Last week I attended the Retail Week Tech conference, where I had the chance to connect with lots of retailers and tech companies revolutionising the industry. Contrary to stories of doom and gloom, what I found was an industry in the midst of a renaissance, huge amounts of innovation, and some incredible individuals leading the way. Here’s my take on the top trends:
Artificial Intelligence and Augmented Reality
Where to place your bets on the technology that will transform retail has been discussed for years. Top of the list this year was Artificial Intelligence and Augmented Reality.
Intel’s vice president of the Internet of Things, Joe Jensen, was confident AI will revolutionise the industry:
“AI is going to change every aspect of your life and how it operates. It is going to usher in an entirely new world of efficiency and effectiveness and better enable you as a business to meet these new customer expectations.”
This is backed up by Salesforce research. The ‘Personalization in Shopping’ report- data from 150 million shoppers on how AI impacts revenue and the shopper journey, found that:
- Product recommendations drive revenue. Visits where the shopper clicked a recommendation comprise just 7% of all visits, but 24% of orders and 26% of revenue.
- Shopper spend soars with personalization. Purchases where a recommendation was clicked saw a 10% higher average order value, and the per-visit spend of a shopper who clicks a recommendation is five times higher
- Your recommendation-clicking shoppers have a high propensity to buy. Only 6% of shoppers clicked a recommendation, yet 37% of shoppers that placed an order clicked a recommendation
However, there seemed to be a sense of fear or uncertainty in where to begin with AI. Some retailers are already using AI for recommendations, visualisation, forecasting and improving customer service- with great results- but as these applications become more widespread, AI will soon drive much of the retail experience. However, some of the retailers I spoke to weren’t really sure where to begin, and were too busy focusing on keeping the lights on.
AR had the conference buzzing. Powered by zero-latency 5G connectivity and the proliferation of next-gen smartphones, this one is one to watch. Chief Executive Ronny Mikalsen of Danish fashion firm Carlings told a story of using AR in the social media age. The fashion retailer came up with “virtually fitted fashion items” that people only wear in one photo on social media, in a bid to “give people the tools to be creative and be fashionable, without harming the environment”. Charging £20 per single wear and limited ‘stock’, the products sold out within four weeks.
This reminded me of recent other AR triumphs- from Sephora’s Virtual Artist app, to IKEA’s ‘Place’ and Adidas’ Snapchat VR ‘drops’ creating 60 million digital try-ons before the trainers even hit the shops. Augmented and virtual reality had retailers talking about the changing instore experience and potential for brands to connect with their customers in different ways.
Partnerships
This year partnerships with tech companies were visible, much more than I’d seen in previous years. Retailers seemed to have absorbed the idea of gain share, with two companies sharing the risk and reward of technology innovation to get better customer-centricity.
A key theme of the Retail Re-engineered stage was future-proofing retail by working collaboratively both with large tech firms and startups. Retailers are recognising it’s a fast route to accessing transformative solutions.
It also was going some way to assuaging the ‘fear factor’ in where to invest next. Working with tech partners as strategic advisors is enabling retailers to take a step back and evaluate the next move. Clodagh Moriarty, CIO of Sainsbury’s, outlined the power of bringing together all digital initiatives into a single ecosystem for competitive advantage. My key takeaway- the Sainsbury’s app will give me personalised wine offers and then show me exactly where it is in store. I call that living well for less!
I also saw some partners doing really good jobs of communicating and helping the industry frame some of the challenges- for example, I particularly liked Accenture’s take on experiential retail: A transaction + something else, with subcategories of what that could look like. As well as some cool conference floor demos, it was good to see the strategic thinking being shared.
Tech Talent
Lots of people were talking about the digital skills gap, how to retain the best talent, and the importance of culture. Today’s workforce is digitally savvy, meaning they have access to lots of information about alternative jobs and they’re in demand, so retaining them relies on the culture of the company. Values such as trust, sustainability and customer-centricity were repeated, as was the idea of empowering a workforce to serve loyal customers with meaningful relationships.
Michael Green, AVP of Salesforce, was joined by Fabian Wong, Head of Experience and Design at Capita, to talk about tech talent. Salesforce sees company culture as its biggest differentiator and competitive advantage, so the company makes an effort to write down its culture strategy, build programs around it, measure the success of it, and continuously improve and innovate upon its culture. Michael talked about Salesforce’s commitment to ‘psychological safety’, and some of the initiatives such as Vetforce, Salesforce Supermums, and other groups aimed at bringing more diverse talent into their workforce.
We saw an incredible speech from Code4000 and an ex-convict who had, through the support of learning to code while incarcerated, secured a developer job at Metro Bank. We also heard about initiatives to get more women in STEM, Salesforce’s ‘Vetforce’ programme and women returning from maternity leave. Overall the industry was thinking diversely about its talent pools, as well as the skills a future retail leader would need to succeed.
Sustainability
The sustainability agenda has shone a spotlight on the fashion sector, forcing retailers to think more sustainably and give more careful consideration to the impact fast fashion is having on the planet. Having adopted an increasingly green mindset, consumers are striving to get more use out of their clothing and are gradually turning to the second-hand market.
Online clothing consignment marketplace ThredUp’s chief technology officer Chris Homer says research by the platform found the size of the second-hand market has already doubled to $24bn (£19.3bn) in the US over the past 10 years, with one in 20 items in shoppers’ closets being pre-owned.
Shoppers reward brands that go beyond transactions to bring relevance and resonance to the relationship. Salesforce research has also found that 45% of shoppers are more likely to buy if the retailer/brand gives a charitable donation with their purchase and 65% of customers actively seek to buy environmentally sustainable commodities.
According to Forrester, 50% of every buying decision is driven by emotion, yet 89% of consumers feel no personal connection to the brands they buy. Cultivating brand loyalty is more important than ever- advocacy is worth more than advertising, and influencer marketing, while changing, isn’t going away. Generating a feeling of connection is where brands can gain an edge over marketplaces- and the sustainability agenda was a big trend this year for retail to create that sense of shared values.
The ‘Uberification’ of non-retail industries is also having a huge impact on consumer’s expectations. As Rent the Runway’s CTO summarised: “Attitudes have absolutely shifted. Now people rent out their beds and get in cars with strangers – everything we do has changed”
In summary, Retail Week Tech was great to get inspired and to see an industry fighting back with innovation, hunting for talent and a laser-focus on customers. Consumers are purchasing more intelligently, more ethically, and expect retailers to keep it new, relevant, and be where they are. Brands need to offer something that aligns to shoppers’ values. Friction-free purchasing combined with ethical credentials and a great experience will fuel the retail renaissance- and I can’t wait to see where this great industry goes next.
