Shoptalk 2023 Day Two: AI Takes Center Stage

Introduction

Coresight Research is a research partner of Shoptalk 2023, which is taking place March 26–29 in Las Vegas, US. Shoptalk is an annual retail conference focusing on the trends, business models and technologies shaping the future of retail. We present our top insights from day two of Shoptalk 2023.

Shoptalk 2023 Day Two: Coresight Research Insights

Shopper Engagement: The Future of Livestreaming and Customer Loyalty

With more brands, products and marketing noise than ever, retailers must provide unique and immersive shopping experiences to capture consumers’ attention and wallets. Various sessions on the second day of Shoptalk 2023 covered the importance of starting initiatives that improve shopper engagement, especially via livestreaming and loyalty programs.

Many companies are discovering how well they can connect with their existing customers—as well as new ones—through shoppable livestreams. In 2023, Coresight Research expects to see the US livestreaming e-commerce market grow to nearly $32 billion, up from just over $20 billion in 2022, due to key trends such as companies using multiple platforms and consumer demand for product transparency. Much of Shoptalk’s “Forefront of Livestreaming and Shoppable Video” session focused on the potential growth of the livestreaming market over the next few years. Per the session, in 2024, US consumers are expected to spend more time watching digital video than their televisions, making it a premier channel for companies. Livestreaming is also far more personal than many other marketing and communication methods, enabling brands to create personalized experiences that drive shopper engagement and sales, while also allowing customers to immerse themselves in the brand.

During the panel, Andrea Moore, Chief Digital Officer at NEST New York, explained what companies should do if they wish to enter the livestreaming space—most importantly, diving in instead of waiting for everything to be perfect. Constant innovation, customer feedback, and trial and error are all critical in determining how livestreaming will fit into a brand’s storytelling and its overall process.

“Forefront of Livestreaming and Shoppable Video” session (left to right): Soumya Sriraman, President of Streaming, Qurate Retail Group; Andrea Moore, Chief Digital Officer, NEST New York; Kevin Miller, Chief Marketing Officer, The Fresh Market; and Kendra Bracken-Ferguson, Founder and CEO, BrainTrust
Source: Coresight Research

 

Another topic of frequent discussion during the second day of Shoptalk 2023 was how loyalty programs can enhance shopper engagement. Online shopping has made it easier for consumers to compare and try different brands and retailers. This comes at a time when customer acquisition costs (CAC) are rising, putting extra pressure on brands and retailers to extract value from their existing customers by increasing customer loyalty.

In the keynote session, “Innovative Approaches to Customer Loyalty,” topics covered ranged from how to personalize loyalty programs to using gamification and rewards to boost program engagement. For those looking to personalize their loyalty programs, panel members recommended that companies first look at what first-party data tells them about their customers’ habits. For instance, Kent Zimmerman, VP of E-Commerce and Marketing Technology at Shoe Carnival, discussed how the company focuses its promotions on customers who react well to those offers. However, the company does not think all promotions must be sent to all customers, helping it maintain better margins.

“Innovative Approaches to Customer Loyalty” session (left to right): Jenny Wolski, SVP, Omnichannel Experience, Petco; Art Sebastian, VP, Omni-Channel Marketing, Casey’s; Zimmerman; Lokesh Ohri, Partner, EY
Source: Coresight Research

 

All panel members agreed that gamification remains a powerful tool for loyalty programs of all types but that companies need to keep things fresh—simply reusing the same gamification models again and again will not work for modern consumers. Instead, companies should find ways to keep loyalty program games and rewards exciting, such as theming games seasonally or making them more challenging over time. In the coming years, Coresight Research expects more brands and retailers to turn to technology to increase customer loyalty and engage with consumers in new ways, including experiential rewards and non-fungible tokens (NFTs). We believe that the metaverse and NFTs will provide a considerable opportunity to enhance loyalty among consumers, especially Gen Zers.

• Read our Retail-Tech Landscape to view selected startups globally that offer innovative solutions for brands’ and retailers’ customer loyalty programs, covering gamification, personalization, blockchain and more.

Emerging Channels: Global Retail in 2023

In the current uncertain macroeconomic environment, retailers can turn to new and emerging channels to drive alternative revenue streams. The most significant disruptions of 2022—including the Russia-Ukraine war, the European energy crisis and talent shortages—snowballed and have rolled into 2023. While overall US inflation is moderating, prices remain high in several everyday retail categories, including food and household products, which both remain up by double-digit percentages (as of February 2023). This year, companies need new strategies to successfully navigate the global retail landscape in 2023.

During the “New Insights on Global Retail Trends” session, Kelsey Robinson, Senior Partner at McKinsey & Company, took a deep dive into the current macroeconomic environment and how it is impacting the global fashion industry. She explained that it is a time of change for the fashion industry, as consumers’ preferences and behaviors are shifting rapidly, including trading down. In response, the entire fashion system is changing; in particular, Robinson stated that many fashion companies are likely to overhaul both their digital marketing efforts and their organizational structure (see more coverage of this trend at Shoptalk 2023 in the “Organizational Changes” section below).

Robinson during the “New Insights on Global Retail Trends” session
Source: Coresight Research

 

In the same session, Lee Ballin, Managing Director of Environmental, Social and Corporate Governance (ESG) and Sustainability Services at Deloitte, discussed how consumers’ growing demand for transparency and sustainable offerings impacts the retail industry. Putting it simply, he stated, “ESG risks are business risks… Corporate social responsibility should be corporate social opportunity.”

For companies looking to drive their sustainability initiatives, the panel went through four key ideas that can help spur environmental change company-wide:

1. A company cannot manage what it does not measure and track. To begin hitting ESG goals, companies must be measuring and tracking.
2. Sustainability regulations are real and enforced; companies must follow them.
3. Everyone in the company has a role to play in regard to sustainability.
4. Value chains drive accountability, making them a crucial part of any sustainability initiative.

For companies searching for more ways to make their organizations more environmentally friendly, Coresight Research developed the EnCORE framework to help brands and retailers frame their approach to sustainability. The framework comprises five components, including environmental engagement and circular models.

For some companies, emerging channels might simply mean retail avenues they have never considered before. As part of the “How Content and Technology Are Transforming Retail” keynote, Jeffrey Katzenberg, Co-Founder and Former CEO of DreamWorks Animation and current Managing Partner at WndrCo, discussed the immense retail opportunity for media companies. He spoke from experience, explaining how Disney and DreamWorks movies have “multiple lives” by living on through retail products associated with the original media, such as memorabilia or toys. He stated that storytellers of all types should look for opportunities to expand their products’ stories.

Katzenberg discusses how media companies can utilize the retail channel
Source: Shoptalk

 

Store Experience: Reimagined Spaces

After experiencing the convenience and other benefits of online shopping over the past couple of years, consumers’ expectations around the in-store shopping experience are more demanding than ever. Now, consumers want a streamlined, personalized and technology-enhanced shopping experience, a topic covered in great detail in the keynote session, “Transforming the Store Workforce with New Roles and Capabilities.” Throughout the panel, participants discussed how organizations must rethink both their store experience and the technologies and capabilities that enable store associates to create that unique experience.

According to Marc Mastronardi, Chief Stores Officer at Macy’s, physical stores exist to fill four needs: discovery, convenience, service and engagement. To do this effectively, Macy’s relies on its store team members, which must be much more than engaging. To help customers discover new products, team members must know a store’s inventory (or at least how to search it quickly), a task made easier by radio-frequency identification (RFID) technology, another popular topic of conversation during the session. Well-equipped team members can also easily help any customer quickly, boosting convenience. Finally, Macy’s has also turned its stores into “return hubs,” where customers engage with a person when making a free, in-store return.

Mastronardi at the “Transforming the Store Workforce with New Roles and Capabilities” session
Source: Coresight Research

 

Similarly, at the “Providing Inspiration and Ease: Balancing Store Design Imperatives” session, all three speakers—Eric Ryan, Co-Founder and CEO of Cast Jewelry; Lisa Bubbers, Co-Founder and Chief Brand Officer of Studs; and Yehuda Shmidman, Chairman and CEO of WHP Global and Toys “R” Us—discussed the importance of reimaging the store experience. By reimagining their stores, companies can find new audiences, bring creativity to stores, use smaller spaces and leverage exclusive partnerships and in-store experiences to drive sales. Ryan challenged companies to look to create an “everlasting gobstopper,” turning their stores into “forever destinations.”

The conversation on new and improved store experiences continued in the keynote session, “A Global Perspective on the Evolving Role of Stores,” later in the afternoon. Once again, panel members asked companies to rethink and reimagine their stores. While stores once served a singular purpose—retail—they now serve many, including bringing a brand to life in the real world. However, companies need to think about more than just how they can change their already open stores. Organizations should also devise new stores that provide new experiences and meet consumer demand. For example, Tolga Öncü, Retail Operations Manager (COO) at Ingka Group (IKEA Retail), discussed how IKEA is rolling out smaller-format stores, which are meant to complement the company’s flagship locations and answer consumer demand for IKEA stores closer to their homes.

Öncü (left) and Joe Laszlo, VP Content, Shoptalk (right), discuss IKEA’s smaller-format stores
Source: Coresight Research

 

In 2023 and beyond, Coresight Research believes that retailers and brands must execute a comprehensive, consumer-centric brand strategy across all consumer touchpoints—physical and digital—bringing in new audiences and keeping customers coming back. From dressing rooms and in-person checkout areas to social media apps and branded websites, all touchpoints must build the brand, amplify brand messaging and create an engaging, immersive and omnichannel shopping experience.

Technology: Personalization Rules

In the face of brisk economic headwinds, strong technology investment plans will be crucial in reducing inefficiencies and driving growth. Many of the panels during Shoptalk 2023’s second day focused on various emerging technologies, namely artificial intelligence (AI) and data and personalization technologies.

At the “Data and Personalization Technologies” session—a standing-room-only panel, revealing this particular topic’s immense popularity with Shoptalk 2023 attendees—panel members covered how companies can provide personalization options in a brand-friendly way. According to Carrie Tharp, VP of Retail and Consumer at Google Cloud, data analysis shows that consumers want personalization; however, it also shows that it is easy for a company to “creep out” potential customers by asking for too much data. Companies need to research and test what personalization options will work for their identities and customers. “There is no such thing as too much personalization,” Tharp explained. “Just personalization done wrong.”

In the same session, the panel discussed what questions brands and retailers should ask themselves when implementing AI into their processes. First, companies should ask what role AI will play in the organization and whether the AI will be on “auto-pilot,” where it works alone, or “co-pilot,” where it works alongside a human. Next, companies must determine ways to ensure AI follows their brand, business and safety protocols. Finally, companies need to ask themselves how they will track and learn from AI missteps, allowing them to adjust processes and systems, making them better.

Once these challenges are navigated, all panel members agreed that AI can play a pivotal role in a company, especially concerning personalization. Assaf Baciu, Co-Founder and COO of Persado, stated, “Motivation AI marries data from the brand experience and gives consumers a personalized language experience specific to an individual, something which ChatGPT or Bard cannot do.” Persado defines “Motivation AI” as a specialized segment of natural language generation that creates personalized messages designed to motivate the customer to act.

“Data and Personalization Technologies” session (eft to right): Puneet Mehta, Founder and CEO, Netomi; Baciu of Persado; Jen Glaspie-Lundstrom, Co-Founder and CEO, Tandym; and Adam Pressman, Partner and Managing Director, AlixPartners
Source: Coresight Research

 

In various other sessions, many companies—including retail giants such as Kroger and Lowe’s—discussed how AI helps train associates quicker, while freeing already-skilled team members up to do more meaningful tasks. AI was also the main topic of discussion at the “Unlocking the Future of Marketing with AI” keynote at Shoptalk’s Majestic Theater. There, Sean Downey, President of Americas and Global Partners at Google, spoke about Google’s AI developments since it became involved with the technology in 2016. Downey mentioned that, while there is a lot of excitement surrounding generative AI, there are also many less-talked-about AI tools that can help companies complete a variety of tasks, including driving growth and providing entertainment to customers.

Downey discusses AI
Source: Shoptalk

 

These are just some of the sessions that initiated conversations around AI, which certainly took center stage on day two of Shoptalk 2023, dominating many conversations. AI was also one of the main focus areas for companies in the Shoptalk 2023 “Shark Reef” startup pitch competition—moderated by Deborah Weinswig, CEO and Founder of Coresight Research. Read our separate report for more on the competition and the startups involved.

How to leverage data to empower companies was another popular topic during the sessions on day two. At the “Leveraging Data Effectively Throughout the Organization” session, Brendan Witcher, VP and Principal Analyst at Forrester, interviewed Alan Boehme, Chief Technology Officer at H&M, about the role of data at the company. Throughout the conversation, Boehme covered how each part of the company’s process, from its supply chain through to final sale, leverages data and how it builds teams to leverage that data. Specifically, H&M hires team members who are “open to where the data will take them.” Boehme also stated that almost every brand and retailer, including H&M, is competing with lifestyle giants, such as Apple, Pinterest and Spotify. These companies not only have a wealth of data on consumers thanks to their place in daily life, but they have also trained their teams to use data effectively and efficiently.

Organizational Changes: Improving the Employee Experience

Making structural and organizational changes is crucial for retailers to remain competitive in an uncertain and challenging macroeconomic environment. They can also help create a better employee experience, ensuring less turn over a time in which labor shortages loom large—this was a major theme during many of the sessions on day two of Shoptalk 2023.

During the “Leveraging AI and Automation to Enhance Operations” session, Alexis DePree, Chief Supply Chain Officer at Nordstrom, and George Hanson, SVP and Chief Digital Officer at Panera Bread, both discussed how they are bettering their employee experiences. Specifically, DePree and Hanson spoke to the impact of automation on employee experiences, which has allowed the companies to reduce “micro-friction” while their employees are freed up to do more fulfilling work.

• At Panera, the company is testing Amazon One hand scanners. These scanners reduce the time it takes employees to look up information, reducing frustration and enabling employees to focus on more important tasks. Hanson also covered how Panera has released an opt-in geolocation feature on its app, which enables local teams to see what customers are closest and optimize production and delivery times.
• DePree discussed how automation has changed Nordstrom’s value chain, which is key, as the brand is about “discovery” and access to the best brands. Looking forward, the company sees many applications for AI and automation, including helping it better understand customers’ shopping patterns and discover exciting brands that resonate with its base. There are also many opportunities for automation in the company’s supply chain, powering its teams to do more rewarding work.

The “Leveraging AI and Automation to Enhance Operations” session (left to right): Depree; Hanson; Gerry Hough, Partner, McKinsey & Company
Source: Coresight Research