NRF 2016 DAY 3 JAN. 19

Transcription

1 NRF 2016 DAY 3 JAN. 19 Day 3 s keynote presentation featured a discussion between Macy s CEO Terry Lundgren and American Express CEO Kenneth Chenault on digital transformation. Other highlights included presentations on personalization, the retail promotional environment and how retailers can improve their omni- channel initiatives. Executives from Williams- Sonoma discussed how the company leverages data. Leading Digital Transformation in a Rapidly Changing Industry: A Conversation with Kenneth Chenault Tuesday s keynote session was opened by Mindy Grossman, CEO of HSN, who shared some thoughts on the overall retail industry and its future. Grossman noted that if you are not willing to disrupt, you will be disrupted. She pointed out that the conversation has changed over time from multi- channel to omni- channel to disrupted commerce, which refers to consumers being able to purchase any product, anywhere, at any time. It is boundaryless retailing. Grossman said, It is no longer enough to attract customers to stores and communicate with them there retailers must be able to attract consumers wherever they are and communicate with them wherever they are. The new POS is wherever the customer is; the customer is demanding a higher level of engagement and relevancy. Terry Lundgren, CEO of Macy s, then hosted a fireside- chat type of session with Ken Chenault, CEO of American Express. Here are key highlights from their conversation: No matter the size of your company or the length of its existence, it is critical to continuously reinvent yourself as a company and adapt to the changes in your industry. One of American Express s slogans is you innovate or you die. Constant reinvention is about service, trust and integrity with regard to your customers. 1

2 It is crucial that companies know what their core values are. The core value of American Express is service. Understanding your point of differentiation from your competitors and what you offer the customer is key. You must understand the unique attributes of your business model, Lundgren said. It is also important to be hyper- aware of your customer s needs from a holistic perspective rather than focusing on the particular needs you may have met in the past. You have to be willing to cannibalize yourself. You also want to be where your customers are you need to be in the right place at the right time with the right offering. The convergence of offline and online has clearly been an important change in the retail industry and has affected the payments industry, as well. American Express is working to figure out how to best integrate the two in order to deliver services that do two things: improve the efficiency of how the company interacts with its customers and better leverage the data generated from both American Express s merchant partners and consumers. American Express wants to be able to personalize a customer s shopping experience by using the vast amounts of data it collects. Coalition rewards such as Plenti are a more recent phenomenon in the US, brought over from Europe. These programs let a customer spend at one retailer and earn points that can be used at many other retailers. American Express is working to understand how it can help its partners and take a much broader view of the customer in order to provide better service in terms of membership rewards and other services such as Platinum offerings and Centurion lounges. American Express was originally launched in 1958 to deliver services to business travelers. The company did more than facilitate payments, though; it helped along the entire travel experience from beginning to end. And that is what it is working to do in mobile and online commerce. If the company only facilitates payment, it will ultimately become a commodity. In the Q& A session, Chenault was asked if he had any advice for new entrepreneurs; about the future of plastic credit cards, mobile payments and cryptocurrency; and about his outlook on the future of American Express s business. As a company, American Express spends a lot of time with startups all over the world, and Chenault has gained insights about the market and new technologies through these interactions. He encouraged the audience to ask themselves what some key customer needs they can address are and what sustainable advantages their business might have. He advocates partnerships between established companies and startups as a great way to lead to profitability over time. Chenault is confident that plastic credit cards are not going away soon. Nevertheless, American Express is actively building partnerships with Apple Pay and with mobile apps such as Uber and Airbnb. He added that the mobile payment market is still in its early stages and that no one payment method has everything that consumers want. He drew similarities between his company s points- to- pay system and cryptocurrency. He also noted that the boundaries are coming down between geographical regions and between businesses. 2

3 Getting Personal Through Customer Science Yael Cosset, CIO of 84.51, and Matt Thompson, VP of Digital Business at The Kroger Co., did a joint presentation on how to achieve personalization through data and customer science. Cosset kicked off the presentation with an anecdote about growing up in a small village in France and having to go to the local butcher as one of his chores when he was a child. He relayed that sometimes he forgot what his mother asked him to pick up, but that the butcher knew his family and their habits and could always fill in the order for him, as he did with all the other families in the village. That level of personalization is ultimately what Kroger is trying to reestablish, but on a much larger scale, according to Thompson. Kroger wants to create more personalized, relevant experiences for customers and bring the retail touch back to its stores, ultimately benefiting both the customer and the company. That creates loyalty, and when customers are loyal, they become immensely more valuable. One loyal customer is worth eight non- loyal customers to Kroger. The more you know about how customers shop, think and behave, the better the experience you can give them in terms of personalized offers, services, prices and promotions. In addition, more loyalty leads to a better understanding of the customer, which lets the company provide a better experience, which makes the customer more loyal it is circular. The use of data and analytics has evolved over the past several years. Kroger now seeks to know customers as individuals instead of segmenting and clustering them into groups based on commonalities. Kroger wants to understand each customer s circumstances, community and behavior in order to understand the customer himself or herself. The current relationship between Kroger and is not focused on a short- term project. Customers are constantly changing and evolving, and Kroger plans to continuously adapt. The company wants to take a longitudinal view of its customers, so as to understand them holistically. Kroger is trying to avoid bombarding customers with too much information or the wrong information at the wrong time. It is taking a diligent approach to utilizing the data it gathers in order to provide customers with relevant information and offers. The company has identified the personalization trifecta as big data, customer science and technology. The Race to the Bottom and How to Win in the World of Insane Price Promoting Speakers: Andrew Mantis, EVP of Checkout Tracking at NPD Group and Robin Lewis, CEO and Founder of The Robin Report Markdowns are not uncommon in today s highly promotional retail environment. Robin Lewis noted that one common promotional activity, the e- commerce model, was unprofitable. He also mentioned that the US has an oversupply of retail real estate. Finally, he stated that consumers wallets are not growing, and that retailers have often defaulted to competing via price promotions. Andrew Mantis presented NPD s exclusive data on receipts. He explained that receipts are diamonds in the rough. A lot of information, including address, date and time of transaction, and purchased items are found on receipts. Mantis also noted that discounts are not only for bargain hunters; some luxury buyers also like to shop for 3

4 value. Retailers need to figure out which of their competitors consumers are going to and what those competitors value propositions are. Experiential and personalized offerings are not one- size- fits- all. Mantis noted that Nike, REI and lululemon are at the forefront of establishing customer loyalty through the in- store experience. Physical or Digital? The Choice Is BOTH Participants: Courtney Reagan, CNBC Retail Reporter; Steven Lowy, Co- CEO of Westfield Corporation; Sir Charlie Mayfield, Chairman of John Lewis Partnership; Kevin Plank, Founder, Chairman and CEO of Under Armour Westfield Co- CEO Steven Lowy focused on collaboration and how beneficial it would be for retailers and mall owners/operators if they shared data and used it to provide a seamless experience for customers. Lowy believes that collaboration is the new competition. He said that customers are not aware of who generates data or who uses it all they are concerned about is their experience. In the future, Lowy said that a mall might recognize a customer s license plate and direct him to the closest parking spot, then provide him with a personalized shopping experience that includes alerts based on what is on sale in the stores where he has previously shopped. Westfield continues to invest in the brick- and- mortar retail experience and is pouring $11 billion into new centers in cities that include Milan and Rome. Lowy believes malls will be a central part of people s lifestyle in the future, and that they will feature food, shopping and entertainment. Sir Charlie Mayfield began his presentation by outlining John Lewis s business. The company operates John Lewis department stores as well as Waitrose, an upscale grocery chain. John Lewis stores are a bit different than traditional American department stores: the mix is one- third apparel and beauty, one- third home, and one- third consumer electronics and appliances. Mayfield said that 40% of John Lewis s holiday sales in 2015 were generated online, as were 15% of Waitrose s, a significantly greater proportion than for any comparable retailer. He noted that80% of the company s best customers shop both in stores and online and that 75% of all transactions include some component of both brick- and- mortar and online. Mayfield s main point was that retailers must focus on the customer and not on the channel they shop in. Under Armour s Kevin Plank said it was important for brands to tell a story, and then he told one of his own. When he was a college athlete playing football, he noticed that he and his teammates had to change their undershirts frequently because they quickly became soaked with sweat. That led him to base the company around a compression shirt. The offering has since expanded, but shirts and shoes remain Under Armour s core offerings. The company s retail channel began as a liquidation experiment and later became a way for the company to communicate its brand messaging to consumers. Plank also talked about the company s connected fitness initiatives with various apps. The idea is that the more Under Armour knows about its customers and their health and fitness, the better it can engage with them and, ultimately, the more shirts and shoes it can sell. 4

5 Connected Stores: How to Serve the Digital Customer This presentation focused on how retailers can improve their omni- channel initiatives. Bernardine Wu, CEO of FitForCommerce, talked about the hyperconnected digital customer and how stores continue to experiment and innovate to improve the shopping experience. The session highlighted what brick- and- mortar stores can do to innovate their digital capabilities, from making their stores data- equipped to installing smart mirrors and smart dressing rooms. Wu shared results from the NRF- FitForCommerce Omnichannel Retail Index study, in which FitForCommerce analyzed 120 web stores and mobile sites and visited stores to collect data. Two questions discussed were: What can a retailer do to improve the omni- channel experience? What factor differentiates retailers? Her research indicated that 86% of customers want access to their shopping bags on multiple devices. As to what differentiates retailers, the top answer (44%) was offering free return shipping as a normal course of business. Fred Argir, Chief Digital Officer of Barnes & Noble, Nook, and Healey Cypher, CEO and Founder of Oak Labs, discussed how the retail landscape has changed. In the past, stores competed in terms of location, proximity and square footage. Today, stores compete in terms of providing an experience, and they compete with restaurants, cafés, concerts and other entertainment events. The presenters framed the process of digitizing the store experience and serving the digital customer in terms of three steps: 1. Digital funnel: Take a data- driven approach that lets you focus on the best bang for your buck. When you enter a store, it is similar to the home screen on a website; you are either searching for something you like, or are looking to get excited by something you see. 65% of customers will not ask for help if they see a product they like. If a line appears to be longer than seven minutes, 79% of customers will walk out. Retailers must use data in- store to improve the experience. 2. The right tools: Implement the right tools in order to create real insights versus vanity metrics. What is the index that matters most? The right tools can help you generate insights and assess what is happening; online data are not inherently superior to in- store data. 3. ROI: Prioritize easy wins and focus on ROI. Focus on dollars per square foot, but also on touch points on the path to purchase. E- Mazing The Unstoppable Power of the Online Marketplace This session focused on why retailers should embrace e- commerce marketplaces as part of their global growth strategy. On the panel were Jordan Sweetnam, VP of Global Seller Experience at ebay, and Ryan Miller, VP of Global E- Commerce Strategy at Rakuten. The panel discussed the role of marketplaces in retail distribution and cross- border trade. A study conducted by Forrester Consulting on behalf of FedEx in September 2014 found that cross- border shoppers strongly prefer a multibrand online retailer or marketplace. While such marketplaces offer fewer customized options, integrated payment methods, loyalty payments and immediate foreign reach outweigh the negatives. 5

6 Nearly one- third of all e- commerce in Japan happens through Rakuten s platform and more than half of all e- commerce in China is through Tmall. The panel also raised the question of How do I prepare to enter a foreign country? Miller answered, saying that a retailer must prepare in four key areas: 1. Merchant requirements: local business entity, local bank account 2. Shipping/logistics: freight- forwarding model, in- country warehousing 3. Customer service: local /telephone support in local language, return policy 4. Store operations/content: adding products, updating prices The main message was: Don t just translate product descriptions and content, localize! Miller also said that retailers must understand that the dimensions for apparel sizing vary by country and that each country has unique characteristics. For example, 69% of Internet users in China have made a purchase via smartphone and 99% of the Japanese population speaks Japanese almost exclusively. OtterBox was cited as an example of a company that did a nice job with customization. Sweetnam discussed the global opportunity to fuel business growth. He presented some statistics about ebay today: 53% of gross merchandise value involves a mobile touch point, there are 159 million active ebay buyers globally, 57% of sales revenue crosses borders and there are 800 million active listings. Retailers that sell on online marketplaces are growing faster than traditional businesses are they have seen 20% year- over- year growth in the US in the last five years compared to 6% retail growth and 16% overall e- commerce growth. They are also exporting to more countries globally; 59% of US sellers export to more than 10 countries versus 8% of traditional businesses. The data presented showed that growth is fueled by global trade. Expanding globally allows retailers to address concerns about seasonality and availability as well. Cross- border selling on marketplaces is a great way to boost sales. Focusing on products that are unique or that have a pricing advantage is a nice starting point. Localizing product content, not just translating it, is a more effective approach. Killer Apps, Beacons, Wi- Fi: Revitalize the Brick and Mortar Experience Speakers: Chris Kozup, VP of Marketing at Aruba and John Paul, CEO and Founder of VenueNext This session took place in two parts: the first was a presentation by a representative from Aruba, and the second was a presentation by VenueNext, a satisfied Aruba customer that has successfully deployed Aruba s wi- fi routers and beacons in stadiums and public spaces. The first part of the presentation was launched with a statistic: 84% of consumers use mobile devices, computers and in- store technology for purchasing decisions. The speaker s remarks centered on the need for retailers to embrace online shoppers and find a way to connect with consumers online personas. Aruba surveyed 400 attendees at NRF and found that 57% of respondents would rather use their mobile device or app than speak to a human. To do this, and keep shoppers informed and delighted, Aruba offers an Engagement Toolbox, which provides retailers with context- aware wi- fi and analytics and beacon- based location services, al though retailers have to integrate their back- end systems. 6

7 The second presentation was from VenueNext, which successfully deployed 2,000 beacons in Levi s Stadium in the San Francisco Bay Area. The system integrates beacons and a context- /location- aware app to know where visitors are at all times, whether in the stadium or in the parking lot, before or after the event. The app manages tickets and parking for games/concerts/events; food, beverages and merchandise; loyalty and experience; and wayfinding. For example, attendees use their phones to order food, which arrives within six minutes. The beacon system brought $2 million in additional revenue from higher sales of food, beverages and merchandise, in addition to preventing lost revenue from fake parking passes. At one venue, attendees can use their app to notify the venue that they are unable to attend. The customers receive reward points, and the venue is able to resell their seats and prevent the unpleasant appearance of empty seats. Mid- Market Retailers Get Competitive with RAIN RFID Inventory Intelligence Moderator: Eric Brodersen, President and COO of Impinj Speakers: Jonathan Jenkins, Founder and CEO of ShopWithMe; Hans Petter Hubert, Retail Director at Moods of Norway; G- Star RAW Impinj is a leading provider of RAIN RFID solutions, which deliver item intelligence, physical items unique identity, location and authenticity to the digital world. Its platform connects billions of everyday items such as apparel, medical supplies, automobile parts, drivers licenses, food and luggage to applications such as inventory management, patient safety, asset tracking and item authentication. RAIN RFID is a wireless technology that connects billions of everyday items to the Internet, enabling businesses and consumers to identify, locate, authenticate and engage items. It is based on a UHF RFID protocol standard developed by GS1 and ISO. ShopWithMe offers fully portable, prefabricated retail environments that blend online and offline shopping to create a truly personalized experience. Moods of Norway is an original fashion brand with 18 stores that sell everything from waffle irons to menswear and womenswear. The company initially used RFID for replenishment and expanded its use to improve delivery, embarking on a deployment of omni- channel two years ago. G- Star RAW (or G- Star) is a Dutch designer clothing company. Although RFID seemed to be for larger companies, not midmarket ones, activities such as loss prevention and replenishment are essential and play into the strengths of the deployment of RFID. Williams- Sonoma and Teradata: Value from Big Data Analytics Data is central to Williams- Sonoma culture, stated Sameer Hassan, the company s VP of E- Commerce and Marketing, as he kicked off a Q&A session about how his company leverages data. Williams- Sonoma, which owns brands such as Pottery Barn, PB Teen and West Elm, receives 50% of its revenue from its e- commerce business. Hassan claims that the data- driven culture starts with the CEO. You can t go into an executive meeting without data to support your ideas, Hassan said. When I was invited to my first executive meeting, the first question the CEO asked me is if I A/B tested our ideas. This mentality drove the company to optimize different areas of its business using data and analytics. It started with optimizing the catalog business. Catalogs present different challenges, as they are often sent blindly to a list of customers. The company started tracking different parameters about how customers were using the catalogs. It then partnered 7

8 with Teradata and leveraged Teradata s Aster analytics product to come up with actionable insights to help improve circulation and customer engagement. The system was architected to put the customer in the center and was therefore easy to roll out to other areas. From there, the company moved to optimize its e- commerce, which has become a critical aspect of the business. The e- commerce platform, which the company built from scratch, fully embodies the concept of user engagement and personalization. Using both implicit and explicit data signals, the system is able to personalize experience for users. The personalization goes beyond simple product recommendation; it can actually tailor the entire web and mobile experience, including product assortment, visual appearance of the site, and even the checkout process. The key is to create a more seamless experience for the end user. Another area that has been improved with data analytics is search. In some cases, users who searched for terms such as sofa would not find the items they wanted because the name of the product was completely different. Using machine learning, the company was able to correlate between search terms and products, and update the engine so that it became smarter over time. This was a big deal because search was one of the most important features of the site, driving 25% of its revenue. Although Williams- Sonoma seems to be ahead of the curve, Hassan claims that there is still a long way to go. Some of our web properties don t even use the same sign- on at this point, he said. This is obviously a top priority for us to complete the overall user experience. 8

9 Deborah Weinswig, CPA Executive Director Head of Global Retail & Technology Fung Business Intelligence Centre New York: Hong Kong: China: Filippo Battaini Marie Driscoll, CFA John Harmon, CFA Aragorn Ho John Mercer Shoshana Pollack Kiril Popov Jing Wang Steven Winnick HONG KONG: 10th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: NEW YORK: 1359 Broadway, 9 th Floor New York, NY Tel: LONDON: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) FBICGROUP.COM 9