Slightly delayed by the launch of WhichPLM Academy, our coverage of NRF 2014 resumes with the Editor’s annual report on the sights, sounds, trends and hot topics originating from the 103rd of retail’s “big shows” in New York City.
While retail has withered, bloomed, withered and bloomed again in recent years, the sheer scope and bombast of its “big show” have remained consistent. Every January, retailers, brands and hopeful technology vendors flock to New York City, descend on Hell’s Kitchen, and prepare for the biggest, brashest, most feverish celebration their industry knows.
In an era when retail itself is on increasingly unsteady footing, lumbered with the task of resurrecting economies the world over, the National Retail Federation’s conference and expo has carried on strong. And at time when non-essential expenditure like international flights and convention tickets are being culled in the name of austerity, the Javits Centre manages again and again to draw more than 30,000 delegates away from the pressing business of remaining afloat in a turbulent retail environment.
With a deafening opening ceremony by the New York Sticks drum troupe, the theatricality that’s defined the NRF show over previous years was present and correct in 2014, too. As I took my seat at one of the tables closest to the stage, though, I realised that this year all the pomp and pageantry actually dovetailed neatly with one of the show’s common themes. If – as keynote speakers and vendors alike proclaimed – retail is about creating memorable experiences, then every retail channel is in its own way a stage. They may not play host to blistering military drumbeats, but each medium of consumer engagement represents an opportunity for the most forward-thinking and commanding retail players to draw adulation – as well as for the quieter and more traditional actors to fade into obscurity.
It may sound strange for me to be drawing parallels between the proscenium arch and the shop floor, but at this year’s show I was by no means alone in doing so. From speakers like Twitter chairman Jack Dorsey, to ERP salesmen drumming up enthusiasm for their products in the clamour of the expo hall, NRF was abuzz with the concept of the consumer experience – that ineffable part of selling and buying that elevates good retail from the transactional to the theatrical.
And if retail is to be judged by that metric – as it seems it will, if flagship stores from the likes or Burberry are anything to go by – then it’s little wonder that the 103rd NRF Bacchanlia remained such a major attraction. As NRF Chairman Stephen Sadove (also CEO of Saks Incorporated) put it in his opening address, movies have Hollywood; retail has New York. And if Hollywood has the Oscars; retail has NRF.
He may not necessarily have meant them this way, but Sadove’s comments cut to the quick of what I believe retailers and industry analysts alike mean when they talk about that ephemeral consumer experience. New York City does not do things by halves: skyscrapers go up; neighbourhoods reinvent themselves before our eyes; and most importantly, visitors leave with a sense of having touched, seen, and been surrounded by something they couldn’t have experienced anywhere else.
New York brands itself extremely well. Every time you’ve seen somebody wearing an “I Heart NY” t-shirt, you’ve seen a new convert to the five boroughs experience – someone who came to New York, left satisfied, and is prepared to tell others about it.
If retailers can capture that, then I believe they will have tied down the essential nature of the modern consumer experience. More than money, they will have pocketed mindshare.
On that note, it’s been a recurring theme for the past few NRF shows that retail is inextricably tied to the global economy, and carries a heavy responsibility as a result. As a collective, retail provides jobs to a significant segment of the global population, putting more than a million people to work in the United States alone. The money that changes hands in retail channels – online or off – has the potential to underpin the viability of its host markets and transform the lives of its workers. But what the 2014 big show really drove home was retail’s potential to foster communities – to take the essential building blocks of commerce and use them to restore the point of sale to its rightful place at the centre of the human experience.
He may not have said it directly, but Sadove’s opening address – and the bustling surroundings of his hometown – effectively encapsulated the new retail mantra. Win hearts, and the wallets attached to them will follow.
That might sound a little cynical, but in practice it’s anything but. Yes, retailers have to turn a profit, and of course they measure their success at the rawest level in terms of units sold. But from the keynotes to the expo floor, I found at this year’s show a genuine commitment from retail professionals to living up to their industry’s potential – to recognising that although they shift SKUs, retailers are actually trading in so much more.
I may be about to risk losing the CFOs in the audience, but when it comes to being successful in 2014, the central currency of retail isn’t dollars or yen; euros or baht. It’s empowerment. The power to set up shop, open your doors, and actually change the essential character of a street. The ability to skip traditional channels and sell direct to consumers, responding in near-real-time to their demands. The ability to imbue your customers with a sense of pride in where they live, where they spend time, and with whom they spend money. And finally, the power to transcend the cash register or the online payment gateway and deliver a more complete experience that cuts to the very heart of human society – an experience that in turn creates enduring loyalty and profitability.
To demonstrate that I’m not entirely insane – or at the very least not alone in it – this reductive approach to retail was also central to a fascinating keynote presentation delivered by Rick Caruso of Caruso Affiliated, and a lively panel discussion that followed. Caruso’s company developed and owns a number of retail “properties”, the largest of which might be more properly referred to as standalone urban environments in their own right. His presentation highlighted two of these properties in particular: The Grove in Los Angeles, and The Americana At Brand in Southern California. Both were designed to create an idyllic retail environment, founded on the principles of community and the power of the shopping experience. Both are amongst the highest-grossing retail environments in the United States. Neither are what you typically think of when you hear the term “shopping centre”. And both embody the kind of next-generation thinking it takes to deliver a truly modern, transformative retail experience, as well as showcasing a demonstrable appreciation and understanding of its history.
In the more theoretical part of his presentation, Caruso was careful not to attempt to put his properties on the same level as locations like the Marrakech souk or the Champs Elysees, but rather sought to explore why it is that those places endure – and why, throughout some of the most difficult periods in our financial and social history, people have continued to shop.
It can’t just be because people need to shop, Caruso argued, otherwise mega-malls and department stores, with their sheer convenience, would be in the ascendancy, rather than sliding slowly into irrelevancy. No, people don’t just need to shop. People like to shop. So when we take account of the economic and, for want of a better word, spiritual aspects of retail, we come to understand that “the marketplace enriches us all”, as Caruso puts it. In more ways than just the literal.
This is why the Champs Elysees does more than just endure, and this is why the most prestigious retail locations are venerated as tourist attractions even in the age of e-commerce. Tellingly, this is one of the major reasons consumers come to New York, and remains a tremendous contributing factor in the NRF’s decision to continue to host its annual event in the Big Apple.
Most importantly, what Caruso and his team are building is exactly what a host of exhibitors set out their stalls this year to convince retailers they could help to provide: a transformative, unified, and truly modern consumer experience.
Sadove also touched on this in his welcoming remarks, acknowledging retail’s status as a breeding ground for innovation, and if my extensive tour of the adjacent expo floor (with a series of exclusive vendor interviews to follow shortly) was anything to go by, innovation was certainly not in short supply this time around. But unlike previous years, that innovation did appear to be clustered around a common theme, with even small point solution vendors eager to explain how their products fit into the cohesive, interoperable future.
The experience trumps all, then, whether it’s the direct consumer experience or the seamless staff experience of working with a unified or integrated suite of back-end solutions. As Blake Nordstrom (CEO of American retailer Nordstrom) highlighted during the panel discussion on which Caruso also sat, to the end consumer it doesn’t matter whether your head office or your supply chain partner is to blame for a delayed or unfulfilled delivery. To that customer, the individual systems that conspired to create the failure are irrelevant – it’s the inconsistency in the expected experience that counts, and the way in which it detracts from what modern, hyper-connected retail should be.
In lot of ways, as we’ve already seen, this philosophy shaped the exhibition styles of virtually every vendor on this year’s expo floor. From PLM to ERP and everything in between, suppliers were keen to talk up their seamless concept-to-consumer capabilities. And as Peter Bambridge has already highlighted in his “12 Insights from NRF 2014” this extended to traditional ERP vendors claiming some degree of PLM functionality, as well as PLM mainstays improving the way they articulated their solutions’ place at the centre of the new consumer and software paradigm.
From a PLM perspective, almost every major vendor was present, and readers should look for interviews with PTC, TXT, Infor, ecVision, SAP, TradeStone, Dassault, CGS and others over the coming weeks. I was keen to get each vendor’s opinions on PLM’s place within the retail cycle (not to mention its position at a retail show so focused on holism) and the insight they offered should provide you with some strong indications as to their priorities and strategic directions for the coming year.
Notable in their absence this year were NGC, Centric and Lectra. To the best of my knowledge these companies have not exhibited at NRF in previous years, either, but I do hope to have the opportunity later this year to learn what these three very different vendors think about the unified, omni-channel development and retail environments that analysts seem to agree will come to define our industry’s near-term future.
The phrase “omni-channel” itself, though, has become a troublesome one in very short order – not to mention one that could see you shooed away from certain exhibition stands. On the lips of everyone from IBM to Oracle last year, “omni-channel” is now widely considered to have been one buzzword too many – the straw that broke the camel’s back when it came to compartmentalising and branding concepts that many people considered to have been simple common sense.
For several key speakers at NRF 2014 – including Build A Bear CIO Dave Finnegan – “omni-channel” has become an entirely unnecessary term, since the concepts it was designed to articulate are now ubiquitous enough that they can more simply and accurately be called “modern retail”.
For example, as part of the same CIO Council roundtable that Finnegan led, Etienne de Verdelhan of L’Occitane en Provence explained that the concept of channels is irrelevant to the customer. For the executive, phrases like “channel blurring” and “unified intelligence” are commonplace, but the consumer simply wants a consistent experience whether they shop online, in-store, or via a mobile device. And, de Verdelhan said, that consistent experience should be the driving force behind retailers’ investments in technology at every level.
This was a sentiment echoed by Janet Sherlock of Carter’s Incorporated (another CIO Council member), who explained her belief that technologies from EPOS to e-commerce are converging around the goal of delivering a consistent, central transaction and communication platform, where a consumer can begin their interest in a product on one medium, and finalise it on another.
And for Allan Smith, CIO of Lululemon Athletica, and the final member of Monday’s CIO Council panel, the holy grail has always been “one guest experience” irrespective of channel or platform, and enabled by quietly integrating technologies that have hitherto been disconnected.
The impact of this might escape the speed-readers amongst you, so I’d like to emphasise it. These are some of the retail industry’s most senior information technology professionals – people whose entire careers were forged at the intersection of silicon and commerce – arguing the case that technology should always be subservient to the consumer experience.
As Smith put it, remaining competitive in today’s retail and brand environment relies on your “having the flexibility to add new parts to your unified ecosystem”. And whether they’re talking about a point solution of limited scope or an enterprise-spanning implementation, those in the know are convinced that the true value in technology rests in its ability to disappear and become a seamless part of a coherent whole.
This is a message we’ve long preached here at WhichPLM, and one that has underpinned the strategies of some phenomenally successful retailers and brands. Where PLM is concerned, in particular, the words of Smith, Sherlock and de Verdelhan are incredibly timely: along with the explosion in functionality and adoption has come the realisation that a broader range of people than ever before are working either directly or indirectly with PLM. By extension, this has created a proliferation of stakeholders – from the designer to the executive – and shifted the perception of PLM away from being the preserve of the CIO and his or her team.
Today, technology for retail, footwear and apparel is properly seen as a whole-business initiative, and its selection must by necessity take account of the needs of a host of different users and processes – some operating across multiple continents. As a result, the success of PLM in the fashion and retail environment (and certainly on the expo floor, as evidenced by most vendors’ approaches this year) is contingent upon it delivering value to the business as a whole, rather than to one or several isolated processes.
While its implementation is and always will be a technological discipline, the potential to understand, select and work with PLM is now within everyone’s grasp – driven by improvements in education, accessibility and the user experience. And while every business needs to become technologically minded in order to deliver against consumer expectations, the work put in by vendors over the past few years means that not everyone on their payroll need become a technologist.
The strapline for this year’s NRF show was “perspective elevated”, which followed 2013’s stark “NEXT” in the grand tradition of vague but portentous-sounding exclamations. The 2014 tagline, though, had a kind of substance to it – one underlined by the paradigm shift I’ve just highlighted in the way retail and enterprise technology is marketed, sold and consumed. Whether they dealt in graphical point of sale solutions enriched by assets from a digital store, or traded in a long-proven and monolithic ERP platform, the 550 vendors and solution providers who thronged the Javits Centre expo hall were, like the retailers jousting for position on 5th Avenue selling parts of a dream. The dream of an interconnected and interoperable environment that can elevate retailers and brands beyond the raw technology level, and empower them with a new perspective on the consumer experience as well as their own.
WhichPLM has long extolled the virtues of using PLM to consolidate and centralise previous-cleansed “master data”, since this is the quickest and most effective way of reducing data redundancy, data duplication, versioning conflicts, and poor visibility. The best PLM vendors, too, have always placed these kinds of capabilities high on their feature lists, enabling their customers to create the fabled “single version of the facts”, accessible from anywhere. And that accessibility may just prove to be PLM’s trump card as more retailers and brands begin to seek out ways to solidify their grand designs for an interconnected future.
Indeed, this year’s expo floor was characterised by demonstrations – from Microsoft to Motorola – of how a single source of product information can be used to enrich everything from in-store touchscreen experiences and smart shelves, to three-dimensional store planning inter-continental materials management.
That last line is a reminder that, while NRF does cover a host of verticals, apparel, footwear and accessories remain perhaps the most potent distillation of the retail experience. It’s within these most approachable of consumer-facing businesses that the most exciting technological developments take place. It’s for this reason that the veil between retail and technology is at its thinnest in the apparel industry. And it’s little wonder, then, that consumer electronics giant Apple just last year poached CEO Angela Ahrendts from Burberry to head up its retail division.
That co-mingling of fashion and technology is something noted trend forecaster David Wolfe highlighted in his presentation and on-stage interview, arguing that technological trends will soon become more closely mirrored in style trends. Indeed, Ahrendts’ hiring to such a prominent position within what many would argue is the world’s foremost digital lifestyle brand certainly suggests that wearable technologies and truly transformative in-store experiences (like those found at Burberry’s digital-first Regent Street location) will no longer be the preserve of either the technology or fashion industries.
In fact, Apple’s recent release of iBeacons – small and very specific geo-aware tags designed to alert shoppers to deals and other context-sensitive information – and the slew of rumours suggesting the company will soon embrace the “smartwatch” or “smart band” wearable computing concept certainly suggest that talent will not be the only commodity exchanged between different retail verticals in the near future.
In many ways, this cross-pollination of executives and ethos is mirrored in the coming-together of consumer-facing names and back-end technology that keeps NRF feeling fresh, year-on-year. Although at first blush it’s easy to draw a line between the different kinds of exhibitors that make their homes on the expo floor, in fact the annual big show, by placing point of sale solutions adjacent to PLM vendors, underlines just how much they have in common. New York might be a Mecca for retail of all shapes and sizes, but the NRF show floor is where technology has the chance to shine, revealing its collective potential to bring together designers, material vendors, marketing departments and sales associated, and united them on a common platform, serving a common experience.
That surface duality and underlying complexity is something that was perhaps best captured by Jack Dorsey, whose keynote presentation on the show’s final morning examined the missed consumer engagement opportunity that is the paper receipt. More generally, though, Dorsey (who is also CEO of mobile payment processing company Square, in addition to his role with social media juggernaut Twitter) talked about what he called “the tangibility of technology”.
As Dorsey put it, technology is a tool – a great tool, but nothing more. And while modern innovations like mobile devices and cloud computing are often hailed as “disruptive”, he prefers to think of them as “radical”. Technology to Dorsey – things like Square’s ingenious iPad point of sale hardware – has the potential to transform outmoded ways of thinking, but it should always be deployed with an end goal in sight, rather than simply heralding change for chaige’s sake. In this case, Dorsey said, “cohesion” is the watchword.
Similarly to Caruso’s keynote, Dorsey, a consummate executive and a surprisingly humble presenter, also discussed the innately human experience of commerce. Square was founded on the principle that human beings were trading goods and services before we developed language, but that today whole segments of the commercial sector are excluded from selling and engaging because they do not fit into the traditional mould.
By democratising payment processing, Square (and now the Square Wallet application) sought to put tools into the hands of merchants that would place them back on the frontlines of the consumer experience, becoming “merchants” and finding their closest historic analogue in the old-time shopkeeper.
In a very important way, then, Square serves as something of a model for retail technology. Discrete and democratic. Cohesive and connected. Mobile and memorable. Like Dorsey himself, Square (and many of the other numerous solutions that glittered from the Javits Centre booths) is a kind of Trojan Horse – an approachable face on the cold, hard fact that “retail’s big show” might for all intents and purposes now been called “technology’s big show”, so intertwined have the two become.
As Dorsey would tell you, “the best tools are the ones you build for yourself”. And as the CIO Council and the phalanx of vendors who set our their stalls from January 12th to January 13th would say, if people need retail, then people need technology.
It’s that essential truth that has kept NRF’s banner flying high, and it will be that same maxim that ensures retail continues to thrive in the face of adversity – particularly in partnership with technology. After all, those two seemingly-disconnected disciplines might have drawn together originally out of necessity or convenience, but today they’re actively uniting around a common commercial goal.
And I’m certain that at NRF 2015 and beyond, the two will continue to grow symbiotically, and be deployed together in a way that serves a growing number of essential human needs. The need to make. The need to buy. And the need to live and work together.