Event Coverage 19 minutesFree ReportShoptalk Fall 2024 Wrap-Up: Unified Commerce, Customer Loyalty and AI Are “Mission Possible” John Harmon, CFA, Associate Director of Technology Research October 30, 2024 Table of ContentsIntroduction Shoptalk Fall 2024 Wrap-Up: Coresight Research Analysis Conquering Unified Commerce Designing an Optimal Product Assortment Developing Efficient and Successful Teams and Retail Businesses Unlocking New Growth Opportunities Loyalty and Brand Trust AI and the Changing Brand Landscape What We Think Notes What's InsideCoresight Research was a research partner of Shoptalk Fall 2024, which took place during October 16–18 in Chicago, Illinois. Shoptalk Fall is a new conference that builds on the success of the annual Shoptalk event held earlier in the year (which has been rebranded as Shoptalk Spring). We present our top takeaways from the conference, across vital retail themes, such as artificial intelligence (AI), product assortments, loyalty programs and unified commerce experiences, among others. Companies mentioned in this report include: Build-A-Bear Workshop, Crate & Barrel Holdings, The Home Depot, Kohl’s, L’Oréal, Lowe’s, Macy’s, McDonald’s, Signet Jewelers, Target, ThredUp, Ulta Beauty, Walmart, Wayfair Other relevant research: Access all of our coverage of Shoptalk Fall 2024 and other Shoptalk events. See our coverage of Groceryshop 2024, a related event. Executive SummaryWe present our top insights from Shoptalk Fall 2024 across six major themes in retail. Coresight Research Analysis Conquering Unified Commerce “Unified commerce” represents the evolution of omnichannel retail, and it has different meanings for different retailers—as each retailer is unique, there is no universally correct combination of online and offline. In all cases, however, unified commerce embraces the blurring of the lines between the physical and the digital worlds that define how people live their lives and therefore how retailers need to serve customers. Throughout the event, we heard speakers discuss unique combinations of shoppable online catalogs; online retailers’ reasons for opening physical stores; the benefits of combining social media with in-store offering; and changes retailers have made to their business models in order to adapt to changes in shopper preferences. Designing an Optimal Product Assortment Interestingly, the discussion on designing the optimal product assortment often centered on either capturing specific demographic segments of the population or on catering to the entire US population. Throughout the event, we heard speakers from various brands and retailers speak on the topic, including Macy’s and Walmart. Developing Efficient and Successful Teams and Retail Businesses The topics discussed in this category spanned cultures of experimentation, the importance of human-based customer service, sustainability and profitability, and the impact of technology on employee training. Sessions covering these topics included speakers from companies such as Kohl’s, Target and Ulta Beauty. Unlocking New Growth Opportunities Among the many new growth opportunities discussed at Shoptalk Fall 2024, retail media was a key topic, covered by companies such as FTI Consulting and The Home Depot. Coresight Research expects retail media to remain an important topic, as we estimate that the US retail media industry will grow to $106.4 billion in 2028, up from $46.3 billion in 2023, resulting in an 18.1% CAGR (compound annual growth rate). Loyalty and Brand Trust Loyalty can be elusive, so various panelists discussed ways of generating loyalty among fickle customers. Above all, the key takeaways were that warm, welcoming environments can help to build trust and that highly satisfied customers are often willing to offer up their own data to retailers they trust. AI and the Changing Brand Landscape Throughout all three days of Shoptalk Fall 2024, speakers from brands and retailers across the retail landscape discussed how they have already deployed many AI (artificial intelligence), ML (machine learning) or GenAI (generative AI)-powered solutions, while investors commented on the long-term prospects of the technology, which they view as underrated. What We Think We heard much about how unified commerce represents a worthy goal of retail, offering consumers a seamless experience across all channels. Additionally, the conference revealed how the discussion around GenAI has now progressed beyond the “hype” of its promised capabilities, with retailers able to demonstrate current applications. We also found it fascinating how retailers are determining assortment by demographics, which are likely inputs for demand forecasting and assortment platforms. However, we believe that, while technology can offer powerful benefits, it is the human element that ultimately drives a company’s success or failure—as such, efforts such as deciding when and how to bring employees onto projects will determine their results. Introduction Coresight Research is a research partner of Shoptalk Fall 2024, which took place during October 16–18 in Chicago, Illinois. Shoptalk Fall is a new conference that builds on the success of the annual Shoptalk event held earlier in the year (which has been rebranded as Shoptalk Spring). This year, the show brought together more than 3,000 current and future leaders to discuss challenges and opportunities in how consumers shop for products, and included keynote addresses, conference sessions, an exhibit floor, one-on-one meetings and evening entertainment. The theme was “Mission Possible,” and Shoptalk named its main stage “Mission Control” with the conference tracks named “Intelligence Room,” “Decryption Room,” “The Lab” and “Radar Room.” We present our top insights from Shoptalk Fall 2024 across the six major retail themes discussed at the event: conquering unified commerce; designing an optimal product assortment; developing efficient and successful teams and retail businesses; unlocking new growth opportunities; loyalty and brand trust; and AI (artificial intelligence) and the changing retail landscape. Shoptalk Fall 2024 Wrap-Up: Coresight Research Analysis 1. Conquering Unified Commerce “Unified commerce” represents the evolution of omnichannel retail, but the speakers on Shoptalk Fall’s agenda revealed that it has different meanings for different retailers—as each retailer is unique, there is no universally correct combination of online and offline. Throughout the event, we heard speakers discuss unique combinations of shoppable online catalogs; online retailers’ reasons for opening physical stores; the effects of combining social media with in-store offering; and changes retailers have made to their business models in order to adapt to changes in shopper preferences. On the final day of the conference, Ben Miller, VP of Original Content and Strategy at Shoptalk, stressed the importance of cross-functional collaboration and loyalty programs in unified commerce, where personalization and seamless integration across channels are critical. Changes Due to Shifting Shopping Patterns Jennifer Hyman, Co-Founder and CEO of Rent the Runway, stated that the fashion world has changed significantly during the company’s 15-year existence, with trends shifting from being dominated by name brands and fashion editors to being dominated by indie brands and micro-influencers. This change has promoted the company to transition from being a retailer to bringing its store into consumers’ homes, creating a unique definition of unified commerce. Hyman (left) discusses Rent the Runway’s “refashioning” with Jill Manoff, Editor-in-Chief of Glossy (Interviewer; right) Source: Shoptalk Fall Several imperatives for retailers are coming from demographic and generational changes among shoppers. Melissa Gonzalez, Principal at MG2, a retail strategy and architecture firm, outlined three main trends for those looking to optimize unified commerce experiences: Cross-generational influence—While Gen Zers and Gen Alphas respond to influencers (and are influencing trends themselves), they remain influenced by both Boomers and Gen Xers. Wellness and wellbeing—Consumers want brands to adopt a sense of wellbeing into their purpose, moving away from simply transactional retail. Digital fluency—Consumers want the ability to research products visually and visualize those products accurately, as well as personalized experiences. Fusion of Multiple Channels and Media Several speakers discussed how retailers can connect multiple channels via media experiences: Sarah Post, Vice President, Interconnected Experience, at Home Depot, discussed how the retailer decided to offer clearance items online after it saw social media users not only discussing its discounted items online and but also coming into its stores to purchase them. This fusion of online and offline represents an interconnected experience. J. Crew commented that it has brought back its iconic catalog—digitally—and now offers an app for the Apple Vision Pro headset, aiming to embrace customers on those platforms. The company also offers its associates a clienteling tool, enabling them to offer more personalized in-store service. Adam Goldenberg, Co-Founder and CEO of Fabletics, uses data to make real-time decisions as to which content, including video content, to use to best drive sales and customer satisfaction. “We are using data every day and making changes every day based on it,” Goldenberg explained. Goldenberg explains the critical role of data in Fabletics’ operations Source: Shoptalk Fall Merging Products, Services and Experiences Attendees also heard various speakers discuss the ways in which their companies were merging products and services into new experiences. For instance, Kyle Leahy, CEO of Glossier, explored how the company has evolved from being a simple DTC (direct-to-consumer) retailer to a multi-channel retailer that is again opening physical stores after closing its two physical locations in March 2020. Additionally, the company now offers its own fragrance line. Similarly, we heard how Wayfair is again opening physical stores to complement its e-commerce business, while Studs discussed its “ear-scaping concept,” which merges the earring shopping experience with the company’s ear-piercing service in fun, social and well-designed environments. Amber Turley, Vice President, Omni Convenience and Commerce Partnerships, at Sephora, spoke on how the company formed partnerships with two delivery companies—DoorDash and Instacart—to gain access to customers across various sectors. Turley also covered Sephora’s partnership with publisher Hearst, which aims to bring “shoppability” to fashion websites. On the other hand, L’Oréal USA cautioned that consumers are suffering from content fatigue due to an overabundance of products available online, stating that the real challenge is balancing brand consistency and personalization. 2. Designing an Optimal Product Assortment Interestingly, the discussion on designing the optimal product assortment often centered on either capturing specific demographic segments of the population or on catering to the entire US population. New Private-Label Focus at Macy’s Emily Erusha-Hilleque, Senior Vice President, Private Brands, at Macy’s, discussed how, two years ago, the retailer started building, rebuilding and reimagining its 25-brand private-label portfolio; for instance, the retailer launched a new private-label brand in September 2024, “Mode of One,” a contemporary menswear brand targeted at 29–45-year-olds. To support this brand refresh, Macy’s also assembled new design, analytics and brand management teams. Erusha-Hilleque discusses the role of private brands in the Macy’s portfolio Source: Shoptalk Fall Millennials Are Migrating into the Peak Furniture-Buying Age Lee Mayer, Co-Founder and CEO of Havenly, mentioned that the 30s represent consumers’ peak furniture-buying age, which currently encompasses digitally native Millennials; as such, the retailer aims to cater to their unique shopping habits and needs. Due to this process, Havenly customers take an unusual shopping journey: the customer demographic begins their shopping journey online, then receives fabric swatches and often visits a physical store—yet the transaction is ultimately completed online, where Millennials feel comfortable. Walmart Wants to Democratize Fashion for Everyone Walmart has identified two major trends in fashion retail—the shift from department stores and specialty retailers to mass merchandisers, and the shift in fashion authority from fashion magazines to influencers (echoing the comments we heard from Rent the Runway). The company also commented on how higher-income consumers are increasingly patronizing its stores. To capitalize on these trends, Walmart is offering more higher-priced national brands and elevating its own brands, reimagining them as cohesive brands rather than just as simple, private-label offerings. To support this effort, the retailer has also accelerated its supply chain to provide products to consumers faster and keep stable stock rates. 3. Developing Efficient and Successful Teams and Retail Businesses The topics discussed in this category spanned cultures of experimentation, the importance of human-based customer service, sustainability and profitability, and the impact of technology on employee training. Small Teams, Data-Driven Decisions and Experimentation Although Kohl’s and Signet Jewelers execute their visions of efficient teams in rather different ways, they agreed that small, iterative teams, data-driven decisions and a culture of experimentation are critical for retail success, as are customer-centric innovation and continuous learning and adaptation. To this end, Kohl’s transitioned to a remote, customer-centric technology team amid the pandemic, whereas Signet accomplished a rapid shift to digital commerce around the same time, seeing its e-commerce sales double from its implemented strategies, which include virtual consultations and curbside pickup. In-Store (and Online) Experiences Have a Big Impact Throughout all three days of Shoptalk 2024, we heard speakers discuss the impact of both in-store and online experiences on retail businesses as a whole. Sharon Price John, CEO of Build-A-Bear Workshop, stated that the company offers a superior customer experience, which, in turn, has led to both high affinity figures and customers volunteering their data. Now, the retailer is benefiting from several generations of customers who have enjoyed memorable experiences in its stores, resulting in record financial results. Price John discusses Build-A-Bear’s approach to the in-store experience Source: Shoptalk Fall According to Joe Megibow, CEO of Casper, the company’s mantra is “humans matter;” to follow this mantra, it goes to great lengths to make the unpleasant experience of mattress shopping as service-oriented, frictionless and (ultimately) pleasant as possible, diffracting itself from other retailers who are no longer customer-centric. As part of this effort, the retailer has retained its human customer service staff—despite testing an AI-powered large language model (LLM) that can solve 70% of customers’ needs without human intervention—in order to offer superior customer service. Crate and Barrel offers its customers access to a human designer that provides 2D and 3D renderings, measuring services and a mood board for large and small projects alike. For online content, the company’s strategy is “video, video again, and social,” according to Alicia Waters, President, Crate & Barrel and Crate & Kids, at Crate & Barrel, who stated that the retailer has posted approximately 200 videos, including 10 videos with more than 1 million views. Waters also told attendees that unpolished videos do particularly well on social media. Ulta Beauty discussed how its focus has evolved from being a house of brands to “creating a more emotional connection with multiple generations of consumers,” paralleling the comments we heard from Build-A-Bear Workshop. Kecia Steelman, President & Chief Operating Officer of Ulta Beauty, speaks on the company’s evolution Source: Shoptalk Fall Sustainability Is Not Antithetical to Profitability Sustainability was another major topic of Shoptalk Fall 2024. For instance, Target discussed its Target Forward strategy, which aims to have 100% of the company’s owned brands designed for a “circular future” by 2040. Today, the retailer is recycling used car seats to recover plastic resin pellets that it uses in manufacturing its Brightroom plastic crates; it also holds events known as “Denim Take Back Days,” where members of its Target Circle loyalty program can exchange used denim for discounts on new denim. In the same session, Katherine Homuth, Founder and CEO of SRTX, explained how the company increased vertical integration to reduce its fossil fuel-related costs by 50% at Sheertex, its best-selling tights brand. Rothy’s is a lifestyle brand committed to sustainability—as just one example, the brand repurposes plastic bottles into stylish footwear and accessories. The brand is also vertically integrated and deals with a minimal number of suppliers, which simplifies every step in the manufacturing process, reducing waste. Technology and Training Can Drive Efficiency Build-A-Bear Workshop also discussed its rapid, 90-day tech-transformation framework, which integrates seamless customer personalization across both in-store and online touchpoints. Similarly, KEEN Footwear has experienced success in moving from costly, custom-built systems to more agile, cost-effective solutions, such as Shopify. Both retailers emphasized the strategic use of AI in integrated tech ecosystems as critical to enhancing operations and customer experiences, and it was surprising takeaway how quickly companies are moving away from legacy systems to adopt “plug-and-play” technologies, drastically reducing costs and improving agility, yet businesses must prioritize digital landscape. At Shoptalk Fall, we also heard how training is an essential component of successful IT launches: Ulta Beauty commented on how staff training is a fundamental component of building an engaging in-store journey, from micro-training on personal devices all the way through to management training. Aurelian Lis, CEO of Dermologica, talked about training general managers to use Python, not because they need to program but so that they better understand how tech teams work and what they can’t do. 4. Unlocking New Growth Opportunities Retail media was a key topic at Groceryshop 2024 and remained one at this year’s Shoptalk Fall. Coresight Research estimates that the US retail media industry will grow to $106.4 billion in 2028, up from $46.3 billion in 2023, resulting in an 18.1% CAGR (compound annual growth rate). Retail Media Is Additive but Tricky The Home Depot considers retail media as additive to the customer experience; however, it only feels this way as long as adding more advertisements “does not clutter the customer experience.” Currently, the retailer uses project-based audience data, which it monetizes in its stores, resulting in high ROAS (return on advertising spend) from its retail-media program. In-Store Media is Compelling but Not Easy FTI Consulting commented that while physical stores represent around 77% of sales, they only account for around 0.8% of retail media spending. These figures make a strong case for increased spending on in-store retail media technology—however, an executive from Orange Apron Media, The Home Depot’s retail media arm, commented that in-store retail media is not an easy task, as it involves hardware and large capital outlays, which can be operationally challenging. RMN “Do’s and Don’ts” During the “Seizing the Retail Media Opportunity Without Sacrificing the Customer Experience” session, panelists offered advice of what to do—and what not to do—when developing retail media networks (RMNs): Do’s: Invest in relevant technologies from the very beginning and offer closed-loop attribution to deliver an offering that is scalable, reliable and credible Ensure that the purpose of their network aligns with the company’s purpose Focus on the unique capabilities of the RMN Don’ts: Say “yes to everything” Do not make large promises early on Steer away from being competitive, as the retail media space should be a collaborative one The “Seizing the Retail Media Opportunity Without Sacrificing the Customer Experience” panel (left to right): Stephenie Cattonar, Head of Strategy and Analytics of Orange Apron Media at Home Depot; Lucy Yu, Vice President of Strategy and Marketing at Expedia Group; Aaron Dunford, Vice President of Nordstrom Media at Nordstrom; and Kurt Staelens, Senior Managing Director at FTI Consulting Source: Shoptalk Fall 5. Loyalty and Brand Trust Loyalty can be elusive, so various panelists discussed ways of generating loyalty among fickle customers. Above all, the key takeaways were that warm, welcoming environments can help to build trust and that highly satisfied customers are often willing to offer up their own data to retailers they trust. Perks Can Activate the Loyalty of Fickle Customers Home-improvement customers are not typically a loyal bunch—with 65% stating they are not loyal to any one brand—according to Jennifer Wilson, Senior Vice President and Chief Marketing Officer at Lowe’s. These customers want value and they are looking for value beyond price, so they often respond well to additional perks, including free gifts, such as a free flower in spring. The retailer believes that “loyalty is a behavior,” and that it can use techniques to activate their customers’ loyalty, even motivating them to drive past a competitor to visit a Lowe’s store further away. Jennifer Wilson, SVP and Chief Marketing Officer at Lowe’s, discusses customer loyalty Source: Shoptalk Fall McDonald’s Plans to Take its Loyalty Program Global The data McDonald’s receives from its loyalty program—which comprises some 150 million users who have been members for at least 90 days—has improved dramatically as it has developed more ways to meet the needs of its customers, including offering pickup, delivery and in-store purchases in the app. Now, its app is a powerful vehicle for marketing to customers directly. Currently, all its global loyalty offerings are based on points, but McDonald’s offers freedom to the operators of each country’s programs, including allowing them to change the number of points required for a free item. Additionally, although the loyalty program is transactional at present, McDonald’s is exploring how to turn it into an emotional loyalty program. Experiences and Customer Care Build Trust Both cosmetic dermatology company Ever/Body and ear-piercing provider and jewelry retailer Studs discussed the power of creating environments that are welcoming and reflect their customers’ needs and identities. For example, Ever/Body seeks to broaden access to cosmetic dermatology, while Studs offers a modern, gender-neutral piercing experience that takes piercing out of the tattoo parlor. To enhance the customer experience, both companies also build trust through education, offering individualized care and using technology to personalize services. The Power of Zero- and First-Party Data Zero-party data—which is obtained from consumers participating in quizzes, surveys or at the time they create their account—can be incredibly beneficial to retailers. For example, Marriott International uses data collected through quizzes and other engagements to deliver personalized offers, tailored experiences and dynamic content to members of its Bonvoy loyalty program. In another session, using a case study from a QSR (quick service restaurant), Mastercard outlined how the use of purchase history and weather data can be used to offer personalized recommendations, reducing friction, improving sales and generating emotional loyalty. 6. AI and the Changing Brand Landscape At Shoptalk Fall 2024 retailers discussed how they have already deployed many GenAI (generative AI)-powered solutions, while investors commented on the long-term prospects of the technology, which they view as underrated. Retailers Have Implemented GenAI in Several Use Cases Companies from across the retail landscape shared their GenAI use cases throughout all three days of the event: Dermalogica uses GenAI to screen terms of use in 88 different countries, in addition to automatically translating internal documents into 30 languages for use around the world. McDonald’s uses GenAI to communicate with employees in their “most comfortable language;” it also uses the tech to leverage ubiquitous smartphone technology, allowing employees to upload a photo of a problem in the restaurant to generate a service request, rather than having them write the request themselves. According to the company, both initiatives have increased productivity. Target implemented a GenAI-powered “store companion” that delivers critical benefits to associates, enabling them to obtain important information quickly and allowing them to spend more time with customers on the store floor. ThredUp has implemented AI-powered enhancements, including visual search and a “style chat.” Overall, the company now views AI as a foundational element for everything that it does, as GenAI-powered visual search, image search and shopping chatbots have all driven purchases and repeat visits. Wendy’s realized that the complexity of its menu required a GenAI solution, rather than a rules-based solution. Now, the restaurant chain has started implementing a GenAI-powered system that can receive voice orders—in both English and Spanish—at select drive-through locations. While it took some time, Wendy’s stated that its employees have become comfortable with the new system, as it enables them to spend more time with customers. Is AI Overhyped? Yes and No At Shoptalk Fall 2024, Sara Ittelson, Partner at Accel, stated that she not only believes that AI is not overhyped, but that its full potential continues to be understated, echoing sentiments we heard at Shoptalk Spring 2024. In the same session, Ninaad Acharya, Co-Host of the “eCom Logistics Podcast” and Co-Founder and CEO of Fulfillment IQ, expects AI to cause massive disruption in the retail supply chain given its ability to analyze data in real time; he also stated that he expects many functions to be replaced by AI agents. On the other hand, Brian Houck of PwC stated that he expects that AI will only succeed if it is implemented correctly, is the right tool for the job, is embraced by employees and is in-line with the company’s long-term goals. Scott Friend, Partner at Bain Capital Ventures, said that in retrospect, the Internet and smartphones were not “frothy” (meaning overhyped); yet, technologies that are fundamental today, such as AI and LLMs, are currently viewed as frothy, something brands and retailers should keep in mind. The “Rapid-Fire Insights from Investors: Perspectives on the AI Landscape” session (left to right): Aron Bohlig, Founder & Managing Partner of ComCap LLC; Scott Friend, Partner at Bain Capital Ventures; Tessa Flippin, Founder & Managing Partner of Capitalize VC; Debra Aho Williamson, Founder & Chief Analyst, Sonata Insights (Interviewer) Source: Shoptalk Fall What We Think Shoptalk Fall 2024 was an engaging conference, about one-third the size of its Spring counterpart, which takes place annually in Las Vegas, Nevada. We thought the venue layout—where the exhibit floor formed the center of the space, similar to the layout of Shoptalk Europe—was designed well and encouraged attendees to engage with exhibitors. The overall “Mission Possible” theme of the conference was borne out in discussions across many panels as retail leaders highlighted real-world use cases and positive accounts of the benefits of emerging technologies and innovative strategies, as well as their optimistic and ambitious visions for the future of retail. We heard much about how unified commerce represents a worthy goal of retail, offering consumers a seamless experience across all channels. Additionally, the conference revealed how the discussion around GenAI has now progressed beyond the “hype” of its promised capabilities, with retailers able to demonstrate current applications. We also found it fascinating how retailers are determining assortment by demographics, which are likely inputs for demand forecasting and assortment platforms. However, we believe that, while technology can offer powerful benefits, it is the human element that ultimately drives a company’s success or failure—as such, efforts such as deciding when and how to bring employees onto projects will determine their results. Notes Data in this report are as of October 24, 2024. Companies mentioned in this report are: Accel Partners, Build-A-Bear Workshop (NYSE: BBW), Casper Sleep, Crate & Barrel Holdings, Dermalogica, Ever/Body, Fabletics, FTI Consulting. (NYSE: FCN), Fulfillment IQ, Glossier, Havenly, The Home Depot, (NYSE: HD), J.Crew Group, Kohl’s Corporation (NYSE: KSS), L’Oréal (ENXTPA: OR), Lowe’s Companies (NYSE: LOW), Macy’s (NYSE:M), Marriott International (NasdaqGS: MAR), McDonald’s Corporation (NYSE: MCD), MG2, PricewaterhouseCoopers International Limited, Rent the Runway, (NasdaqGM: RENT), Rothy’s, Sephora (a unit of LVMH Moët Hennessy (ENXTPA:MC)), Signet Jewelers Limited (NYSE: SIG), Studs, Target Corporation (NYSE: TGT), ThredUp Inc. (NasdaqGS: TDUP), Ulta Beauty (NasdaqGS: ULTA), Walmart (NYSE: WMT), Wayfair (NYSE: W), The Wendy’s Company (NasdaqGS: WEN) This document was generated for Other research you may be interested in: Retail Shrink and ORC: Legislative Momentum Grows and New Tech Solutions Emerge To Tackle TheftSeptember 2023 China Retail Sales: Growth Continues To StrengthenInnovator Profile: Portless Streamlines Cross-Border Logistics with Direct Shipping SolutionsData Dive: Mapping Bed Bath & Beyond Store Closures—States Impacted and Retailers Likely To Benefit