In this exclusive, detailed report, our Editor describes the sights, the trends, the keynotes and the experience of this year’s National Retail Federation “big show”, which was held in New York City from 13th to 16th January.
If retail is, as National Retail Federation Chairman Terry Lundgren put it in his opening address, “a religion in New York”, then the federation’s annual “big show” is its evangelical cousin. On the one hand a febrile celebration of the singular passion of selling, raucous and rousing; on the other a humble homage to the social, environmental and economic responsibilities that have come to shape the landscape of twenty-first century retailing.
From 13th to 16th January, the NRF mounted the 102nd of these big shows, enticing 27,000 delegates – brand name executives, industry analysts and enterprise system programmers alike – with keynotes and breakouts dedicated to those same shared passions and responsibilities. And whether their expertise lies in branding, strategising, sketching, merchandising or store design, NRF 2013 demonstrated that the results of gathering the international elite in one place, on stage and on the expo floor, can be electric.
Lundgren’s metaphor was never far from my mind as I set out to cover this year’s massive, four-day show. With its stories-high glass panes keeping out the frigid Midtown air and reflecting the commotion from the show floor, the Jacob K. Javits Convention Centre felt like a crystalline Pentecostal church perched in the left ventricle of the Big Apple. Five football (the American kind) fields’ worth of floor space was given over to the expo itself, with more than five hundred vendors of everything from fully-fledged ERP and PLM solutions to waterproof point of sale devices clamouring for attention.
[quote]A little pleasure goes a long way, and every interaction with the product is an interaction with the brand.[/quote]
Needless to say, there was too much here for any one delegate to take in. Helpfully each day had particular presentations flagged as keynotes, meaning that I was able to distil the essence of the on-stage show whilst still having time to get out, meet with PLM vendors (each of whom volunteered for an exclusive interview, to be aired on WhichPLM in the coming weeks) and walk the carpets of the expo itself to learn about the trends and technologies that will shape the year to come.
Nowhere was that on-stage essence more succinctly captured than in the opening day’s keynotes, which saw Lundgren take to the stage alongside NRF CEO Matthew Shay, and a host of executives from Coca Cola, Walgreens, SAP and the Home Shopping Network (HSN) after a breathless performance from an America’s Got Talent dance troupe.
First amongst these was Lori Mitchell-Keller of SAP, who in a single sentence set the scene for all that would follow. “There’s a new nexus of forces”, Mitchell-Keller said, the likes of which we’ve never seen before. And social, mobile, cloud, and the fickle consumer are at the heart of it.” More specifically, she explained that, with today’s technology, so many “conversations” (I’ll call them interactions) happen between brands and their consumers that the opportunities for predicting their needs and desires are more frequent – and their content richer – than they have ever been before.
No other brand on the planet, I suspect, has quite as many of these opportunities for interaction as Coca Cola. And as Melvin Landis and Alison Lewis of the company took to the stage they revealed that Coca Cola sees 1.8 billion servings and opportunities for consumer connection per day. This is all well and good for Coca Cola, you may be thinking – one of the world’s most recognisable brands – but while your figures are no doubt more modest, this style of thinking really does signify a paradigm shift in the way that the most forward-thinking (and yes, richest) brands are approaching the market today. Coca Cola’s mission, to “create hope and bring friends and family together”, might seem like a lofty one for a soft drink, but it’s effective precisely because it draws so heavily on the product experience. A little pleasure goes a long way, whether it’s obtaining the perfect-fitting pair of jeans or twisting open a cold beverage when you’re thirsty, and every interaction with the product is an interaction with the brand.
As Alison Lewis put it, “marketers no longer own the brand; the market does”. It’s a stark message, but not a surprising one: modern consumers often care more about what the brand stands for than they do its products because the products have purposefully become almost indistinguishable from the brand. For a long time consumers have cared deeply about the people and the ethics behind their favourite goods, but only now, Lewis and Landis explained, have they been empowered with the actual tools – and those tools become entrenched enough – to make a difference to the everyday. This is a valuable lesson for a business of any size.
[quote]Not only is the customer always right, but he or she is always there.[/quote]
And more and more businesses are catching on, as keynote speaker Eric Qualman explained. With some plain statistics, Qualman showed that Facebook is both the number one activity on the web and, terrifyingly (at least for me, a man who uses it begrudgingly in his personal life) the “third largest country in the world” by volume. In fact, Ford launched a new Explorer model last year, on Facebook, and was able to achieve more exposure than it would have done with an advertisement placed during the Super Bowl – the high water mark of worldwide commercial expenditure.
“With technology”, Qualman explained, “the consumer can sell for or against your brand”. In many ways this principle isn’t any newer than Coca Cola’s assertion that the brand counts for more than the product: the mantra “the customer is always right” has dogged retailers for hundreds of years, after all. But what has happened, as Lori Mitchell-Keller hinted, is that a sheer confluence of factors has combined to extend that old adage to its ultimate conclusion.
Not only is the customer always right, but he or she is always there, ready and able produce and disseminate a great deal of qualitative data about their last interaction with your brand to you, your competitors, and their peers.
So, while you may not have Coca Cola’s 56 million Facebook fans or staggering worldwide market penetration (only two countries remain untouched), or Eric Qualman’s social media savvy, the key lies in engaging consumers with stories and experiences in whatever opportunities you have, letting them spread organically, and allow your brand to be culturally led. After all, that collective culture, empowered by the same technology that drives your trend analysis and marketing teams, is going to determine your success in today’s market whether you like it or not.
Closer to home but no less indicative of the connected future were the host of augmented reality and mobile applications on display on the expo floor. PLM vendors like TXT (now incorporating Maple Lake) and ecVision were demonstrating situation-focused applications that were designed the bring the benefits of touch interfaces and mobility to specific areas of product development (quality assurance, approval, collection and assortment planning, sales) rather than attempting to shoe-horn the entire PLM experience onto a device to which it is perhaps not best-suited. And, away from PLM itself, much was being made of location and context-aware incentive systems like Google’s Zavers, which I predict will be incorporated into NFC payment solutions to create a compelling mobile ecosystem where consumer loyalty is rewarded instantly.
Less ephemeral and far weightier, though, were the second day’s keynote presentations, beginning with an introduction by NRF CEO Matthew Shay. That morning, Shay reiterated the organisation’s recommendations for growth over the coming year (lower corporation tax, the opening of new markets, and a reform to the country’s visa system) and segued nicely into Kofi Annan’s sobering keynote by explaining that retail, on the world stage, means more than just profits and loss and products and lines; it means careers and communities.
Every inch the statesman, Annan began by taking stock of the geopolitical realities he had faced in his role as UN Secretary General (which he abdicated in 2006 and is currently held by Ban Ki-Moon), and how international businessmen and women – and there were certainly no shortage of either in the packed hall that morning, with a rumoured 3,000-strong Brazilian delegation alone – can help to prepare the communities in which they and their supply chain partners work for what he called “a strong transformational wind… one that cannot be easily stopped or controlled”.
As Annan spoke, I couldn’t escape the feeling that it was, well, awkward to be comparing something as evidently tragic as the Syrian conflict to quarterly earnings and footfall, but the spine that runs deep through both became more and more evident as the structure of his presentation developed. Infrastructure. Only infrastructure can build strong and stable communities, he said, and business can play an absolutely vital role in building the infrastructures of the areas in which it operates. This, as some of the more forward-thinking retailers have long known, is a moral and ethical imperative in modern business, as all too many retailers and brands have shouldered the social and economic consequences of inaction.
Asked by Terry Lundgren to look to the future, Annan predicted considerable growth in Africa, where six of the ten fastest-growing economies of the next decade make their homes. Similarly, he praised the continued growth of Brazil, China, South Korea and Japan. More importantly though, he argued through steepled fingers and in his trademark sincere baritone, retail can create jobs – something that we, a jumbled world, predicted to soon hit a population high of 9 billion, desperately need millions more of. By creating these, Annan explained, and building the incentives, communities and logistics that encourage export and supply chain partnerships in the developing world, the current technological and social revolution can have as large a positive impact at home and abroad as the industrial revolution ever did.
Almost absent from Annan’s farther-reaching overview, the US recession and fiscal cliff did not go unmentioned in addresses by Shay, Lundgren or incoming NRF Chairman (and CEO of Saks Fifth Avenue) Steve Sadove. Encouragingly, though, each spoke about them as a crisis mostly averted.
Almost untouched by this, in fact, was Lundgren’s Macy’s, a symbol of resilience and a beacon to retail fanatics, flashing in the cold of Herald Square amongst skyscrapers and fairy lights. It was with the knowledge that Macy’s had seen 4.1% year-on-year growth for December 2012 that I embarked on a tour of their luxuriant upper levels. Walking these timeless, Versailles-worthy boardrooms, champagne in hand, it was strange to even think of the recession, so prominently on show back home in the collapse of HMV. Can New York be so different to my home city of Manchester, I wondered? Obviously the city is notoriously resilient, but with crowds milling about on every floor of the famous department store, and an explosion of brands at every turn of the head, it almost seemed as though austerity was old news here.
[quote]Despite what I saw in the fairytale streets of Manhattan, the future, it seemed, must be walking away from the brightly-lit haunts of Fifth and Seventh Avenues, skulking home, and loading up Amazon.[/quote]
This wasn’t the case, of course. What I saw was not indifference, but the result of the fact that Macy’s, like much of New York’s retail, has already responded to the economic crisis – it’s battened down the hatches and sailed on. Like social media or e-commerce, today’s economic realities aren’t news to the savviest retailers – they just “are”. And the most forward-thinking amongst them have already incorporated their effects into their roadmaps and consumer engagement strategies, much as many up-and-coming brands have on our shores.
Indeed, Jill Puleri of IBM revealed in her earlier introduction to Eric Qualman’s keynote that they saw holiday sales across the US grow 12% year on year, and that in-store shopping still accounted for a majority (some $490bn) of this. These figures will differ around the world, but generally speaking it appears as though the incentive to shop is as strong as ever. But, Puleri added, of the majority that made purchases in stores, just over half intended to make that same bricks-and-mortar venue the destination for their next purchase. And of those who were choosing instead to shop online next time, the majority were in the vital 18-34 demographic. They were abandoning the high street for e-commerce.
Despite what I saw in the fairytale streets of Manhattan, the future, it seemed, then, must be walking away from the brightly-lit haunts of Fifth and Seventh Avenues, skulking home, and loading up Amazon.
But, as I saw from cruising purposefully up and down the aisles of the expo, this is something else that the best retailers and brands are already preparing for. Much was made on the expo floor of differentiating in-store experiences that were built upon the reams of consumer data and demand that exist online – what Puleri called the “digital exhaust of commerce – a more intimate, nuanced picture of your consumers”. And indeed, several large booths were given over to turning this ephemera into tailored experiences designed would attract consumers into stores by making the most of what exists online.
I’m dodging, of course, around the hot topic of omni-channel commerce.
“Omni-channel is the future”, as Joseph C. Magnacca of Walgreens put it. “Accessibility of information shapes our lives, so [omni-channel] is not about protecting yourselves from that, but leveraging it through immediacy in the consumer experience.”
Omni-channel, as Magnacca rightly said, represents the future of retailing, and the expo floor reflected the exhibitors’ and attendees collective desire to be ready for that future, sooner rather than later. From simple expediencies like moving the traditional point of sale to mobile devices that are able to access online catalogues, to more in-depth and tailored solutions like Adidas’s pioneering virtual footwear locker, omni-channel retailing is about using centralised information to deliver a seamless shopping experience, online and off.
And this was by no means all that the expo floor had to offer. PLM was out in force, as you might expect from a show that placed so much emphasis on information. I met with representatives of PTC, Dassault Systemes, Lectra, Centric Software, TXT, Computer Generated Solutions, Gerber Technology, NGC, ecVision, DeSL, TradeStone, SAP and more – all of whom were either exhibiting for or meeting with retailers and brands who appear to be, now more than ever, coming to understand that a rich, omni-channel future simply cannot take place without PLM.
[quote]So, while you may not have Coca Cola’s 56 million Facebook fans, the key lies in engaging consumers with stories and experiences in whatever opportunities you have.[/quote]
All of this is without my even mentioning the retail industry awards that saw a presentation on branding and responsibility from Donna Karan, and Jeff Bezos of industry wild child Amazon being presented with the NRF’s gold award for the year. Or the third day keynote from WalMart CEO Bill Simon, which had the oratory power to bring a lot of the audience to its feet as he talked about retail being “the greatest engine of opportunity in the US today”, and felt for all the world like being present at the filming of Citizen Kane.
Or the presentations by Story’s Rachel Shechtman, Warby Parker’s Neil Blumenthal, Square’s Sarah Frier and Zaarly’s Bo Fishback. Together, these four represented a real insight into the new face of commerce – from Warby Parker’s focus on product, to Story’s extrapolation of the “magazine concept” into a multi-storey building in Chelsea, and from Square’s revitalisation of the payment industry for retailers and consumers, to Zaarly’s innovative approach to allowing service providers to speak for themselves, directly to the people who need them.
In this sense – the meeting of the best and the brightest, their recognition, and their own opportunity to give back to the industry that has elevated them so – good retail is even more potent a religion than Lundgren perhaps realises. It’s a celebration of the best in the human spirit – not selling through duplicity and cutthroat practices as some might think, but focused in a meaningful way on giving people what they want and need.
[quote]“A strong transformational wind… one that cannot be easily stopped or controlled.”[/quote]
As Fishback put it, the technological revolution prompted an offline revolution, and its impacts are being felt on street corners and shop floors all over the world. Online services got people talking, sharing, working, living and loving together, and the humble high street store stands poised to be one of the most potent physical manifestations of the way in which each of these is cascading back into our physical lives.
So how does retail ensure its place in this offline / online future?
Do right, in a nutshell, and success will follow. It’s a principle that has built cities, felled banks and despots, and allowed some of the world’s most prolific retailers and brands – like Macy’s, like Coca Cola, like Burberry, Amazon, Faconnable, Coach, ASOS, Zara, DKNY, Louis Vuitton and countless others – to thrive by taking stock of what people want, and providing it to them without compromising the core aesthetic, ethical and economic values that attracted those consumers in the first place.
I may well have returned from New York and been almost immediately cut down by its flu epidemic (hence the slight delay in publishing this report), but more importantly than that I came home with a deeper understanding of what it takes to be “next” – a word that featured prominently on this year’s NRF branding.
More than just leapfrogging the competition or fighting the hardest for real estate, NRF 2013 explaining to its gathered, multinational crowds that retail today is about being next to celebrate how far we’ve come; next to recognise that in order to go further, we have to examine not just what we’re selling and what we’re doing, but the how and why of both, online and off. Do that, the Javits Centre and the city at large seemed to be whispering in concert, like a myriad monks cloistered all about the five boroughs, and we can all – retailers, suppliers, consumers and press alike – be next in line to inherit the future.
Look for our series of “NRF Conversations” – interviews with all of the PLM vendors who were present at NRF, about their predictions for the future – over the coming weeks, exclusive to WhichPLM.