Insights From Top Retail Influencers That Are Changing the Face of the Industry
Last Friday, the team at RETHINK hosted their second Small Groups Mixer, a monthly virtual event catered to all of 2022’s Top Retail Influencers. During the Mixer, topics ranging from the creator economy to interactive retail experiences and today’s consumer spending environment were discussed at length. Here, we’ll explore these topics and additional insights from the Mixer with the help of a few of our outstanding influencers!
Gary Newbury: Reverse Logistics
Three main causes of returns: Product not wanted, Product not as expected and Product presented a fault. Nearly US$800B of returns were processed in 2021, that about 150% of total retail sales in Canada (including automotive and food service), equivalent to around 30B+ individual items being picked from a shelf, packed and shipped, all coming back!
There are a few key issues with returns that have the market separating between those actively managing whether a return should be made (e.g. Walmart, Amazon, Target – apex retailers) and those that cause friction in customer retention by either charging or making it frictionsome to enact a return. There is some doubt whether retailers are accounting for eCommerce and returns correctly, however, the biggest challenge to returns is “who own’s the end-to-end process, from the front end of the sale channel (and supporting merchandising/buying/demand planning) through to the overall customer experience. This responsibility is spread among various departments.
Haixia Yu: The Creator Economy
The younger generation is moving away from posed, rehearsed content on social media. Instead, they look for authentic, relatable content created by Nano Influencers.
How can retailers and brands leverage those Nano Influencers who are passionate about the products they share, local or within a specific age group?
Retailers can leverage the creator economy, for example, include content created on TikTok into the unified marketing campaign and create an inclusive unified commerce experience.
Live shopping is trendy to engage with the audience through storytelling and authentic content.
The creator economy can also be used for brands to spark creativity to repurpose, recraft, or reuse products to elevate resale and sustainability.
Trevor Sumner: Interactive Retail Experiences
I had the pleasure of moderating the most well-attended sub-group (ahem) of the Rethink Retail July Mixer, attended by some impressive colleagues in the industry – The Rethink Retail 100. Our discussion topic was a hot one – interactive retail experiences. So much promise in technology. 85% of transactions occur in store and even Shopify admits that eCommerce has returned to the pre-Covid trend line. So as investment shifts back in stores, why haven’t we seen more interactive retail at scale defined as let’s say 50% of stores of major retailers? Why not ask the experts…
Brands And Retailers Need To Collaborate Closer
We began on who was doing interactive retail experience well and Nike, Zara and Warby Parker were the leading examples – all single brand retailers that own their product. One key challenge is that multi-brand retailers struggle with getting the content from brands consistently and have smaller margins they need to share with the brand. Brand-retailer collaboration needs to improve or we will see brands leading the charge in bringing interactive retail experiences to their retailer partners, which is what we see at the Macy’s beauty section, for example.
Over 80% of our work at Perch is with brands, despite the massive opportunity for retailers to improve shopper experience. Paradoxically, these means at Perch, we have seen greater scale in brands in mass retail like Purina’s Pet Education and Unilever’s Beauty In Real Life, than in luxury where our 30-80% sales lift make a clearer case for ROI.
The Trinity Of Foundational Upgrades Must Enable A More Agile Mindset
It’s hard to have interactive product experiences when the product data is inconsistent, errored or missing. As Talkdesk’s VP Of Retail Industry Strategy Shannon Flanagan added, Covid accelerated the foundational layer of product information and inventory in forcing retailers to beef up online channels and unified commerce modes like BOPIS. Founder of RFID Sherpas Marshall Kay also added that RFID was an accelerant in tracking product and being able to identify and interact with it with magic mirrors in the fitting rooms, custom digital displays and more.
Personalization and retail media networks are driving the shoring up of identity and purchase history as a foundational layer. We have seen a meteoric rise in retail media networks in the last 12 months alone. Loyalty programs are being pushed heavily to unite unique in-store purchasing insights with online targeting, but can also be used for interactive retail in interesting ways.
The last layer, as Microsoft’s Global Retail Lead Shish Shridar pointed out, will be around in-store data, analytics and brand-retailer collaboration so that brands can sponsor or subsidize key interactive technologies, especially store wide. New computer vision insights to in-store are enabling a much better view of shopper behavior in store and what influences it.
With this trinity of shopping (product, shopper, data analytics) in place, retailers will be able to innovate more quickly and drive to scale with interactive retail that improves shopper experience, increases sales and drives greater loyalty.
Organizational Structure And Culture Needs To Align With Innovation
Unfortunately, many companies aren’t aligned to take advantage of existing technologies to adapt in-store experiences with digital, as RetailWeek Columnist Ian Middleton pointed out. Change is hard for large legacy organizations. For retailers, digital often means the eCommerce team. Different skill sets. Different cultures.
Right now, brands are struggling with how to think through retail media network spending, especially in store. If it’s digital, does that come out of advertising budgets? If it’s retailer specific, especially in-store, is that the Sales and Shopper marketing teams? These aren’t trivial questions or ones easily answered.
We will see a period of transition as skillsets merge across departments and org structures are realigned. Those that act more quickly will get in earlier with more attractive economics and the greater opportunity for market share gain.
When will we see interactive retail experiences at scale (>50% of store footprints for major retailers)?
The general consensus of the group was 2025. Foundations are in place. $40 billion will be generated by retail media networks this year. But physical scale takes time. It takes expertise. It takes a culture rooted in the aspirations of digital and the operational realities of the physical. And those with the greatest scale will first reap the benefits of innovations with higher R&D and fixed costs.
We will see Walmart implement electronic shelf labels in the next 6-8 months based on their announcement in March. Best Buy is experimenting with new digitally minded store format (and has implemented ESLs in Canada). The seeds are there and 2025 is just 3 years away. What an exciting time. In just 3 years from now, we will see phyiscal+digital interactive be a commonplace in our shopping experience!
Marie Driscoll: Today’s Consumer Spending Environment
Today’s consumer spending environment is:
- A mixed bag of positive and negative macro-drivers. Still shopping but inflation is impacting choices.
- A result of covid, on the margin more people and more wealthier consumers trust Amazon.
- Marine traffic in logjam in China, that with lack of US infrastructure (enough rails and trucks) and various labor issues including strikes has the supply chain problems lasting longer than most would expect. Potentially through 2025-2026.
- With that in mind, nearshoring is part of retailers and brands consideration set. Changes in supply take time.
- Weddings impacting jewelry sales, bridal jewelry up 40% in 2021. Think about the next purchases as couples enter a new stage.