NRF Show Review: Back to Retail Basics
Procter & Gamble’s Charmin has been playing with a robot that delivers a replacement roll of toilet paper to consumers who might be in urgent need of such services. Such is the state of the consumer goods industry these days.
P&G’s fanciful new consumer “solution” actually made its debut at CES in Las Vegas last week, and was only mentioned in passing by one speaker (see below) this week at the NRF Big Show, where consumer-engaging robots seemed far less prominent than they have been in recent years. And the robots that were on hand performed far more workaday functions like item-sorting and order-picking rather than executing such gimmicky tasks as P&G’s toilet-side assistance vehicle.
And that was appropriate for this year’s overall event, at which a very large, extremely energized group of attendees were treated to a wide variety of cutting-edge solutions incorporating the latest and greatest technologies — most of which seek to solve challenges and obstacles that have been hindering effective, profitable retailing for years: on-time fulfillment, shelf maintenance, workforce productivity and shopper analytics, to name some of the more common ones.
The industry has, thankfully, moved past the defensive, reactive posture of recent years and gotten back to a brass-tacks approach to improving their businesses. There seems to be a greater understanding among traditional retailers that, rather than being potential victims of seismic shifts in consumer behavior, advances in technology or the unstoppable onslaught of Amazon, they actually are in control of their own destinies.
Obviously, not every traditional retailer is going to survive the ongoing shift toward omnichannel commerce — especially since “omnichannel commerce” is rapidly evolving into “everywhere commerce,” where the dimensions of a physical store can be sized down to the size of a fitting room, where the fitting room concept can now be simulated on every smartphone, and where purchases can be made literally anywhere — even, ahem, when you’re waiting for the Charmin robot to arrive.
Poorly run retailers will still fail, as they always have, and failure might be faster and easier to achieve these days given the pace of change and the sheer number of purchase options available to consumers. But companies able to employ technology to keep pace with changing consumer behavior and shifting marketplace dynamics can still succeed.
Why? Because all of those younger, “digital native” consumers who we’ve been told have the same apathy toward brick-and-mortar stores as they do for landline phones and broadcast television apparently have changed their minds. Among the data points offered from Big Show stages this week: Although much of their purchase journey takes place through digital channels, 81% of teenagers say they prefer to shop in physical stores. If that doesn’t shock you, then consider this one: 98% of Gen Z’ers — who, yes, are largely teenagers — say they prefer to buy their products at brick-and-mortar. (I guess kids these days are acting more like their grandparents than their Millennial moms and dads.)
Granted, neither of those data tidbits came with any attribution attached, so anyone choosing to build their next business plan off them should be very, very wary. But such optimistic offerings reflect the far-more-positive tone evident at this year’s show. Traditional retail is not dead; it just needs to fix many of its legacy problems — the most critical of which is the ability to fully understand shoppers. From the look of things at the show this week, it now has most of the tools to do so.
To achieve that, retailers need to sort-of become technology companies, to go beyond simply contracting with third-party solution providers to develop their own unique internal expertise, according to one over-riding theme from the event.
While retailers need to adopt the necessary “commodity” technology to keep pace with the industry, they must also develop proprietary digital tools to differentiate themselves from the competition. "You have to be cool on your own. No press release with us is going to do that," advised Microsoft chief executive officer Satya Nadella during an opening keynote that effectively set the stage for many of the discussions that followed.
“We are still a retailer,” Ocado ceo Tim Steiner asserted during a day-two keynote, despite all the attention paid to the company’s cutting-edge supply chain capabilities, “We understand the nature of this business [in ways that] a technology company couldn’t or wouldn’t.” In another day-two keynote, Starbucks ceo Kevin Johnson said, “We want to be as good at [artificial intelligence] as any technology company,” albeit only in the context of its own business needs.
In that context, a tech partner is “providing the horsepower and the infrastructure capabilities to let them do that,” Rebecca Buisan, director of offering management for the Sterling Supply Chain practice at IBM (which actually works with Starbucks in some areas) told the Path to Purchase Institute.
As if in illustration, a number of main-floor exhibitors this year focused more on client case studies than on point solutions, “to move from showing widgets to showing transformative journeys” as Steve Laughlin, IBM’s vp-general manager, global consumer industry, put it.
And the same goes for consumer product manufacturers. “Technology is changing every aspect of what the consumer expects,” said Monica Turner, senior vice president-North America at Procter & Gamble. who was on hand to tout the CPG giant’s “High Tech, High Touch” initiative. One key aspect of those expectations: “They want to know that our brands are having an impact on the world,” she noted.
To achieve its new goals, P&G is shifting strategy across product development, packaging, advertising, retail execution and various other aspects of the business, and bringing more of those activities in-house because “we want to have our hands on the keyboard.”
Or on the robot’s remote control, as the case may be.