Shifting consumer preferences coupled with the emergence of an “on-demand economy” is forcing companies to rethink processes and reconfigure operations. But there are technologies available that can help retailers and brands navigate these market changes and remain competitive.
That was one of the underpinning themes of last week’s inaugural Working Capital Summit for the retail sector, which was hosted by inventory solutions provider Inturn and done in partnership with the Boston Consulting Group. The one-day event took place April 12 at Second, located at the Hotel Eventi in New York.
Attendees discussed and observed technology solutions that optimize processes and streamline efficiencies throughout the entire supply chain. Its audience included c-level executives, retail operations and finance executives, consultants, and accountants, as well as professionals in niche areas such as fintech, supply chain, inventory management and optimization, data/AI, and other leading investors.
Ronen Lazar, chief executive officer of Inturn and chair of the Working Capital Summit, said, “There is much room for improvement to create better visibility so efficient data-driven decisions can be made that have a positive financial impact and optimize working capital productivity in a material way.” He added, “Our goal for the Working Capital Summit is to be a catalyst and ignite dialogue about these areas of innovation that every operations and finance executive must begin to focus on as the retail industry continues through a period of rapid and unprecedented change.”
Inturn’s retail solution offers real-time inventory updates, defragments data, streamlines financial and management processes, automatically downloads files and final transaction information and helps create a criterion for reporting metrics, ranging from product category margins to transaction duration, according to the firm. Last year the company moved its headquarters one block away from its previous office to a larger space in Manhattan’s Chelsea neighborhood to accommodate its rapid growth. The move followed a $22.5 million Series B financing round led by B Capital Group, announced in 2017.
The summit’s series of panel discussions touched upon four categories: Supply Chain; Inventory Lifecycle; Data/AI in Retail; and Shareholder’s Perspective. Its supply chain panel was moderated by Sarah Willersdorf, partner and managing director of The Boston Consulting Group and featured Sanne Manders, chief operating officer of Flexport, a shipping logistics company and Daphne Carmeli, chief executive officer of Deliv, a shipping solution firm. The panelists examined the “on-demand economy” and emphasized how speed has become integral to the overall consumer experience. “Avoiding that dreaded yellow sticky on your door turns out to be of tremendous value,” Carmeli said.
Deliv, which describes itself as “the new delivery standard,” said that consumer expectations are at an all-time high: 80 percent of shoppers want same-day shipping options, according to data from Temando; that 25 percent of shoppers would abandon a cart if same day delivery was not available, according to researchers at L2; and 61 percent of shoppers expect orders placed by noon to qualify for same-day delivery, according to UPS’ report on the “pulse of the online shopper.”
Manders said that pop culture trends are often largely responsible for sudden changes in the supply chain: “What happens when Kanye West buys red Nikes? All of the red Nikes go to L.A.” He added that solutions enable retailers to handle unexpected changes and play a vital role in establishing much-needed visibility. “It all starts first with visibility. There is no visibility right now, and if there’s no visibility there’s nothing you can measure.” Manders said that streamlining supply chains from the back-end saves working capital and allows retailers to determine if their current model is the best framework for their business. He added, “There’s a flexibility that you have with control.”
“What’s interesting is that your working capital actually starts when you’re picking up [goods] from the factory, and your inventory starts when you’re checking into your warehouse; and everything in between the factory and the warehouse is actually not part of your inventory, but it’s part of your working capital, and that’s what we’re solving. We’re providing a lot of transparency [and] visibility,” he said.
Its inventory life cycle panel was moderated by Shyam Gidumal, the leader of consumer products and retail segment at Ernst & Young, and included Lazar of Inturn; John Andrews, ceo of Celect, a predictive analytics solution for retail inventory portfolio optimization, and Gina Ashe, ceo of ThirdChannel, a platform that offers transparency for sales floor activity.
Panelists emphasized consumer experience and optimization as a key focus. Ashe noted the importance of immersive retail environments tailored to engage the consumer: “How do you shape [the retail] environment so the consumer gets the whole picture?” Ashe said that creating immersive consumer experiences is top of mind for retailers, which is inclusive of merchandising, signage, associate education, product demonstrations and consumer engagement. “Look at the way Sephora has reshaped that consumer environment in the store. It’s about immersive brand experiences. It’s entertaining, it’s educational and it converts to sales,” she added.
And predictability has emerged as a vital tool for retailers to “make bigger bets,” according to Andrews, who said that solutions have helped retailers make the “right” choices. He said that “Solutions need to become part of the decision-making process,” and that data can incentivize retailers. Lazar added that the implementation of solutions is “about turning some of the processes on their head, effectively, to just get things done properly.”
Poonam Goyal, sector head, senior research retail analyst at Bloomberg, moderated its Data/AI in Retail panel, which included Greg Petro, ceo of First Insight, a solution for optimizing new product creation processes; John Squire, ceo of Dynamic Action, an algorithmic platform that identifies and offers solutions for “margin-eating disconnects” in businesses, and Bill Adler, ceo of True Fit, a data-driven personalization platform for footwear and apparel retailers.
Panelists discussed how the growth of AI in the retail environment is largely due to its ability to personalize experiences for consumers, positioning it as a primary component of retail optimization. Petro asked, “Where are we with AI on a scale from 1-10? A two, or maybe a 1.5,” he said. Adler added that the sector is in a critical timeframe where “bad retail is getting corrected.” And True Fit’s AI data platform aims to do just that: enhance the consumer experience whilst delivering product strategically and swiftly.
Adler told WWD, “Consumer needs are fundamentally the same in off-price environments; consumers are still looking for items they love and can keep, because the item fits and flatters them. However, some of the friction of shopping is even more dramatic in an off-price environment — size availability of a given style tends to be much more spotty for example. A jacket a shopper might like may only be available in one size (not the right one!). Multiply that problem by thousands of styles.”
He continued, “[Narrowing down options] is becoming even more important to a world of mobile devices where the limited form factor allows fewer items to be viewed at a time. Retailers, off-price or not, need to become faster at presenting consumers with personally relevant, inspiring offers that result in successful purchases. True personalization is the path for accomplishing that.”
Petro told WWD that the Working Capital Summit is “shedding light on key issues and areas of opportunity in the industry. Speed to market and inventory efficiency are constant themes. It’s truly the Charles Dickens ‘Tale of Two Cities’ story. It’s the best of times and the worst of times. We’re in the middle of a retail renaissance and while the retail industry outlook doesn’t look as dire as it once did, it’s more important than ever for retailers and brands to execute to really thrive. They can do this by listening to and understanding their customer to create differentiated products that are priced right.”
The event also featured a keynote interactive video presentation by Max Levchin, the chief executive officer of Affirm and cofounder of PayPal. Affirm’s solution enables consumers to pay off purchases in fixed monthly payments. “Affirm was born out of this idea of, let’s try to create a simple, honest financial product specifically for retail auditors and more importantly retailers themselves,” he said. Levchin emphasized the importance of transparency and clear pricing for consumers, who have demonstrated a willingness to engage with brands if there’s a level of predictability or trust.
Levchin said that “there’s a hunger for transparency and clear pricing,” and that Millennials have demonstrated distrust toward credit card companies and banks and have protested by not opening credit cards to begin with. The company’s pledge to honesty is rooted in caring about the end user: “We don’t need to make money when you’re down and out or if you’ve made a mistake,” he said.
And its private Shareholder’s Perspective panel was moderated by John Berg, ceo of Financo, a boutique investment banking company, and includes: Tom O’Rourke of Bain Private Equity; Annette Rodriguez of Warburg Pincus, and Andrew Ferrer of General Atlantic. Collectively, the panelists have worked with investors in Tom’s, Canada Goose, Gabes, Reiss, Tory Burch and Gruppo Axo.
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