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Day Three at NRF 2023: Retail’s Big Show—Quick Wins Are Key for 2023 Across Forecasting, Personalization and NFTs

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What's Inside

The Coresight Research team attended NRF 2023: Retail’s Big Show in New York City. In this report, we present insights from the third and final day of the event, with highlights covering personalization in beauty retail, demand forecasting, virtual try-on technologies, data analytics and more.

Companies mentioned in this report include: Ahold Delhaize, Albertsons, Charles Schwab, HEB, LVMH, Planalytics, Relex Solutions, Target, Tractor Supply

Other relevant research:

Look out for our wrap-up of NRF 2023.

Executive Summary

The Coresight Research team attended NRF 2023: Retail’s Big Show in New York City. In this report, we present insights from the third and final day of the event.

Coresight Research Insights

  • Retailers are seeking to improve supply chain management, analysis of consumer demand and preparation for a likely challenging economic environment in 2023.
  • Retailers are using emerging technology to engage consumers by highlighting their brand heritage through non-fungible tokens (NFTs), empowering their own employees and building immersive, personalized experiences to retain loyal consumers.
  • Retailers are harnessing new technology tools, including artificial intelligence (AI), to eliminate business bottlenecks by transforming data into actionable insights.

Introduction

The Coresight Research team attended 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 third and final 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 Three: Coresight Research Insights

During the final day of the conference, we emphasize our insights across responsive, engaging, and tech-enabled themes. We observed that retailers were laser-focused on how to respond to a year of challenges ahead, aiming to keep loyal consumers engaged and leverage technology to optimize business every step of the way.

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 third day of the conference, retail executives discussed 2023 economic trends, increasing supply chain visibility and improving demand planning.

2023 Economic Trends That Retailers Should Consider

Retailers need to understand the current uncertain macroeconomic environment and how to prepare for a looming recession. Liz Ann Sonders, Managing Director, Chief Investment Strategist at Charles Schwab, argued “whether its officially called a recession at this point is academic.” Sonders offered insights for retailers into trends in the current climate:

  1. Long-term trends with positive effects for business include the economy slowly shifting to be more investment-driven across every industry, the shift toward hybrid working and increasing digitalization.
  2. Supply chain management must continue to adapt, and near-term inventories need to be worked through.
  3. We are seeing the end of a two-to-three-decade era where cheap goods, cheap energy, and cheap labor reflected China’s ascendency.
  4. We are in an era of great moderation, and inflation will probably settle at a higher level than previously.
  5. The labor shortage is shifting the balance of power from capital and profits to labor.

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US personal consumption expenditure: services relative to goods, 2010–2022
Source: Bloomberg/Charles Schwab/Coresight Research

 

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CPI annualized % change for goods excl. food and energy and services excl. energy services, 2010–2022
Source: Bloomberg/Charles Schwab/Coresight Research

 

Enabling End-To-End Supply Chain Visibility

Achieving agile and flexible supply chains in grocery poses a number of challenges for grocers, who may manage many brands and need to efficiently handle a mix of dry and fresh produce. During a session titled “Delivering for the omnichannel customer with agility and precision, produced by Relex Solutions,” executives at Ahold Delhaize USA (ADUSA) companies discussed their partnership with supply chain solution provider Mikko Kakkaien, Co-Founder and CEO of Relex Solutions. The session focused on how Relex Solutions has served as an enabler for end-to-end supply chain visibility and transparency. End-to-end supply chain visibility is important for large grocers like ADUSA as it improves demand planning, reduces waste through greater precision, and enables company resources to be redirected toward other parts of the business. We provide three main takeaways from the session below:

  1. Efficient and agile supply chains require end-to-end visibility
  2. The right tech drives precision, efficiency and agility
  3. Success requires the right supply chain configuration, the right people and the right tools

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Slide from the session detailing how ADUSA’s partnership with Relex Solutions has improved end-to-end supply chain visibility
Source: Relex Solutions/Coresight Research

 

Left to right: Mikko Kakkaien, Co-Founder and CEO of Relex Solutions; Candace Davis, Manager of Demand Systems at ADUSA; Brian Aubertine, VP Procurement Projects at ADUSA; and Jason Thomas, Director Demand Services at ADUSA
Source: Coresight Research

 

Improving Demand Planning Through Weather Intelligence

In response to major global issues affecting retailers, such as increasingly unpredictable weather patterns due to climate change, retailers are turning to data and technology to help improve demand planning and reduce risk. During a session titled, “Nailing demand forecasts: From machine learning to replenishment and everything in between, produced by Planalytics,” Scott Bernhardt, President of Planalytics, spoke with retail executives about how Planalytics helps analyze and apply weather intelligence to assist with demand planning in the face of the current challenging macroeconomic environment and unpredictable weather patterns.

Weather can affect incremental sales of even products as seemingly unrelated as peanut butter, so analyzing weather intelligence and applying it to demand planning can be useful. The speakers emphasized that solutions like Planalytics were particularly helpful in driving down costs and increasing market and digital market share.

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Left to right: Scott Benrhardt, President of Planalytics; Ross Giambalvo, Vice President of Inventory Management at HEB; Jeremy Elster, Data Science Manager at Chipotle Mexican Grill; and Tyler Scott, Senior Director of Demand Planning/Retail Support at Albertsons
Source: Coresight Research

 

Target Identifies Business Opportunities And Challenges

Christina Hennington, EVP and Chief Growth Officer at Target, discussed the company’s future challenges and opportunities.

Hennington identified three challenges that Target is currently tackling:

  1. Consumers making trade-offs
  2. Balancing its portfolio
  3. Thinking about long-term investments, and re-imagining and understanding consumer needs

Hennington also discussed promising opportunities in Target’s future. Currently Target boasts a $30 billion private label business, which it believes will continue to be important in the future. In the longer term, Target has its eyes on its loyalty program, Target Circle, and hopes to be able to deepen connections with its members, including incremental promotions, tailored communications and a more personalized digital experience. Hennington also shared that she believes health, wellness and apparel will continue to be important business areas for Target.

Engaging

Coresight Research recommends that retailers be “engaging” in 2023 by providing shoppers with new experiences that are interactive, social and full of discovery. This was a key concept during day three at NRF, as retailers highlighted how they expected emerging technologies, such as non-fungible tokens (NFTs), live video shopping and virtual try-on to grow in importance—particularly in the beauty and luxury sectors.

Can Luxury Continue To Ride Its Wave of Success in 2023?

During the height of the Covid-19 pandemic, luxury was remarkably unaffected—and even thrived. However, as we face a looming recession, Anish Melwani, Chairman and CEO of LVMH, took to the stage at NRF to discuss the outlook for luxury in 2023 and how LVMH will continue to stay not only relevant but true to its core principles, through investing in experiences and technology.

Melwani shared that post-lockdown revenge travel helped boost luxury. Americans returned to Europe, attracted by favorable VAT rebate policies and LVMH observed a demand spike in its Belmond and Cheval Blanc portfolios. Although Melwani doesn’t believe luxury is completely immune to a recession, as its customer base is not exclusive to the ultra-rich, LVMH is implementing conservative financing to withstand a weak economy and expects a softer landing.

One of the most interesting points that Melwani discussed is luxury’s engagement with technology and Web 3.0, and how this engagement “reinforces the heritage and DNA of the brands and the Maisons.” For example, NFTs accompanied by digital certificates can serve as proof of authenticity, of ethical production and of the source of the materials used—all of which are important to luxury consumers. Tiffany’s 250-piece Cryptopunk NFTiff collection, for example, is one of the most successful NFT projects, generating $12.5 million in less than a year.

Left to right: Anish Melwani, Chairman and CEO of LVMH; and Robert Frank, Wealth Editor at CNBC
Source: Coresight Research

 

Bringing Technology into the Store To Improve Consumer Experience

Shifting customer expectations as consumers return to stores are pushing retailers to invest in more technology to provide a more connected, convenient in-store shopping experience. During a session moderated by Deborah Weinswig, CEO and Founder of Coresight Research, executives from T-Mobile for Business and Tractor Supply shared how they were integrating technology into their stores to meet evolving consumer expectations.

Roopender Crowley, Managing Director of Retail Strategic Accounts at T-Mobile for Business, discussed how the onset of the pandemic forced retailers to reconsider their tech stack in the face of labor shortages. Tractor Supply has invested in increasing its computing power in stores, including by rolling out direct broadband in over 1,000 stores by the end of 2023. In-store technology is also helping Tractor Supply provide its customers with more personalized in-store shopping experiences, such as by helping consumers understand “what [they] are looking at and providing higher-level insights on the product to help make a decision,” explained Al Lettera, SVP of IT at Tractor Supply.

Looking ahead to the future, Tractor Supply hopes to invest in technology that will help it innovate faster in a world of ever-changing consumer demands. In addition, it hopes to invest more in employee experience and provide better tools to employees who are on the front lines handling consumers’ demands. The session left us with three takeaways for retailers:

  1. Get out of the silo
  2. Bring teams together
  3. Introduce 5G applications to address needs across the organization

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Left to right: Deborah Weinswig, CEO and Founder of Coresight Research; Al Lettera, SVP of IT at Tractor Supply; Roopender Crowley, Managing Director of Retail Strategic Accounts at T-Mobile for Business; and Steven Crowley, Director of Solutions Engineering at T-Mobile for Business
Source: Coresight Research

 

Beauty Harnesses Emerging Tech To Facilitate Consumer-Centric Experiences

Beauty brands and retailers are leveraging emerging technology innovations including virtual reality (VR), augmented reality (AR) and livestream shopping to create more engaging experiences for consumers. During a session titled “Beauty’s blush with technology,” featuring Nicolette Bosco, VP, Divisional Business Manager Beauty at Macy’s, Ophelia Ceradini, VP, Digital Technology and Innovation at The Estée Lauder Companies, and Kelly Kovack, CEO and Founder of BeautyMatter, the executives shared how technology is being used to create consumer-centric hyper-personalized beauty experiences. For example, Ceradini explained that Estée Lauder’s customer facial analysis tool is highly personal, detecting multiple different eye and brow shapes, and making consumers feel more unique. When Kovack asked which technologies the executives were most excited about, they cited live video shopping, virtual try-on and AI as having the most potential.

Tech also plays an important role in beauty on social media, and can be used as an avenue for driving sales and extending interaction with consumers. Bosco, for example, described Macy’s Beauty Playground, an internal-facing technology platform that Macy’s launched to help its beauty advisors understand the history of brands, the latest trends, beauty themes, influencer insights and more. Ceradini also spoke about the role of TikTok in spreading new trends and how Estée Lauder can use AI to aggregate data on trending products. Once Estée Lauder matches trends with existing products, it can provide consumers with its own products as well as other tips, extending the consumer journey.

Lastly, the executives emphasized the role of store associates as a company’s blood vessels. Beauty brands and retailers rely on associates, who are also beauty and tech experts, to help consumers find the products they want and receive personalized recommendations and advice.

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Left to right: Kelly Kovack, CEO and Founder of BeautyMatter; Nicolette Bosco, VP, Divisional Business Manager Beauty at Macy’s; and Ophelia Ceradini, VP, Digital Technology and Innovation at The Estée Lauder Companies
Source: Coresight Research

 

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.

Transforming Data into Retail-Relevant Insights Drives Innovation

Retailers understand that data is a powerful tool, yet many still struggle to analyze and apply data to improve their understanding of business bottlenecks and consumer demand. Weinswig asked two executives at Woolworths, Brad Banducci, CEO and Managing Director, and Amitabh Mall, Chief Analytics Officer, how Woolworths is leveraging data to optimize its business. The executives explained that the entire Woolworths ecosystem is connected, enabling the company to merge data sets from business segments and produce valuable insights. The executives believe that their uniform platform for analyzing data is most useful for things like demand planning, during the holiday season, for example, as well as understanding various consumer segments across channels.

Weinswig provided two major conclusions from the session:

  1. In five to seven years, cloud data can strengthen brands’ and retailers’ ability to understand demand across the entire business.
  2. Omnichannel is driving the application of data analytics, which can drive amazing results and shareholder equity.

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Woolworth’s group ecosystem
Source: Woolworth’s/Coresight Research

 

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Left to right: Deborah Weinswig, CEO and Founder of Coresight Research; Brad Banducci, CEO and Managing Director at Woolworths; and Amitabh Mall, Chief Analytics Officer at Woolworths
Source: Coresight Research

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