4 takeaways from NRF 2021 — chapter one
By Stephen Frieder
Posted on 02-04-2021
“Retail’s Big Show” hosted by the National Retail Federation took place virtually this year, similar to other traditionally live events, such as the Consumer Electronics Show. Instead of bringing thousands of people to New York to gather for the event, I along with thousands of other attendees joined NRF 2021 — Chapter 1 in a series of online gatherings from January 12 to 22.
Here are four key themes from the conference that I think will be most beneficial and meaningful for retailers in 2021 and beyond.
Being truly customer-centric
Fostering a positive customer experience at every stage of the customer journey — from people discovering a retailer’s brand to forming a long-term loyalty to it — has become even more important amidst the disruptions of the global pandemic.
The health crisis and its economic effect led retail executives to reimagine their businesses while remaining fixated on their customers.
“It is really about being customer-centric and asking questions such as, ‘What do we do as a company that will give the customer the ability to shop any way they choose?’” Marvin Ellison, the CEO of Lowe’s, said during a session at the event. “As we think about all the ways that customers desire to shop, and all the ways that customers will probably shop in the future — that really dictates how we go to market internally and determines our capital span and our innovation strategy.”
The pandemic changed shopping behaviors as many people avoided stores, which forced retailers to adapt quickly to customer needs. In fact, 75 percent of U.S. consumers said they had tried a new shopping behavior during the pandemic, according to consulting firm McKinsey & Co. This general change in behavior has also affected brand loyalties, with 36 percent of consumers trying a new product brand and 25 percent trying a new private-label brand.
Because of this new consumer behavior, some retailers accelerated their timetables to invest in technologies for services including online ordering and curbside pickup. Instead of implementing them over the next few years, they had to pivot within weeks.
Athletic apparel retailer Lululemon saw a huge increase in online sales but was prepared to handle the higher volume. Its direct-to-consumer sales from its website and mobile app more than doubled to $710.4 million during the first nine months of 2020 from a year earlier.
Lululemon met that demand after three years of investments in digital technology to support extensive services, said Celeste Burgoyne, Lululemon’s president of Americas and global guest innovation.
“COVID has shifted the world in some ways and allowed us to take advantage of all the investments we’ve made in our digital ecosystem and leaning into our omnichannel strength,” she said at the event.
During the early days of the pandemic, Lululemon introduced its “digital educator” program to connect customers with store employees through video chats.
“It helps us bridge that experience and allows us to have our educators be at the center of both the physical and the digital experience,” Burgoyne said. “On Black Friday alone, we had over 4,000 live video appointments with our digital educators.”
Those value-added services helped Lululemon to distinguish its brand from the competition, and keep their customers front and center.
Pet supplier Chewy adopted a similar strategy as customer needs changed during the pandemic. The company accelerated its plan to launch a “virtual vet” service years before it had originally planned, Chewy CEO Sumit Singh said in an online presentation.
“We started to get calls in our customer service/customer experience centers where customers would be sitting at home saying, ‘Hey, my dog just ate chocolate, and I can’t get ahold of my veterinarian,’” Singh said.
The service is now available through Chewy’s website in 35 states, and the company plans to add video to the service, expand it across the country and serve pets beyond cats and dogs.
In a recent interview Singh said the service will deepen loyalty among customers, who may add more to their basket because it will keep the brand top of mind. He also said Chewy will explore ways to monetize the service in the future.
Focusing on sustainability
The role of sustainability in retail’s post-pandemic recovery was also a key topic at NRF’s virtual event. Fast-fashion brand H&M considers environmental awareness an important part of bouncing back from the crisis, said Abigail Kammerzell, U.S. sustainability manager for the company.
The growing “circularity movement” in the garment industry, which seeks to avoid filling landfills with discarded apparel, is changing how H&M operates. The company provides drop-off bins in stores to collect clothing for the secondhand market or to refashion it into something else. By 2030, the retailer wants to use only recycled or sustainably sourced materials in its collections.
H&M is “working with our customers and the supply chain to enable people who want to wear our clothing to do so in a manner that’s safe for the planet and for themselves,” she said.
Jennifer Keesson, U.S. sustainability manager for IKEA spoke about how overconsumption is a key challenge the furniture retailer company faces in this green recovery. To combat the challenge, IKEA has prioritized the sustainable sourcing of its products and is encouraging consumers to use their furniture for longer and for multiple purposes, she said.
As part of this effort, IKEA launched a “Turn Black Friday Green” campaign during the holiday season. “Rather than promoting a sale,” Keesson said, “we promoted things to do with furniture you already have.”
In another session, Shelley Bransten, worldwide corporate vice president for retail and consumer goods at Microsoft said consumers are closely watching retailers’ sustainability practices right now and they are choosing to do business with companies they believe are doing the right things.
“Sixty-seven percent of consumers are actually considering a brand’s sustainability practices when purchasing products or services from them,” she said. “They have more time, they are reading more content, and they want to know a brand’s supply chain and sourcing practices before they shop with a company. In fact, a company’s transparency, values and ethics have never been more important.”
Branston added that Microsoft is also focusing on sustainability and plans to be “carbon negative by 2030 and water positive by 2030, which means we are actually going to replenish more water than we consume.”
Reimagining the role of the store
Another key topic discussed at NRF 2021 was how the COVID-19 pandemic is forcing the retail industry to redefine the role of the of the brick-and-mortar store. As in-store traffic declines, more retailers are using their stores as micro-fulfillment centers and delivering e-commerce orders.
This is especially important given the fact that online sales are booming. In fact, during the first six months of the year, consumers spent $347.3 billion online with U.S. retailers — up 30 percent from $266.8 billion for the same period in 2019, according to a Digital Commerce 360 analysis of U.S. Department of Commerce data. to the U.S. Department of Commerce. Comparatively, e-commerce sales during the first half of 2019 grew just 12.7 percent that year.
“Last-mile distribution really gives a new life to some of these brick-and-mortar stores,” said Stephen J. Yalof, president and chief operating officer at Tanger Factory Outlet Centers, during another NRF session. “It makes these stores more valuable, and a more valuable store makes for a more valuable shopping center.”
Another benefit of making the store a hub of fulfillment is its role in reverse logistics.
“Malls and shopping centers can be ideal places to direct consumers to make their returns, since it gets them to a location where they are thinking about making a purchase,” said Bill Thayer, co-founder and co-CEO of logistics service provider Fillogic, during the session.
Experimenting with voice commerce
Voice commerce, or the practice of using voice commands with digital assistants to search for and purchase products online, was top of mind for retailers during several virtual sessions.
In one session, Kris Zanuldin, head of product at Amazon Pay/Alexa Money Domain, and Andrei Rebrov CTO and co-founder of luxury fragrance subscription service Scentbird, discussed how the COVID-19 pandemic has helped accelerate voice commerce growth. One reason? This type of commerce satisfies consumers who are looking for touch-free ways to make physical purchases, Rebrov said.
In addition, voice commerce has found success in part because “voice is many consumers’ most natural mode of communication and interaction,” Robrev added.
During their session, Robrev and Zanuldin highlighted two case studies of successful implementation of voice commerce tools in 2020:
- Scentbird worked with Amazon to add Alexa delivery notification features to its fulfillment infrastructure, helping keep consumers informed and engaged during the fulfillment process.
- Amazon worked with Exxon to implement voice-driven pay options at gas stations nationwide, enabling touch-free purchase options for consumers wary of touching public surfaces.
Moving forward, voice commerce appears poised to grow even further: Zanuldin cited survey data from Amazon indicating that one in five customers expect the proportion of purchases that they make over voice commerce to increase in the next two years.
No doubt the retail industry is going through a period of massive disruption given the reality of COVID-19. At NRF 2021, executives focused on becoming customer-centric and meeting their customers’ needs no matter where they are, implementing sustainable practices, using their stores as fulfilment centers and experimenting with voice commerce to succeed in 2021 and beyond. These trends highlighted and predicted at this year’s ‘Big Show’ should keep retailers on the right track.
Topics: Retail, Responsibility, Digital Transformation, Trends & Research,