5 Takeaways From NRF 2020 Vision: Retail’s Big Show

Following are the key themes executives agreed will loom large in the decade to come.

5 Takeaways From NRF 2020 Vision: Retail’s Big Show

by Melissa Williams

Posted on 01-11-2020

As they do each January, retail leaders convened this week at the National Retail Federation’s annual trade show, in New York City, where they discussed the high-level trends that are shaping the way people shop.

CMO by Adobe also was in attendance. Following are five key themes that executives agreed will loom large in the decade to come.

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Social Shopping Growth

Social networks started as a way for people to share pictures and commentary online, but in the past few years they have also branched out to support e-commerce. Indeed, social media platforms like Facebook, Instagram, and Pinterest not only have a key role in consumers’ path to purchase, but they also are important for communicating with customers after making a sale, as several panel discussions at the NRF event highlighted.

One brand that has been benefitting is Rent the Runway, an online provider of designer dress and accessories rentals that generates significant word-of-mouth interest through social media. Fifty-three percent of consumers first hear about Rent the Runway through social posts from friends and colleagues, said Alicianne Rand, vice president of growth marketing at the company, during a panel discussion. The company also shares customer testimonials on social media, helping to familiarize consumers with its service.

“On paid social media—on Facebook and Instagram, particularly—we know a customer testimonial is a leading indicator of whether that paid ad is going to drive performance,” she said.

Another panelist, Amy Eschliman, senior vice president of client engagement at beauty retailer Sephora, cited social shopping as a key growth area.

While social posts offer an authentic connection to clients, “this does not preclude Sephora from being more commerce-oriented in our social posts,” she said. “We actually make a concerted effort to make it really easy to shop—trying to make that transition from inspiration to actually pressing a checkout button as easy as possible when the content is in that vein.”

During that same discussion, Facebook touted shopping features it has added to its platforms, including its Messenger app and Instagram. Asher Rapkin, director of global business marketing for Messenger and emerging platforms at Facebook, said shopping directly on Instagram is popular because it doesn’t require consumers to move off-platform to complete a purchase.

He also predicted that in-app shopping will become more popular with the launch of a universal payment platform where “users can leave their payment information on Facebook and have that move across different surfaces,” Rapkin said. “If we can continue to enable that, we believe that we’re going to see the distance between discovery and conversion greatly compress.”

Using Technology To Improve CX

No one is closer to a retailer’s customers than its frontline employees. According to many sessions and speakers at NRF 2020, successful retailers are starting to empower them with technology and data to help them improve the customer experience.

In a keynote presentation, for example, Starbucks CEO Kevin Johnson explained Starbucks’ “Deep Brew” initiative: an internal program that uses artificial intelligence (AI) to automate certain tasks, such as counting inventory and ordering new merchandise, freeing employees to spend more time interacting with customers.

“Over the next decade, we want to be as good at AI as any of the top tech companies,” Johnson said. “AI is about enabling our partners to connect with customers. It’s a human-first digital strategy.”

Hudson’s Bay Co. (HBC), the Canadian retail group that also owns the Saks Fifth Avenue department-store chain in the United States, is giving store associates the technology to personalize service for repeat customers. In the past year, Saks has provided 4,500 employees, who the chain calls “stylists,” with more data and software tools to help them maintain relationships with customers. The stylists can check what their customers are doing online, gather insights into their needs, and urge them to visit stores to make a purchase, said Helena Foulkes, chief executive of HBC.

The Saks team has been very smart about “using new digital insights and tools to empower our frontline employees to absolutely delight our customers,” she said.

Gen Z And The Rise Of Experiential Shopping

Another trend discussed at the event was the emergence of experiential retail formats to meet the needs of Generation Z, the demographic group born after the mid-1990s who is now reaching adulthood.

Aaron Levant, chief executive of NTWRK, introduced the company’s mobile shopping platform, which was created in the spirt of home shopping networks but aimed squarely at Gen Z consumers, he said. NTWRK features famous guests—such as rapper Travis Scott and actor Jonah Hill—and offers exclusive products for a limited time. The platform also provides streaming video and social media content to create shoppable episodes. Its daily live broadcasts are geared for viewing on mobile devices, Levant said.

Ben Kaufman, chief executive of Camp, a network of experiential retail stores with rotating themes, also discussed ways to engage younger shoppers. The chain’s five stores—three in New York City, one in Dallas, and one in Norwalk, Conn.—may look like a traditional toy retailer. However, each location has a “magic door” to lead shoppers through a tunnel to an experience that changes every eight to 12 weeks, he said. Themes include Base Camp, Travel Camp, Cooking Camp, and Toy Lab Camp.

Camp’s business model is based on three components, Kaufman said: selling products, selling tickets to experiences, and offering sponsorships to brands that can tell their own stories.

A Focus On Sustainability

Many retailers and brands that appeared at the NRF event had much to say about sustainability and all that it entails: ethical sourcing, fair trade, reduced packaging, and the growth of resale and rental services aimed at reducing waste.

One example was Lush Cosmetics North America. Heather Deeth (photo, above, left), manager of ethical buying at Lush, said the company was founded with six core values, including providing fresh cosmetics with production dates, ethical buying, a focus on handmade items, and stringent policies against animal testing.

“At Lush, we’re creating a cosmetics revolution to save the planet,” Deeth said. “I actually think we need a revolution. We all need to participate.”

Then there was West Elm. Jennifer Gootman (photo, above, center), vice president of social consciousness and innovation at the home décor retailer, said her company has followed a simple motto since its founding in 2002: “Get a little greener every day.” The push into ethical production and responsible materials has continued through the years, she said. For example, in 2014 West Elm became the first home retailer to become Fair Trade Certified. Two years later, it set companywide, public goals for responsibly sourced cotton and wood.

“It’s been an evolution, and it’s been a journey,” Gootman said. “I think for a lot of retailers that are really interested in this space, it’s important to recognize [that] everything happens at once. You can evolve and learn and figure out what’s material to your business and develop it from there.”

NRF also featured many speakers from fashion “re-commerce” companies—that is, companies that resell products or offer “thrifting” services. Growing consumer awareness of the environmental side effects of clothing purchases is driving the trend.

“We’ve always been believers that the pride of ownership is being replaced with the pride of access,” said Jennifer Hyman, CEO of Rent The Runway.

A Global Focus

One-quarter of NRF event attendees came from regions outside the United States, according to NRF president and CEO Matthew Shay, giving the exhibition an international and multicultural flavor.

China, with a rapidly growing middle class that has much better spending power than prior generations, took center stage. Several speakers discussed how they market to Chinese customers, especially through online marketplaces.

Christina Fontana, head of the fashion and luxury Tmall division of Alibaba Group, described how the company developed technologies and services that let brands speak to Chinese customers directly. The company currently has 700 million active consumers on the platform who, on average, open the app seven times a day look for content and see what their peers are doing, she said.

Fontana urged brands entering China to target consumers 10 to 15 years younger than they would in Western markets, and outlined the importance of influencers who reach local consumers. China’s consumers rely on recommendations from key opinion leaders and other customers, making them a key target for brands that want to stand out among rivals, she said.

Meanwhile, Erick Haskell, international president of footwear brand Allbirds, discussed how the company generated significant consumer feedback from its first week on Tmall. For example, it learned that 95% of Allbirds’ China sales come from mobile, compared with only 50% in the United States.

Another interesting insight: While Gen Zers in the United States tend to shop at discount stores, China’s younger generation is characterized by greater affluence, according to Deborah Weinswig, CEO and founder of Coresight Research. China’s consumers want to be more informed, generally requiring 12 touch points to convert to purchase, while the average U.S. shopper needs only four, she said.

Weinswig urged U.S. brands and retailers to create shopping holidays to drive sales. For example, China’s consumers celebrate four occasions a year that resemble Valentine’s Day, she said.

Looking Ahead

The retail industry is going through a period of massive upheaval, but people will always need to shop somewhere. Social commerce, experiential marketing, and improvements to the customer experience will be essential parts of the retail landscape in the next decade, along with environmental sustainability and global expansion, as NRF 2020 made clear.

Retailers that respond to changing shopping habits and consumer tastes will be best positioned for growth as these trends shape the marketing of goods and services for years to come.

“Listening, having a process, having a system, making sure we have the data we need—balancing all that with a little paranoia is probably what you need to be a great retailer today,” said Kevin Plank, executive chairman and brand chief at Under Armour.

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