Prioritizing Retail Innovation: Insights From NRF 2024
An effective way to organize the flood of information from National Retail Federation (NRF) 2024 is to follow the money. In other words, focus on innovations in priority of their business impact. With this guiding principle, key learnings from NRF include new revenue in retail media networks, operationalizing artificial intelligence (AI), managing shrink/cyber risk, effective employee engagement, and store automation.
Retail Media Networks
In an economy marked by higher operating costs, labor shortages, and a fierce fight for a shrinking customer wallet, new high-margin, revenue streams are critical to improving store profitability. As TV, radio, and print face the reality of shrinking audiences, consumer packaged goods (CPG) brands are aggressively investing in retail media networks. Insider Intelligence forecasts US retail media ad spending to reach $109B by 2027. The store is the one place where consumers welcome advertising to help them shop more efficiently and competently.
To justify the in-store customer spend, advertising brands are seeking attribution metrics. The industry is evolving from basic traffic and purchase data to path analysis (tracking how consumers navigate the store) and product engagement. While POS data provides insight into what a customer purchases, retailers are blind to other consumer activity in the store.
Additional customer in-store analysis includes:
- What other products did the consumer consider but not purchase?
- How long did they spend in the store?
- Did anyone help them when they needed help?
- How many customers entered the store without purchasing anything?
The rapid maturity of computer vision applications and widely available video surveillance solutions provides retailers the insight they need to optimize the customer’s in-store experience while collecting valuable in-store operational data.
Challenging market conditions require retailers to operate their stores with greater precision to achieve profitable outcomes. When profits are fat, retailers can afford to overlook the traditionally acceptable points of revenue leakage and operational waste. During lean times, every aspect of the business matters and must be optimized. Gone are the days when retailers could afford to operate their business based on executive intuition or personal experience.
Retailers require the ability to extract insights from their enormous pools of store operational data and translate them into actionable tasks. There is no time for data analysis when store managers are faced with operating stores with insufficient labor. The frontline jobs must be simplified to focus on store execution. Numerous tools are emerging to engage with retailers at every step of the AI journey, from basic tools to full-service solutions.
Loss Prevention and Cybersecurity
According to NRF, shrink costs the retail industry $112B. In 2023, IBM reported the average cost of a data breach at $4.45M. As bad actors leverage various methods, such as initiating fraud online and monetizing in-store, retailers are integrating their loss prevention and cybersecurity teams. One informs the other and vice versa. Intelligent analysis of multiple data streams (both online and in-store) enables retailers to anticipate fraud and take action before it happens. For example, high volume, store-specific, high-valued inventory queries may be leading indicators of a future attack.
As retailers become increasingly adept and dependent on insights from consumer data, proactive action must be taken to comply with data privacy regulations and cybersecurity standards (e.g. PCI 4.0). For example, implementing data clean rooms enables retailers to extract insights while protecting the customer’s identity. Engaging with Managed Security Service Providers (MSSP) enables retailers to elevate their internal cyber defense capabilities while controlling costs.
Effective Employee Engagements
Labor is one of the most significant costs of retail operations. Retailers are leveraging the next generation of mobile employee engagement to address the ongoing struggle to find, onboard, and keep frontline labor. The solutions are not only accelerating the onboarding process, simplifying task management, and providing scheduling flexibility, but mobile engagement is also shaping the employee experience by helping them feel like part of a much bigger organization and purpose. With mobile engagement via video, the retailer directly connects with the frontline, facilitating a consistent corporate-wide understanding of organizational values and culture.
While RFID has been around since the 1980s, escalating customer expectations around omnichannel engagement are forcing retailers to solve the problem of in-store inventory accuracy. With the wave of an RFID wand, retailers understand not only what inventory exists in the store, but also how inventory moves through their supply chain. In today’s market, the “where” and “when” of inventory are as important as the “what.”
Change occurs when the pain of staying the same exceeds the pain of making the change. Extremely challenging market conditions have created a powerful motivation and opportunity to evolve the business of retail. Careful technology prioritization and execution will be the key to a successful 2024.