Day One at NRF 2023: Retail’s Big Show—Personalization Drives Retail Relevance at Every Consumer Touchpoint

Introduction

The Coresight Research team is attending NRF 2023: Retail’s Big Show in New York City during January 15–17, 2023. NRF is an annual event hosted by the National Retail Federation, bringing together retail technology innovators, industry experts, brands and retailers to participate in panel discussions, present on key topics in retail and showcase their solutions.

In this report, we present highlights from the first day of the event, framing our insights around the Coresight Research RESET framework.

The Coresight Research RESET Framework

As part of Coresight Research’s Retail 2023 series, we released our Global Retail in 2023: Five Forces and Five Trends report, which reiterates our RESET framework for retailers to respond to short-term consumers needs while securing long-term success. In order to brace for headwinds in the coming year, including high inflation and interest rates, the RESET Framework calls for retailers globally to be:

1. Responsive… to accelerated structural frugality
2. Engaging… to drive long-term loyalty
3. Socially Responsible… as a buttress against trading down
4. Expansive… to pursue alternative revenue opportunities
5. Tech-Enabled… to empower a productivity push

 

NRF 2023 Day One: Coresight Research Insights

Responsive

As part of our RESET framework, Coresight Research defines “responsive” as being tuned in to consumers’ shifting needs and expectations. “Responsive” encompasses the strategic agility that retailers need in the current uncertain and volatile macroeconomic environment, as we expect to see more consumers trading down and exercising greater basket fragmentation in the coming year.

During the first conference day, we observed many retail executives discussing how they are proactively remaining agile and adaptive while driving growth in this challenging environment.

Agile Business Strategies Enable Business Preservation and Growth

Jeff Gennette, Chairman and CEO at Macy’s, discussed how Macy’s is conducting store transformation and improving the agility of its supply chains in response to a more weary forecast for 2023 because consumers are under pressure. He explained that the retailer is taking the following key actions:

• Leveraging data science, including demand forecasting and trend forecasting, to understand what products consumers want and the location of inventory
• Leaning on its significant partnership with UPS to develop original warehouses with next-generation technology and reduce its store space
• Rolling out more off-mall, small-format stores to cater to consumers’ increasing desire for convenience, including omnichannel services such as BOPIS (buy online, pick up in-store)

Emerging Solutions Enable Adaptability and Agility

During the session “Resilient retail. Achieving more with Microsoft Cloud for Retail, produced by Microsoft,” Shelley Bransten, Corporate VP, Global Retail and Consumer Goods Industries at Microsoft, shared the technology company’s definition of “resilient retail,” which underlines how the company aims to lead with “responsiveness” in the current macroeconomic environment. Bransten explained that resilience is achieved through adaptability in uncertain times, anticipation of future market and consumer shifts, and the ability to absorb financial and operational shocks.

 

Bransten also unveiled two new Microsoft Cloud for Retail products—Store Operations Assist and AiFi Smart Stores Analytics—which help retailers increase productivity and drive growth by empowering store associates and elevating the shopping experience.

 

Other insights from the same session on how retailers are being “responsive” came from Roxanne Flanagan, SVP, Chief Supply Chain Officer at Walgreens. Flanagan shared how Walgreens is improving the resilience of its supply chain by working with the right vendor and leveraging emerging solutions. The retailer is working with Blue Yonder, a leader in digital supply chain transformation and omnichannel commerce fulfillment, to achieve real-time inventory updates, which helps improve supply chain agility.

 

Expansive

Coresight Research recommends that retailers be “expansive” in 2023 by identifying and pursuing alternative revenue streams. This was a key theme during day one at NRF, which highlighted the expansion of digitally native brands into the brick-and-mortar channel as well as moves by established brands to increase their omnichannel offerings in order to achieve additional revenue growth in the current challenging environment.

Digital Natives Lean on Their Roots To Successfully Expand to Physical Retail

Paul Chapuis, CEO of OnQ, and Tyler Wozny, Chief Digital Officer at Madison Reed, discussed how digitally native haircare brand Madison Reed is leveraging digital tools to more successfully expand into brick-and-mortar stores.

The brand reports that digital tools help enrich the customer experience and drive loyalty. For example, in-store virtual try-on tools help customers explore all 60 shades offered by the brand. Chapuis and Wozny explored the benefits of assisted/unassisted digital screens, which reportedly outperform the stores that don’t have these screens by 21%. Wozny shared that the screens have become the primary tool for color consultation, with 90% of staff reporting that this tool increases in-store engagement: the screens make it easy for shoppers to discover colors, access product details and ingredients, and more.

 

Omnichannel Presents a Resilient Business Opportunity

As became ever-more evident during the pandemic, optimized omnichannel experiences are key for retail success. One session that explored consumers’ shifting expectations around the omnichannel shopping experience featured observations from the following speakers:

• Paige Fitzgerald, General Manager, Business Strategy and Partnerships at Afterpay and Cash App
• Roshan Jhunja, General Manager at Square for Retail
• Arianne Parisi, SVP, Chief Digital Officer at JD North America

Fitzgerald highlighted the business opportunity with expanded omnichannel capabilities, sharing that omnichannel customers spend three times more than single-channel customers. The executives agreed that Gen-Z is a bright spot in this inflationary environment, as they are more resilient and open to trying new purchasing formats, such as buy now, pay later. Retailers should continue to experiment with new channels, while also trying to better understand customers’ preferences in order to successfully pursue omnichannel experiences.

 

Socially Responsible

Coresight Research has identified multiple ways in which brands can strengthen brand value by investing in socially responsible markets and initiatives, such as sustainability, wellness, inclusivity and more. During the first day of NRF, we heard from multiple retail executives on how pursuing the adaptive market not only increases inclusivity but is a major untapped business opportunity for retailers.

Inclusive and Adaptive Apparel Is an Underserved Market

Mindy Scheier is the Founder and CEO of GAMUT, a consultancy and talent management firm that helps companies enter the adaptive apparel market, and the Founder and CEO of Runway of Dreams, a foundation that helps people access the apparel they need. Scheier spoke with several retail executives on the huge business opportunity in the adaptive apparel market and how companies can create a go-to-market strategy. She shared that adaptive apparel is underserved market: inclusion is not a mission but a business opportunity and white space.

In July 2022, GAMUT announced the creation of the GAMUT Seal of Approval, which identifies the inclusion of PWDs (people with disabilities) in the creation and marketing of products, which Scheier explained provides authenticity to three audiences: brands, retailers and, most importantly, consumers.

 

During the session, Michelle Banks, Chief Diversity, Equity & Inclusion (DEI) Officer at Kohl’s, emphasized inclusion as a business opportunity and imperative. She highlighted that inclusive categories enable the retailer to match its values with its business goals.

Lydia Smith, VP, Chief Diversity & Inclusion Officer at Victoria’s Secret, said that partnering with Scheier assisted Victoria’s Secret in thoughtfully considering each step of their go-to-market strategy to ensure that the consumer voice is really heard. This move enabled the brand to serve a new customer base across multiple diverse, underserved markets.

Tech-Enabled

Coresight Research defines “tech-enabled” as the deployment of technology across business units to increase business productivity and customer conversion and retention. In particular, we expect retailers in 2023 to leverage technology to improve inventory management and empower store associates to deliver higher-quality retail experiences.

Tailored Returns Policies Drive Customer Conversion

During “Winning over your customer at every touchpoint of the shopping journey, produced by Riskified,” we heard from Shani Gadot-Klinger, VP of Customer Growth at Riskified, about the important of frictionless, secure checkout as well as a generous and tailored refunds and returns policy. In order to reduce returns-related costs, brands and retailers need to understand their customers and what they want before the point of purchase. Gadot-Klinger recommended that retailers tailor their returns policies by being more generous to more loyal customers, as this can increase customer retention. She said that Riskified is launching a new a dashboard this year that helps retailers optimize their returns policies.

Also during this session, Bill Bennett, VP, Head of Commerce at Kroger, emphasized that product search and discovery is a key area in which Kroger is leveraging technology solutions. The retailer’s digital coupon platforms are achieving double-digit growth, Bennet said, enabling consumers to easily find savings. In addition, Kroger is investing in home pages and search functionality to improve the discovery experience.

 

 

Digital Personalization Tools Power the Omnichannel Shopper

Sean Turner, CEO and Co-Founder of Swiftly, discussed the benefits of leveraging digital tools to provide a personalized shopping experience across channels, driving customer engagement and enabling the “omni-shopper.” Turner shared some insightful statistics, including that personalized experiences capture 48% more of customers’ spend if personalization is done well and that 82% of in-store purchases are influenced by online channels, long before shopper comes into the store.

Turner recommended three priorities for retailers looking to improve the omnichannel shopping experience: upgrading the app experience, increasing digital loyalty through targeted and personalized recommendations, and emphasizing what is unique and valuable to the retailer’s physical stores to drive in-store visits.

Digitalized Consumer Experiences Drive Conversion and Loyalty

A tough economic environment and labor challenges are prompting some retailers to turn to technology to provide real-time data and intelligence to increase agility and improve the customer experience. Rob Garf, General Manager and VP of Retail at Salesforce, explained how Salesforce’s products assist retailers to do this. L’Oréal leverages Salesforce Customer 360 to digitalize the consumer experience, driving shopper adoption of beauty technology and boosting average order value.

 

Art Sebastian, VP Digital at Casey’s, spoke about the advantages of customer data platforms (CDPs), such as Salesforce’s Genie Customer Data Cloud, which organizes data into one unified stream that can be augmented and added to, enabling Casey’s to achieve better conversion and loyalty. Sebastian emphasized the importance of retailers’ agility, stating, “Personalization can’t be planned in advance. It happens in real time with contextual behavior.”

 

Marketplace Technology Enables Business Expansion

Brands and retailers are adopting a marketplace strategy and leveraging data to improve merchandising and product assortment, uncovering new business opportunities. Faisal Masud, CEO of fabric, and Jana Schuster, VP of Digital Innovation and E-Commerce at The Honest Company, discussed how fabric’s marketplace technology has enabled the baby and beauty brand to be more agile and efficient when curating product assortment. The partnership also reflects how technology can assist retailers in being “expansive” and pursuing new business channels.

Retailers Should Develop a Roadmap for Web 3.0

Web 3.0 presents new, untapped opportunities for retailers. In “Web3: Retail’s 3-year roadmap, produced by McFadyen Digital,” Peter Evans, Chief Strategy Officer at McFadyen Digital, and Nick Katsivelos, Global Media Industry Digital Strategy Director at Microsoft, discussed how Web 3.0 will bring a new era of engagement for brands, retailers and solution providers alike. Evans recommended that when thinking about Web 3.0 and the future of retail, retailers should build a roadmap that includes assessing market trends, building new capabilities, and developing and communicating their vision and goals.