NRF 2020 Key Takeaways
January 20, 2020
The LiveArea team was on the ground at NRF 2020 – along with 38,000 attendees from 99 countries, 18,000 retailers, 900 members of the press, and 800 exhibitors. Brands and retailers looking to sharpen their commerce vision this year and beyond traversed the 275,000 square foot expo – where LiveArea co-exhibited with PFS – and selected from 300+ sessions and activities exploring the retail landscape.
We gathered insights from NRF 2020 reflecting common themes threaded through conference content that offer a glimpse into where retail is headed, interesting trends, and how brands are thinking about and caring for customers.
Companies are putting a premium on the human element in the digital age. Brands talked about efforts and investments to put people at the center of their interactions – not only customers, but pivoting to experiences delivered by people or a blend of people and technology. Starbucks CEO and President Kevin Johnson said Starbucks’ customer experience is grounded in human connections – admittedly, a challenge when serving more than 100 million customers a week across 31,000 stores. He said the company’s digital strategy is “human-first” and it applies technology and data to enhance human connections.
Apparel brand Rag & Bone recently launched a tool connecting shoppers with in-store sales associates via smart phone. Color & Co by L’Oreal, a LiveArea client, pioneered a service that pairs colorists with customers for online color consultation sessions – a win-win for customers and a growing network of freelance stylists connected with the brand. Peloton’s SVP of Retail Jennifer Parker described the fitness company as relationship-based rather than transactional. Creating community is key to the care and feeding of brand loyalty – and what’s behind its rabid fan base. She told the story of one “Pelo-fan” who flew from east to west coast to attend a favorite Peloton instructor’s fitness class.
The Experience Economy
Connect with the customer’s head and heart. Offer brand-centric experiences online and in-store. Collaborate with the right partners to extend your brand and create novel experiences. These concepts define what brands are calling the “experience economy” – and there was no shortage of examples at NRF.
Ben Kaufman, CEO and co-founder of Camp, describes his toy stores as “family experience” venues that create a destination for mom, dad and kids – including Friday “date night drop offs.” Sure, merchandise is sold, but it almost seems like an afterthought. American Girl stores, too, are destination shopping locations with doll hospitals, cafes, hair salons and more that create emotional connections with customers.
But experience isn’t limited to toys. The salon Drybar is known for creating luxury experiences – champagne, first-run movies, augmented reality for sensorial spa services that place customers in a Provence field of lavender. NTWRK, the HBO of video commerce, leverages a headless commerce platform for retail-tainment, including exclusive shoe drops for sneaker heads. The brand markets fewer than 1,000 SKUs, but has a conversion rate of up to 15% tied to its live video experiences.
“Retail generates 40 terabytes of data per hour. What will we do with all that data?”
– Satya Nadella, CEO, Microsoft
Data and AI
Retail generates 40 terabytes of data per hour, Microsoft CEO Satya Nadella told a packed house in his keynote address that opened NRF 2020. “What will we do with all that data?” PopSocket’s global CMO Becky Gebhardt said the phone-grip brand uses data to drive innovation. AI-generated data signals were behind the launch of PopPower Home, a wireless charging device adding a significant new revenue stream to the brand’s bottom line. Single view of the customer is the holy grail for PopSocket, enabling it to build experiences that resonate with each customer.
Drybar CMO Sarah Hoffmann said the salon chain invests in maintaining 360-degree profiles of its customer base – two million and counting. Data is maintained on customer preferences, lifestyle and behavior to customize what the brand refers to as in-store “micro-experiences” to drive loyalty and engagement.
eBay applies data and AI to accelerate growth, speed search, and better understand its customers who spend 104 million hours shopping on the platform each month. Little known fact: Every day a Ferrari is sold on eBay. AI is applied to ensure these Ferrari customers – and every other eBay shopper – can quickly discover and buy products. Search content is served up in roughly two-tenths of a second.
“Deep Brew,” Starbucks’ AI initiative, is used to predict the number of baristas needed in stores any hour of the day. CEO Kevin Johnson explained, though, that AI will never replace people – its role is to help store associates spend more time connecting with customers. “We have a human-first digital strategy,” he said.
Conscious Consumption and Sustainability
Sustainability was a huge theme across the conference. Executives from apparel, health and beauty, and home brands described initiatives appealing to an increasingly vocal customer base that cares only to associate with brands invested in sustainability.
Lush is a billion-dollar global beauty brand based in the United Kingdom. It has 900 shops — 250 in the United States and Canada — and a significant digital presence. Six values bind the brand: Stringent policies against animal testing, fresh cosmetics with production dates, ethical buying, a 100% vegetarian product line (80% vegan), a focus on handmade items and “naked” or no packaging. “It’s not enough to sign a code of conduct,” said Heather Deeth, manager, Ethical Buying at Lush. “At Lush, we’re creating a cosmetics revolution to save the planet.”
At West Elm, a home lifestyle brand, sustainability initiatives are underway across the company. Waste is repurposed. Only responsibly sourced cotton and wood are acquired. West Elm is the first retailer to launch the Nest Ethically Handcrafted Seal, letting consumers know products have been ethically handcrafted in a home or small workshop. It is the first home retailer to become Fair Trade Certified. A worker wellbeing program was introduced offering vision screenings and providing corrective eyewear to 20,000 factory workers. “Customers vote with their dollars and want to know that no harm is being done where they spend their money,” said Jennifer Gootman, vice president, Corporate Social Responsibility, West Elm.
Storytime and Contextual Commerce
Story telling matters and especially for lifestyle brands. Crate and Barrel CEO Neela Montgomery said her brand targets online customers with compelling stories and unexpected collaborations, including Gwyneth Paltrow’s goop contextual commerce brand. NTWK streams shoppable episodes live every day to mobile devices, releasing limited edition apparel before it’s available in store. Pinterest prides itself on its ability to inspire. “Consumers don’t want to be advertised to – they want to be inspired, educated and enriched,” said Pinterest’s Head of Retail Strategy Amy Vener, and that’s the power of a good story.
“Consumers don’t want to be advertised to –
they want to be inspired, educated and enriched.”
Rental and Re-Commerce Revolution
More shoppers are rethinking how they acquire “new” clothes, so fashion rental and resale brands are taking center stage – and wallet share from brands that only sell apparel. “Pride of ownership is being replaced by pride of access in fashion today,” explained Rent The Runway CEO and Co-founder Jennifer Hyman. She said the brand’s “closet in a cloud” concept – one-time rentals and subscription services – gives consumers a “living closet that adapts with your life – your size, mood, age.”
Clothing rental brand LeTote, which recently acquired Lord and Taylor, sees two-thirds of its revenue come from clothing rental and its subscription model, building its business on a “try-before-you-buy” model.
“We are all more conscious of how we consume,” said Anthony Marino, president and CMO of resale brand thredUP. Last year, more than 60 million consumers bought second-hand clothing – up from 56 million the previous year. One in three Gen “Z” consumers – those born in the late 1990s and early 2000s – said they buy second-hand clothing. “This is real – this is happening,” said Marino of the resale trend. New and used apparel and accessories marketplace Poshmark boasts 50 million users, including seven million sellers who use the platform to resell goods. Rebag sells “once-loved” luxury handbags. “Retail doesn’t discriminate by income. Value is attractive no matter how much you have in the bank,” said Marino.
Diversity and Inclusion
Executives from Macy’s, Bonobos, and Mastercard suggested the diversity conversation is being reframed and broadened. The consensus seemed to be that diversity and inclusion are about enabling people to see themselves in brands. But Bonobos CEO Micky Onvural cautioned the definition of inclusion must embrace not just what is seen — gender, ethnicity, body size — but what is unseen, including gender identity and orientation. “I think what’s interesting is how fashion can help express the entirety of who they are. We want to create a world where we all fit,” she said.
On another note, this year Macy’s announced a goal to get to 30% ethnic representation at its senior director level and above, and created a year-long development program focused on ethnic diversity called “Mosaic.” Similarly, Mastercard CEO Ajay Banga talked about the importance of celebrating, at an individual level, what makes us different. Imbuing diversity in company culture better equips brands to serve and relate to all types of customers, and creates deeper customer connections.
Customers move across verticals fluidly – and brands are following suit, pursuing a constellation of opportunities. A prime example is Shinola. Its heritage may be in leather goods and as a watch maker, but the brand recently moved into the hospitality sector – after bicycles and audio equipment. In talking about the opening of Detroit’s Shinola Hotel last year, Shinola CEO Shannon Washburn explained that technology is facilitating the ability to shop easily across terrains. “Experiences once lived within verticals – not anymore,” she said. Loyal customers will shop across categories if brand ethos and quality interactions remain intact.
“Myself and a lot of women felt largely ignored,” explained goop CEO Gwyneth Paltrow in talking about the genesis of her lifestyle brand. The brand, she said, blends experiential and contextual commerce to help women connect with products to “optimize” their lives. Rent The Runway’s CEO and Co-founder Jennifer Hyman said women make up 80% of the company’s leadership, while the CEO and president of Cartier North America Mercedes Abramo said 55% of the brand’s country managers are women. Yet, just 12% of leadership positions in retail are held by women – in spite of the fact that 78% of retail purchases are led by woman. A solution to the leadership imbalance lies in sponsorship. “Women have to figure out how to help women,” said Abramo.