NEW YORK — The National Retail Federation’s Big Show wrapped up Wednesday, having painted a picture over four days of an industry in the midst of serious change.
From how big data is bringing about big new ideas to the limits of e-commerce and how physical stores can keep up with the times, the conference made clear that retailers are thinking hard about how to stay ahead of the curve. Here, some more highlights from the show.
THE COMMERCE SHIFT
In a keynote address, Ginni Rometty, chairwoman and chief executive officer of IBM, explained how Big Data and changing expectations are intersecting with major technological shifts — cloud computing, analytics, social and mobile — to significantly reshape commerce.
“There are great possibilities happening at the intersection of our two industries,” said Rometty, who was introduced by Terry J. Lundgren, chairman and ceo of Macy’s Inc.
She said Big Data will be the basis of competition for the entire industry; clouds will allow you to make business model choices, and cognitive systems that “learn” will radically change the retail industry.
“I believe information is our generation’s next natural resource,” said Rometty. She said one-quarter of the world’s population is on a social network, and 2.5 billion gigabytes are created each day. “Eighty percent of the world’s data was created in the last two years,” she said. Data is comprised of both structured data and unstructured data, which are pictures, video, Tweets and blogs, she said.
“Information will be your basis of competitive advantage,” she said. She believes Big Data will change everything from how retailers engage with customers to how they hire workers and manage their supply chains. For example, she noted, “You’re more likely to respond to a coupon when you shop.” A store like Kohl’s will send you a coupon while you’re shopping in the shoe department. “We will enter a period where stores will be a great source of data,” said Rometty, noting that one will have the intelligence of online combined with the tactile nature of being in a store.
She also stressed that we are at the beginning of a new era of computing — the cognitive era — with systems that learn. “They get smarter and better in time,” she said. For example, suppose you’re going on a 14-day backpacking trip. The computer will ask, “How can I help you?” and then will give you a list of things you’ll need for the trip.
In the digital world, there’s no doubt that many see Amazon.com Inc. as the 900-pound gorilla.Amazon’s $75 billion in 2012 revenue trailed Wal-Mart Stores Inc.’s take of $469 billion, but the e-commerce company is growing at a faster rate. Amazon’s 180 million customers bought 3.5 billion items last year; it has the post office delivering its packages on Sunday, and it’s building a new 3.3 million-square-foot headquarters with a biosphere for its employees in Seattle. Is there anything Amazon can’t do?
As a matter of fact, yes, said Lee Peterson, executive vice president of creative services at WD Partners, a design, strategy, research, architecture and engineering firm, during the session entitled, “Amazon Can’t Do That.” Despite the popularity of online retailing, consumers want a more engaging experience that can’t be achieved on the Internet.
“Amazon is not a company you want to hug,” he said. “There’s no emotion there.” According to WD’s study of 38,000 consumers, the top reasons for how consumers shop are instant ownership, sensory experiences and product immersion — the emotional experience of interacting with human beings — and personal service.
While Amazon can’t compete with instant gratification and other store features, online reviews scored high with shoppers. Peterson suggested brick-and-mortar retailers incorporate reviews into merchandise displays. “Emotional benefits trump functional benefits,” he said. “Sales associates ranked 11 out of 12 in the survey. There’s a huge opportunity to invest in people.”
In addition, he said, “Store design is languishing. Don’t be loud, boring, disengaged, warehouse-esque,” he said. “Don’t be cluttered, horizontal or old school. Invest in stores to gain cultural relevancy.”
HAPPENINGS IN THE LOBBY
In recognition of the importance of helping to craft legislation important to its members, the National Retail Federation is changing the name of its national lobbying day from the Washington Leadership Conference to the Retail Advocates Summit.
David French, senior vice president of government affairs for the NRF, said the group decided to make the change in order to emphasize how vital it is for retailers to push for government reform in vital issues to help companies become more profitable and competitive.
In a panel discussion that included John Holub, president and ceo of the New Jersey Retail Merchants Association, who has pushed for tax breaks for merchants operating in urban areas in the Garden State, and Teresa Miller, owner of Treats Unleashed, who has lobbied Congress for legislation on Internet sale tax, French said the NRF has identified three issues on its legislative agenda this year.
Noting a successful lobbying campaign to lower swipe fees on credit cards last year, the NRF has cited three key issues it will target this year in lobbying for legislative action, French said. The most publicized is the Marketplace Fairness Act, which would allow states to require online sellers to collect sales tax. The Senate passed the bill in May, and it is pending in the House Judiciary Committee.
More broadly is the issue of corporate tax reform, aimed at lowering corporate income tax rates, which the NRF has said will stimulate job growth, and simplifying the tax code to ease the burden on companies. In addition, the organization is pushing for the Senate to take up a measure already passed by the House on what he called “patent trolls” to reduce frivolous patent lawsuits.
“I urge all our members to attend the Retail Advocates Summit on July 29 and 30, and to get involved on the national, state and local levels,” French said. “You can make a difference.”
VIDEO THE RETAIL STAR
“A Visual Journey of Retail” presented case studies of recent projects.
Steven Derwoed, vice president of store planning and merchandising at Macy’s Inc., discussed the multimillion-dollar renovation of the company’s New York flagship, including the video broadcast system that beams images and messages to the store’s 150 TV screens and entrance portals. LCD showcase toppers embedded in glass and birdcages with mini video monitors hanging from branches are found in fine jewelry.
Joe Nevin, senior principal at Bergmeyer Associates, discussed the design of theRestoration Hardware flagship in an architecturally significant building in Boston’s Back Bay. The neoclassical structure was designed in 1862 by William G. Peterson and has had only three other tenants in 100 years, the Museum of Natural History, Bonwit Teller and Louis Boston. The 40,000-square-foot building was stripped down to its original bones. A mezzanine and elevators were removed, and a striking glass elevator installed. A glass and steel pavilion was built on the Newbury Street side of the store, and a monumental entrance was erected on Berkeley Street. All sales are done on iPads, and cash wraps are discreetly tucked away inside cabinets.
Another case study featured Lord & Taylor’s Boca Raton, Fla., store. Andrew McQuilkin, international president at the Retail Design Institute and retail market leader at BHDP Architecture, said, “We pretended this was an Addison Mizner building,” referring to the famous architect, whose work is can be seen in Boca’s historic section. One recurring design element is bleached wood oval cutouts on the ceiling.
Kevin Kelley, principal at Shook Kelley, said his firm studies how environment affects behavior. During the session “Retail Bliss: Understanding the Mechanics of Shopping Behavior,” Kelley said he uses body language to determine how shoppers are feeling. Look at a checkout line, he said, and you’ll see people slouching, slumping and staring at the floor. “All over the country, you’ll see men sleeping in stores,” he said. “There are Web sites dedicated to men who hate shopping.” Kelley’s father, who is one of them, exhibited “psychotic” behavior when he was in any store other than a hardware or lawn mower store. “Do spaces drain you like a battery or restore you?” Kelley said. “Look at design as a behavioral science. Stop doing high design, over-the-top design in spaces that make products look extravagant. I want to see retail space survive. It will survive by telling a story. If customers meander, they stay longer.”
In a break-out session entitled “Redefining the Customer Experience Gives a Whole New Meaning to Window Shopping,” executives from the Sony Store and Toms Shoes discussed their participation in a 12-week pilot at the San Francisco Center in Union Square. They created an online experience in a brick-and-mortar space, in collaboration with Magento and eBay.
Megan Farrell Ragsdale, director of guest experience at the Sony Store, said they created a 20- by 14-foot interactive touchscreen where consumers could shop for 20 different products. The way it worked was a shopper could touch products on the screen to see information or add them to their cart. They can then enter a mobile phone number to complete the purchase on a smartphone.
Some 210,478 people passed the storefront to date, and spent 65.28 seconds per experience. She said that 10,000 people “touched and interacted with our brand over a 12-week period.” She called it “a great expression of the brand.” However, one of the barriers was that “people psychologically were not prepared yet to purchase in the window.”
Toms employed similar technology in the San Francisco mall to promote Toms’ new Marketplace.
The initiative, which was launched in November in time for holiday, displays products from socially conscious brands that were inspired by Toms’ “One for One” giving model. The online shop, built by Magento Inc., an eBay Company, allows visitors to browse by cause or impacted region, in addition to product categories. Some 30 different brands with 30 different stories were showcased. “We’re essentially acting as a wholesaler,” said Jordan Glassberg, digital business development lead at Toms Shoes.
“It’s not only a marketplace of products, but now a marketplace of all these different causes,” said Glassberg. For example, a bronze arrow bracelet by Fortuned Culture sells for $45. For every bracelet you purchase, you provide an orphan in Mexico with transportation to and from school for six months.
Glassberg said that Toms is not only in the business to sell shoes, “but we’re in the business to improve people’s lives.” For every pair of shoes they sell, they give a new pair of shoes to a needy child around the world. “We’ve given over 10 million shoes away in 60 countries,” he said. In 2011, the company launched eyewear, and 175,000 individuals have received help in eyewear.
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