The BIG Show: NRF 2015 Blog, Day 1

Keynote: Brick is the New Black
Here are some key takeaways and highlights from Sunday’s keynote:

• Brick is not dead. The key is more profitable commerce. Today, many retailers fulfill online orders but few do it in the most profitable way possible. Retailers have to assess logistics of inventory and commerce to be profitable on each transaction. But current systems don’t offer a view of the supply chain network. To enable dynamic decision making requires integration of warehouse, transportation and logistics, in-store for smarter commerce.

• Smart stores have: inventory visibility, intelligent fulfillment, labor productivity. These are essential if you want to maximize profitability across omnichannel scenarios.

• Store is a vital component of the supply chain network. 95% of retail sales will be captured by retail brick and mortar presence. Store is still the place most retailers make money today. Successful retailers of the future merge omnichannel experience across online and in store. They merge physical and ecommerce operations for a single view of inventory across the enterprise. But most retailers keep physical and ecommerce separate.

• A natural shift is occurring in retail. Tech is just a tool to drive the experience. The experience is what’s critical. The net offers convenience. The retail store offers sensory experience you can’t get at home. And a sales staff. But the staff has to think relationships instead of transactions. For retailers, they have to think about the experience behind the brand.

Thoughts from James Curleigh, EVP and President of Levi’s Brand
Why is the music business challenged today? Consider what used to happen… Music was about the most memorable moments… a concert… a moment that mattered in your life. The challenge is to recreate those moments more often authentically. This has to do with addressing your fans. Our consumers are fans at Levi’s. We have three kinds:

1. Fans that love us and never left us
2. Fans that still love us but left us
3. Fans that really don’t know who Levi’s is but once they get introduced they love us forever

Be Simple and Sophisticated
The brands that do it best are simple in front… but behind the scenes are extremely complex. Levis’ simplicity is necessity. Picking out jeans should be easy. When you order it should be there and available. Data and visibility into data and inventory have to be aligned on the back end to have simplicity on the front end.

Be Accessible and Aspirational
Brands and retailers need to be both. Levis has 2800 stores worldwide. 4800 other points of distribution and wholesale partners. And a web site. It’s up to us to leverage access and provide aspiration. We’re doing this through customized products that include but go beyond denim.

Internet of Everything: New Horizons in Retail
Cisco presented a compelling case for the Internet of Everything (their name for the Internet of Things + Big Data) in retail. From tracking shopping cart paths to using video to generate “heat maps” of the most frequented store shelves, new technology is bringing unparalleled insight to retail.

The IoT enables “Smart Factories” that will optimize operations dynamically, making sudden order changes manageable.

But the real story here was the idea that to solve problems in retail, you need to move will from static processes to dynamic ones. Dynamic processes are alive, generating information, automating and digitizing ways of working with real-time feedback and visibility. While Cisco focused mostly on the consumer side, all these principles hold true, in sometimes more important ways, for the supply chain.

A few highlights from the talk:

• 20% of consumers now make half their purchases online.
• Beyond consumer electronics, the next largest product category that consumers are buying online now is apparel (a 41% shift). Just because a good is tangible no longer means people will only buy it in stores.
• Locating items is becoming more precise. Wifi triangulation used to pinpoint objects within 7-10m, within the coming year that technology will improve to to 1-3m
• The cost of active tags is decreasing. Soon, having tagged sensors on every object will be possible and affordable.
• Video is a general purpose super sensor that offers lots of detailed information. Performing video analytics to get the most of out this information will be a major development in big data applications.

More Takeaways from Leveraging Big Data for Deeper Customer Insights and Smarter Retailing
Big data can deliver real time insights and functionality for retailers. The key is making it actionable. If someone is in the “moment of choice” you can influence it. Retailers and consumer goods companies are also using big data deeper into operations and supply chain. Consider buying behavior across retailers – how can you use those insights in the supply chain? With big data insights I can get better at in-stocks and service. I can better fulfill orders and meet demand.

Notable Quotes:

Satish Mehta, VP Enterprise Solutions at Staples
It’s mandatory that all retailers know customers, and many do, but – they don’t do good just understanding them. There’s a big difference. A unified customer view requires:

1. Master Data Management
2. The ability to bring together transactional and interactional data, which includes email, social, and other interaction data. Understanding a customer requires linking all of that data together in a real time fashion to cross sell and upsell. This is where it’s moving. Until you solve master data management and integration of transaction and in-transactional, a single view will remain elusive.

Dr. Phil Shelley, President of Newton Part Partners
IT organizations that don’t embrace a new way of thinking (about big data and analytics) run the risk of becoming a dinosaur. Many business leads are going around IT now. Some IT organizations are embracing change and partnering but others are focused on what they already have. As a business leader you sometimes have to carry the flag… sadly a lot of IT people are not embracing change at the speed they should.

Breakout Session: Leveraging Big Data for Deeper Customer Insights
How is business evolving? A panel discussion on the digital foundation and transformation of business spoke to the role of big data in changing retail. The panel discussed the current state of big data adoption. Ten years ago, retailers were struggling to get point of sale data. Now, with big data, retailers can see purchase history with each of their customers. Yet this data still exists in silos. The biggest challenge in breaking down silos is that data needs to be integrated, in order to piece together larger trends.

The panel cited that we are entering the “era of engagement,” where it’s the interactions at the edge of an organization that are critical to success. That means engagement with customers, with suppliers, and with distributors become key areas where big data can improve decision-making. The building block to implementing big data, according to panelist Dr. Phil Shelley of Newton Park Partners LLC, is to create enterprise data hubs that can bring data together. Then, businesses can deploy systems that can leverage rapid big data analytics.

Rapid analytics, and real-time information were cited as a centerpiece of the discussion. Real-time insights require knowing what’s going on where, with whom. With that kind of visibility, analytics can drive processes. The panel also described the use cases of big data on the operational side of retail. How do you think about stratifying assortment by velocity and process in addition to by customer? Big data can be used to improve retail supply chain operations, while making use of the real-time analytics occurring from customer-end to supplier-end across the network.

Stay tuned, and follow us on Twitter (@GTNexus) for more NRF 2015 coverage!

The BIG Show: NRF 2015 Blog, Day1 | Day 2 | Day 3