After a Winning Season, What’s Next? NRF Convention Tackles the Future
NRF's "Big Show" was marked by heavier retail participation, cutting-edge technology and water-cooler conversation on everything from Amazon's next acquisition to how to handle mounting merchandise returns.
Can the holiday rebound carry through 2018?Retail resilience was the theme permeating the National Retail Federation's "Big Show" this week, putting a positive spin on a convention that in years past was tinged with pessimism about the future of brick-and-mortar stores and malls. The show featured a compelling "innovation lab" filled with both commercial and potentially emerging technologies including artificial intelligence for personalization, virtual reality to augment the shopping experience, robotics for inventory control and 3-D printing for product design."The next frontier is trying to figure out how to replicate the in-store experience online and really try to bring a human touch to online, so they feel they have a connection," said Karen Katz, outgoing chief executive officer of Neiman Marcus Group, during a panel session with Visa. She suggested bringing chatbots, personal stylists and more personal recommendations into play, and said that of Neiman's total volume, about a third is generated online. "As online grows to plus 40 percent, it's very important to have a human touch.""How do we make that personalization work so we truly know that customer," Katz asked. "Eighty-one percent of our customers go to neimanmarcus.com before they enter a store."There was also a more organized, easier to navigate trade expo; greater participation by leading retailers even if they all didn't reveal much that was new, and attendance at 37,000 was 2,000 above last year's turnout.There's little doubt that many stores, after showing healthy 2017 holiday gains, will show improved sales and profits when they report their fourth-quarter and year-end results come February and March. And stocks have generally been on the rise this month as business continues positive, adding to the optimism for the near-term.Yet judging by some of the sessions, and even moreso by comments at the coffee stations and water coolers at Jacob K. Javits Convention Center, store executives still feel they're walking on eggshells and have to accelerate change. Among the concerns are• how long the retail momentum lasts;• how to compete with Amazon;• how to handle mounting returns, which is a byproduct of growing online ordering;• the proliferation of new technologies complicating where and what to invest in;• keeping up with consumers and their changing spending habits, and• the nation's labor shortage. (Retailing is perceived as offering low wages and requiring long hours, though the NRF — through its "Rise Up" program — is on a mission to make the world aware of the career opportunities.)It seems that in retail, uncertainty is in the DNA, and that for many of the speakers at the NRF, the objective was to bring a sense of assurance for the future.Among the most talked about retail companies: Kohl's and its industry-leading holiday gains; Wal-Mart's newfound agility purchasing and partnering with small, innovative, tech-savvy companies; Amazon's increasing dominance on the Internet and speculation that the company could buy another retailer, possibly in fashion, to broaden the offering and stifle competition, though some at the NRF contended that Amazon is spurring traditional retailers to strengthen their operations.In addition, executives spoke of the massive opportunity for growth in China. "China is off the charts in terms of digital," said Doug McMillon, chief executive officer of Wal-Mart, which has a 10 percent stake in JD.com, China's second largest e-commerce site next to Alibaba.The rise of partnerships was front and center, as a path to extend customer reach and shore up gaps in the service and merchandise offerings, à la Amazon hooking up with Kohl's, which has a handful of stores accepting Amazon returns, and Lord & Taylor, which is hooking up with Wal-Mart by soon launching on walmart.com. As Steve Case, chairman and ceo of Revolution and founder of AOL, mentioned, "Little companies partnering with big companies and big companies partnering with little companies are going to be big winners."Executives from smaller, innovative firms that provide a different experience had a presence on panels, like Rachel Shechtman, founder and ceo of Story, the 2,000-square-foot boutique on Manhattan's west side which every few weeks changes the merchandising through collaborations with all types of businesses, and entrepreneur Marcia Kilgore of Bliss Spa, as well as Beauty Pie, the year-old online beauty retailer that markets itself as offering luxury products at cost for members. Executives say the rise of startups reflect the availability of capital, low barriers of entry, and consumers hankering for different shopping experiences."We are in a really positive environment," said McMillon, during his conversation on the main stage with NRF president and ceo Matthew Shay. "Gas prices are low. There's tax reform and there's optimism on the part of the consumer. We are in a good spot in terms of consumption, but we need to not get comfortable.""Retailers are entering the new year on about as good of footing as we have seen in many years," said Craig Johnson, president of Customer Growth Partners, between sessions. "Home improvement will certainly continue strong and hardlines in general will still be good. The open question is how strong soft lines will be. Apparel, at 2.7 percent growth during the holiday, still lags overall retail growth of 5.7 percent.""There's strong momentum in the economy, but it's not just in the U.S. There is strong momentum in the global economy. The global economy is firing on all cylinders," said Gad Levanon, chief economist, North America, The Conference Board, during a session on the economic outlook.Citing the Brookings Institution, Levanon said "Disposable income will rise 2 percent due to tax reform, which will lift stock and home prices, contributing to the wealth effect which is the highest we have seen since 2000-01." He characterized 2018 as a "solid year in terms of consumption growth.""Coming out of this holiday, investors are relieved and frankly, kind of giddy. Consistently, holiday sales have topped expectations," observed Brian Nagel, managing director, senior analyst, Oppenheimer & Co. equity research.On the negative side, Nagel believes that spending should be better than it has been lately and that while job growth has been good, "there has not been commensurate wage growth."Levanon cited "tightness in the labor market" and noted that retail employment has been declining. "By 2019, we may be at historical tightness. Labor shortages are across the entire spectrum" leading to retailers "compromising on the quality of employees they are getting.…When you have a tight labor market, wages will accelerate. That does impact the bottom line. This is likely to be with us for a decade."He also said consumer spending gains could be delaying a lot of store closings that should happen, though the level of store closings this year will likely be lower than last year's.The corporate tax cut, from 35 percent down to 21, will lead to great savings. Costco, for example, will save more than $400 million, Levanon estimated. Retailers have not yet made it clear as to how the tax cuts will affect business plans, observed Nagel.On the consumer side, Levanon said the tax cuts will be reflected in paychecks starting next month, though in 2019, the effect of tax cuts will be more muted. Still, he said he expects people to spend more on discretionary fashions than essentials. "They have the budget to buy fancier garments, not just sweatpants."The buy online, pick up/return in store service has been a winner for retailers. They're working to reduce the "friction" in the return process, and how businesses can more efficiently redistribute the returned goods, whether back to stores, outlets or to distribution centers. According to Tobin Moore, cofounder and ceo of Optoro, a technology firm that helps retailers deal with returns, the overall return rate exceeds 11 percent, representing $380 billion in goods, and five billion pounds of waste. For stores, it's an 8 percent return rate on average. For online-only retailers, returns can exceed 30 percent, depending on the merchandise category.A most entertaining moment occurred when James Curleigh, president of the Levi's brand, rode onto the main stage riding a bicycle with GPS connected to a Levi's Commuter Trucker Jacket with Jacquard by Google, providing voice directions. It was his way to emphasize the need to innovate and change. "You better start swimming or you will sink like a stone," Curleigh said, quoting Bob Dylan. "If you do nothing, nothing happens."While losing share over the last few decades due to the proliferation of jeans brands, "We are getting that fan back," from other lifestyle brands, Curleigh maintained. It's a matter of "protecting our core and leveraging our icons," such as the 501 and the five-pocket styles, while "connecting with the next generation. He called it "a strategic balance.…We are growing our women's business faster but still growing men's…expand the core, expand for more."His advice to other brands: be simple on the front end, but sophisticated on back-end meaning the supply chain, "lean" into innovation, provide omnichannel access, create aspiration, leverage icons like the 501; deliver the unexpected, create value, be collaborative and culturally engaged. "When you are at the center of culture, the brand only gets stronger."Speaking on corporate responsibility, Hamdi Ulukaya, founder and ceo of Chobani yogurt, said "Ten percent of our company is shared among all our employees. Our employees need to be part of this, to be connected to the community, it's our responsibility and the right thing to do. We have to solve problems and no longer be about just selling yogurt."Diversification, and need for including more minorities and women in the ranks, was part of the discussion. According to the chairman and ceo of Clorox, "business cases prove that diversity and inclusion leads to faster growth.…We believe we are here to serve shareholders but also we have a role to work for a better society."Hubert Joly, ceo of Best Buy, said at Best Buy, the imperative is to "make money, serve our customers and be a force for good. Diversity and inclusion are key factors."Marvin Ellison, chairman and ceo of J.C. Penney, was recognized as one of three African-American ceo's of Fortune 500 companies. "My feeling is it screams missed opportunity," Ellison said.
@moncler unveiled its latest project, #MonclerGenius, yesterday at Milan Fashion Week. The Italian outwear maker gave show-goers a preview of the monthly collections – which were created by eight designers and creative talents including Pierpaolo Piccioli, Simone Rocha, Craig Green and more – that will start rolling out in the summer.
In honor of Rihanna’s 30th birthday, we took a look back at an interview with the Barbados-native when she was just 18 years old. Here, she talked about her second album, “A Girl Like Me” in 2006. “I want to be me. I want people to fall in love with who Rihanna is, and that’s why I want the album to be about me so people can really find out who this girl Rihanna is, because they only know the ‘Pon de Replay’ girl.” Fast forward 12 years, and she’s released six more albums and has become a powerhouse in both the fashion and music industries. Happy birthday, @badgalriri 🎈(📷: Pavel Antonov) #wwdarchive