Shoptalk 2023 Day One: Innovation Leads the Way

Introduction

Coresight Research is a research partner of Shoptalk 2023, which is taking place during March 26–29 in Las Vegas, US. The annual retail conference focuses on the trends, business models and technologies that are shaping the future of retail.

We present key insights from the first day of Shoptalk 2023.

Shoptalk 2023 Day One: Coresight Research Insights

Shopper Engagement: Making Shopping Engaging and Joyful

Today, more companies are fighting for consumers’ attention than ever, meaning that brands and retailers must provide their customers with engaging shopping experiences that capture both their attention and their wallets. At the “Rediscovering the Joy of Shopping” session, panel members discussed how it is more important than ever to keep customers engaged through every point of the shopping journey. While, for e-commerce, the past decade has been about seamless buying, the next 20 years will be about using channels and technology that make online shopping as “joyful” and engaging as in-person shopping.

To better engage with consumers, e-commerce platform Verishop built a premium retail media network (RMN), as Imran Khan, the Co-Founder and CEO of Verishop, discussed in the “Powering Brand Discovery through Transformative Shopping Experiences” session. RMNs provide brands with highly personalized targeting capabilities and an effective way to measure their advertising return on investment (ROI) and SKU (stock keeping unit) level. The desire to monetize shopper data and increase profit margins has driven many retailers to build their own RMNs or enter strategic partnerships with technology providers to set up RMNs, and we expect more to follow suit in 2023 and beyond.

The next 20 years will also be about responding to consumers’ rapidly changing needs, which can only be done through engagement and listening. At the “The C-Suite on Thriving in Today’s Retail Environment” session, Michael Fiddelke, CFO at Target, stated that responding to consumers’ needs and concerns is critical to formulating long-term investments and objectives for brands and retailers. Even if the economics of an initiative is not economically favorable—Fiddelke explained that Drive Up returns at Target initially did not seem economically feasible—it will be worth it in the long run if that initiative favors a particular consumer behavior and causes them to spend more at the store.

Fiddelke (left) discussing shopper engagement with Krystina Gustafson, SVP of Content at Shoptalk  (right)
Source: Coresight Research

 

Emerging Channels: Data Analysis Is Key

In the current uncertain macroeconomic environment, retailers can turn to new and emerging channels to drive alternative revenue streams and engage with new audiences.

One emerging channel discussed at multiple sessions on the first day of Shoptalk 2023 is livestreaming. Livestreaming e-commerce offers a significant opportunity for retailers to drive consumer engagement and conversion. Coresight Research expects the US livestreaming market to triple in size from 2021 to 2023, totaling $31.7 billion. This pales in comparison to China’s livestreaming market, which was valued at $512.0 billion in 2022, revealing the significant growth opportunity in the US market. Key trends we believe will drive future growth in the livestreaming market include multichannel streaming, incentives and special offers during streams, expansion into new retail verticals and the creation of online communities via livestreaming.

At Shoptalk, Khan talked with Joe Laszlo, VP of Content at Shoptalk, about the impact of livestreaming: livestreaming and shoppable video improve conversion rates by 42%, because they resonate well with shoppers, per the “Powering Brand Discovery through Transformative Shopping Experiences” panel.

Another emerging channel that many retailers are interested in is the US secondhand market. During the “Resale, Upcycled Products and the Circular Economy” session, Anthony Marino, President of ThredUP, an online consignment and thrift store, stated that 50%–60% of “younger consumers want to buy secondhand when shopping.” Additionally, Marino stated, “Increasingly, brands are asking: ‘Can you help us define a resale strategy?’”

We are seeing signs of growing consumer demand for resale, especially fashion resale offerings. Coresight Research believes that the fashion resale trend will continue to grow alongside consumers’ increasing awareness of sustainability and demand for pre-owned luxury. We expect the fashion resale market to continue its current momentum through 2023 and 2024, with year-over-year growth of 14.6% and 13.0%, respectively, in each year, for a $36.4 billion market by the end of 2024.

Marino (left) talking about the circular economy with Jeannette Neumann, Reporter at Bloomberg News (right)
Source: Coresight Research

 

When embracing emerging channels, data analysis is the key to removing customer friction, regardless of the sales channel. For instance, at the “Building an Omnichannel Organization” session, Seemantini Godbole, EVP, Chief Digital and Information Officer at Lowe’s, discussed how AI (artificial intelligence)-powered data analysis enabled the company to improve sales trends, make strategic changes to increase sales and reduce friction for customers, across all channels. Without detailed data and trend analysis—something AI is allowing more companies to do—brands and retailers will remain in the dark about which emerging channels they should enter and if their strategies to do so are working.

Godbole (left) and Sarah Engel, the President of January Digital (right)
Source: Coresight Research

 

Store Experience: Innovation Leads the Way

After experiencing the convenience and benefits of online shopping over the past couple of years, consumers’ expectations around the in-store shopping experience are more demanding.

During the “Using Customer Data to Surprise and Delight” session, panel participants discussed the role of data in creating an enjoyable in-store experience. Manju Thomas, SVP of Engineering at Data Science at Stitch Fix, discussed the importance of creating moments that connect and resonate with customers. At Stitch Fix, the company has an 80-data-point style quiz that provides the company with its customers’ unique wants and needs, helping it match the client with the best product for them. Today, over 1 million people take the test monthly, according to Thomas. The test also enables Stitch Fix to determine what styles are trending and pick up on any “nuances in style,” allowing it to create a store experience that fits its customers’ desires.

In the same session, Caleb Pearson, VP of Media and Digital for US Marketing at McDonald’s, discussed the importance of always innovating the store experience. McDonald’s strives to retain and respect its “cultural icon” status. To do so, it remains true to the principle it was founded on: people first and innovation second. According to Pearson, rich customer data are the key to innovation and creating a unique store experience—a theme we heard throughout the first day of Shoptalk 2023.

From left to right: Charles Gorra, Founder and CEO of Rebag; Pearson; Thomas; Kelly Pedersen, Partner, US Retail Leader, PwC
Source: Coresight Research

 

Technology: AI Is Here To Stay

In the face of brisk headwinds, strong technology investment plans will be crucial in reducing inefficiencies and driving growth. Additionally, these investment plans must include allocations for developing or using AI-backed tools. In the Shoptalk 2023 “Shark Reef” startup pitch competition—moderated by Deborah Weinswig, CEO and Founder of Coresight Research—many of the participating innovators focused on how AI could help companies and consumers in various ways, including enabling more personalized offerings and better customer communication.

• Read our companion report for more on the Shoptalk 2023 “Shark Reef” startup pitch competition.

However, companies need to be engaged with adopting AI technology. In the “Rediscovering the Joy of Shopping” panel, Bill Ready, CEO of Pinterest, commented that AI needs high-quality signals and inputs to work correctly, which typically requires a large data set. Pinterest’s 450 million users are constantly making associations between products on their “boards,” meaning its AI is fed very “powerful and accurate” signals. As a result, Pinterest has boosted relevancy scores (the rate at which a user marks a recommendation as relevant) to over 95%.

One thing was clear during the first day of Shoptalk 2023: AI is here to stay. Moving forward, brands and retailers must begin utilizing AI-backed technology to see growth, analyze data faster, save time and better engage with consumers.

Ready discusses the importance of high-quality signals for effective AI in personalization.
Source: Coresight Research

 

Organizational Changes: Hybrid and Remote Work Modes Bring Changes

Making structural and organizational changes is crucial for retailers to remain competitive in an uncertain and challenging macroeconomic environment. Today, companies are learning that how they bring teams together truly matters and that leaders need to listen—especially as many teams are now spread across the world and various work modes.

In the “Creating and Maintaining a Culture of Excellence” session, Sarah Engel, President of January Digital, asked the panel how their companies now approach hiring:

• Samir Desai, Chief Digital and Technology Officer at Abercrombie & Fitch Co., stated that the company is focused on bringing on people with different skill sets than it had previously, helping it build agility without partnering with other companies.
• Lisa Collier, Chief Product Officer of Under Armour, commented that the company had eased back on its educational guidelines, helping it attract both more creative voices and generalists who can play a variety of roles.

All agreed that retailer leads must begin hiring team members from diverse backgrounds and invest in upskilling and reskilling programs.

In the same session, the panel also discussed how retailers should change their organizational approaches in response to the rise of hybrid and remote work modes. Desai explained that, while annual—or more frequent—meetups are important for remote workers, the meetups must have a reason for existing. They must be unique meetups with a specific intent, he explained. Parth Raval, Chief Growth Officer at PepsiCo Foods North America, agreed, stating that meetups need a clear purpose, whether that is collaboration, communication, education or celebration.

From left to right: Desai, Collier, Raval and Engel
Source: Coresight Research