile fleets (joining forces with partners to extend last-mile delivery), and solutions for reverse logistics and minimizing returns. .
Employee involvement
The reverse experience also means focusing on people—not just customers, but employees, and how store associates can integrate the two parts of the shopping experience to provide the best customer experience by using the tools, the right tools and training. The role of the store associate is growing in combination with the essential role of retail in the post-pandemic omnichannel environment.
Immersive experience
Customers expect a consistent and enhanced shopping experience. This should have the power (and mystery) to transcend any discrepancies between channels.
Visual commerce is already a reality for retailers and brands aiming to increase 360-degree customer engagement. These include 3D visualization, live streaming shopping, product design, digital showrooms, virtual try-on, creation of personalized digital objects, virtual shopping assistants, customer support agents and human-generated content.
Data management
Customer data remains the fuel of the retail and consumer industry. Customer data platforms (CDPs) and data lakes have been driving collaboration between retail peers and brands. At the same time, AI and ML analytics are the building blocks that convert data into actionable insights, which are translated into better customer experience and personalization, data accuracy, data security, identity management, data privacy and regulatory compliance and leverage data within partner ecosystems to generate a new source of revenue streams (eg retail media networks).
Loyalty
Retailers always aim to grow and maintain loyalty to build strong and trusting relationships with customers. This has led retailers to mix and match loyalty schemes, moving beyond rewards and unlocking customer lifetime value.
The platform-based approach to loyalty capabilities that we heard about in several conversations throughout the event is a clear sign that both retailers and brands have realized how important customer loyalty and satisfaction have been, especially in during the pandemic. This has raised the bar on customer expectations and led to new forms of collaboration between brands, such as delivery subscriptions, by combining convenience, personalization and omnichannel.
State-of-the-art retail platforms
Commerce platforms are critical to retailers’ technology stacks. D2C retailers and brands are looking for agility and flexibility in their commerce architecture to achieve omnichannel-ready operations.
These were recurring topics in our conversations with trading platform providers during the event. Composability was the key feature of the next generation trading platforms at NRF. Composable commerce allows merchants to combine services or business modules without affecting other parts of the architecture. Simplifying UX and reducing the cost of experimentation are key goals of the next-generation commercial architectures we encountered at NRF, as well as enabling plug-and-play capabilities by ensuring back-end interface readiness, such as making product categorizations . ready to use across various buyer touchpoints, including mobile commerce apps and social media apps like TikTok.
Retailers are focusing on getting the core capabilities to meet the demands of an increasingly complex omnichannel environment, especially as the brick-and-mortar store again becomes the center of omnichannel operations and there is a strong need to combine online and offline and make physical experience more digital. This resonates well with the reverse experience narrative.
Themes that might have been more prominent during the pandemic, including the role of emerging technologies such as blockchain, NFTs, Web3 and the metaverse, were less visible this year. However, we don’t think retailers are turning their backs on more visionary topics. Rather, they are preparing their back-end operations for the future of retail – whatever form that might take.