Shoptalk is arguably the most exciting and informative retail conference out there. It’s an annual gathering of industry insiders and thought leaders that, in its fourth year, hasn’t lost its youthful energy. Close to 8,500 hundred people gathered in Las Vegas this year to talk shop and ponder the future of retail which—spoiler alert—includes stores.
Offline and online are now one line to the customer
At Nordstrom, more than 50% of store visits start online, while just under 50% of shoppers pull up something on their phones while in stores, Nordstrom President Erik Nordstrom said during an opening keynote. Close to 30% of the retailer’s online purchases start in stores.
Stores matter so much in this ecosystem that online sales are negatively impacted when a physical store closes (kind of like the retail version of when a bell rings an angle gets his wings). We have heard this time and again from big chains including Kohl’s and Macy’s.
In the end, it’s all commerce and both retailers and brands have to adopt a direct-to-consumer (DTC) mindset.
Direct-to-consumer brands grow up
DTC brands were more prominent than ever at Shoptalk, an event that kicked off four years ago with presentations from some of the biggest digital disruptors of the day – Harry’s and Dollar Shave Club. But something interesting happened on the way to Las Vegas for Shoptalk 2019, DTC brands have grown up and are serving as role models for legacy names.
Sure, Shoptalk had a good many digitally native brands talking about disruption again this year – Tuft & Needle co-founder JT Marino was refreshingly honest about the challenges faced as the brand matures – but the conversation has decidedly turned to partnerships and how to scale by building stores and expanding product offerings to further their reach.
Retailers are taking different tacks when it comes to DTC – some are buying brands outright (Walmart) while others prefer to form partnerships. “We’re not interested in buying a brand,” said Nordstrom. “The discovery of new brands, bringing the brand story to life – oftentimes that’s best in stores – that is our focus.”
DTC is also giving rise to a whole new retail ecosystem. Brandbox’s Kevin McKenzie explained how the company provides digitally native brands a way to experiment with brick and mortar stores for a lower cost of entry, while Tim Armstrong, former Google ads chief and AOL CEO, talked up his new dtx company that invests in DTC brands at the Recode Code Commerce event at Shoptalk.
“There are so many companies you’ve never heard of, there isn’t a DTC ceiling,” he said. “DTC will end up being a very significant part of the future.”
Charting the path
The customer journey is getting a lot of attention. We used to talk a lot about the path to purchase as it related specifically to the in-store endpoint, but it’s a new path that brands are charting to meet the customer, not necessarily where they are, but where they are in their purchase intent.
Figuring out how to balance the physical and digital is still tricky, as Nordstrom noted. “What is the right mix of assets?” Retailers like Nordstrom are struggling to know where all the points intersect, but technology is rapidly reaching the point of taking the mystery out of the shopping path. “We are trying to build ways to make in-store behavior as measurable and optimizable as it is online,” said Nordstrom. And to deliver messaging to both.
Search engines and online behavior track these digital signals and can help brands find their way along the path. The need for this kind of intent-based marketing will only grow and there’s little doubt that Shoptalk attendees in 2020 will be talking about solutions and sharing case studies on the topic.
The democratization of data
Data is always a big topic at any consumer-related industry event, but brands are beginning to look at how it’s being used differently, at least according to Shoptalk presenters. “The data issues are real,” Armstrong said, but creative use cases could benefit both companies and consumers, like making data transactional. “Consumers aren’t getting anything back from companies other than being bombarded by ads,” he said.
Data-overload and a lack of strategy on how to use data to connect is a constant challenge, notes Molly Hop, senior vice president of commerce media at Performics, a digital agency. It’s critical that businesses – or worse yet, departments and siloes within a business – look at data more holistically, rather than responding to a push to use it in some way. “In the world of endless data, the pursuit of solutions first, data second is the road to success,” Hop said.
“Democratize your data,” urged Sarah Engel, vice president of marketing and creative communications at Lilly Pulitzer during a fireside chat with Forrester Research’s Brendan Witcher. “Don’t let it get weaponized.”
Images reign supreme
It’s been said before but bears repeating: Amazon’s Alexa and voice assistants get a lot of attention, but there are other technologies with more immediate use cases. Case in point — pictures.
Visual search and image recognition are driving sales. Google is making image ads shoppable and Pinterest is now allowing retailers to upload entire catalogs, making the social platform easier to shop.
More than half of all consumers trust images more than textual information, according to a recent study by the Intent Lab, a partnership between Performics and Northwestern University’s Medill School of Journalism, Media and Integrated Marketing. This is particularly high, more than 80%, for apparel and home furnishings, driven largely by younger shoppers.
Image recognition will play a big role for supermarkets as grocery finally migrates online. It’s much easier to compile a shopping list by snapping pictures of labels, and new technology can identify the product and add it to an online shopping cart. Image recognition works when bar codes don’t, especially on fresh foods and produce that might not have one visible, according to Ted Mann, CEO of Slyce. In his conversations with grocery chains, he’s learned that “the No.1 goal of grocers right now is to get people to [choose] home delivery. Voice is a minor part of this conversation.”
Here’s a prediction for Shoptalk 2020: Video will become more a part of this solution. Already, 90% of consumers say they’re discovering new products and brands on YouTube, according to Google.
AI takes the wheel
“AI is clearly the engine driving commerce,” said Mike Micucci, CEO of Commerce Cloud at Salesforce.
Currently, 20% of brand marketers are using AI to some degree, according to a new study by Salesforce, while 40% of marketers are leading the brand experience. More dramatically, 75% of companies surveyed say they will be actively using AI in the next two years.
How that looks remains to be seen, but clearly, AI has momentum.
Personalization is a Work in Progress
Retail has been all about personalization for years now. It means different things to different retailers, and is definitely still a work in progress, but brands seem a little closer to figuring out what personalization means to them, even if they haven’t hit on any solid solutions as yet.
“Personalization is making the experience more useful to you,” said Tami Mahoney, executive vice president of marketing, eCommerce and human resources at Modell’s Sporting Goods.
In truth, there weren’t many actionable insights at Shoptalk about how to engage employees and deliver a more personalized experience. “We need to put the personal back into personalization,” according to Cassandra Steven, global commerce director at Zenith. “For most retailers, a majority of sales happen in store and that is the biggest opportunity to deliver personalized experiences and services. Enabling store employees and customer service teams to be key sources for shopper insight will ensure that future product development is tailored to customers’ feedback.”
Prediction for Shoptalk 2020: More sessions and solutions aimed at employee engagement. The National Retail Federation owned this topic at its Big Show in January, and Shoptalk has an opportunity to
A need for speed
“Too much of retail is deeply out of date. Retail is entering an era of monumental change and we are at risk of under innovating,” said Anil Aggarwal, founder and chairman of Shoptalk, during his opening address at the conference. “We’ve been too slow, we need to be more agile.”
It’s a sentiment echoed by Nordstrom President Erik Nordstrom a few minutes later. “We think we’ve been too slow,” he told CNBC’s Courtney Reagan. “We need to be more agile… to move faster.”
When asked by Recode’s Kara Swisher, “Who do you fear?” Hudson’s Bay CEO Helena Foulkes replied, “Our own inability to not move fast enough.”
It’s about innovation, not iteration
“The risk is to under innovate, not over innovate,” said Aggarwal. It’s a balancing act, to be sure.
As we heard time and time again, at Shoptalk and pretty much every retail conference in the past several years – the Amazon threat is real and retailers and brands cannot just be fast followers. They must lead, and in ways that serve their brand without mimicking.
“It’s a good time to invest in innovative advertising, because so many people are so fearful,” said Armstrong. The future belongs to the brave, even in retail.