What was discussed at the main retail conference of the year: NRF-2022 RECAP

On January 16–18, 2022, the SMART business team visited NRF-2022 Retailer`s Big Show. In the article, we share insights from the event, namely, predictions and forecasts related to the retail sector.

SMART business team at NRF-2022

How can technology enhance customer experience?

Acting “in advance”, not just “on time”

For the 114th year, the conference has been held after the New Year period. This year, one of the questions that came from the stage was why did December 2021 retail sales drop compared to November 2021? 

This question was answered by Arvind Krishna, CEO of IBM Corporation for Artificial Intelligence, Supply Chains and Digital Transformation.

According to Arvind, it is difficult to correctly interpret the figures for one or even two months, given that in an environment of uncertainty, people are shopping in advance. Using exclusively human capabilities, it is quite difficult to predict the real demand for your product for a month, six months or a year in advance and, in accordance with these indicators, build an optimal supply chain.

Thus, it is important to be guided not only by your own knowledge of seasonality and peak sales or last year’s results, but to take a comprehensive look at a large amount of data. Such huge volumes of information can only be “digested” by technology.

Arvind Krishna at NRF-2022

Keeping up with the changing consumer 

This month, the IBM Institute for Business Value and NRF published a study that shows how important it is for retailers to integrate online and offline experiences. Nearly two-thirds (72%) of respondents shop wholly or partly in a physical store, and 27% cite hybrid shopping—a combination of physical and digital channels—as their best shopping experience (36% among Gen Z). Omnichannel business is more important than ever, according to Krishna, and not having the right data systems may put your company at a disadvantage. 

The ecosystem of Microsoft solutions allows business processes to be continuous, as all systems (ERP, CRM, BPM, and so on) are seamlessly integrated with each other. 

Committing to sustainability 

Krishna also touched upon the topic of environmental impact, which was one of the most discussed ones at NFR-2022. The same IBM/NRF study found that 62% of respondents are willing to change their shopping habits to reduce their environmental impact, up from 57% two years earlier. In addition, half of the respondents said they were willing to pay a “green brand” premium, averaging 70%. This is twice as much as in 2020. 

At the end of 2020, IBM made a hard commitment to using fully clean energy by 2030, Krishna said. The company will be at 65 percent clean energy usage by 2025. Green energy refers to energy generated from zero-emission renewable sources and saved through improved energy efficiency measures. 

5 retail trends impacting businesses around the globe 

Best Buy CEO Corie Barry looks back at the company’s last 2 years and shares the trends that have helped Best Buy maintain its lead in the competitive retail niche of consumer electronics.

Corie Barry at NFR-2022

“The first is that safety matters. What constitutes safety will be defined by each customer. We’ll continue to need to prioritize a safe experience.” 

The second is convenience — again, as defined by the customer, not by Best Buy. Barry said 40 percent of what the company sells is picked up by the customer from the store — even though most of it is eligible for free next-day delivery. 

“Third is a juxtaposition of what I call digital comfort,” she said. “People are easy with technology now in ways I’ve never seen before, but the flip side of that is very high experiential expectations. They want magic. When you send a consultant into their home, they expect it to be an amazing experience.” 

The fourth trend is that, at least for now, the employee is more in control. “They ask, what is my career path? What are my benefits? What does my development look like? So how,” she said, “do I offer this suite of things to my employees that will help them stay sticky to me as a company?” 

Fifth, data is the new currency. “We have lots of data about how we can keep the customer’s purchases up and running. How can we refine and improve the customer experience with all this rich data that will allow them to optimize — and also personalize — the way they work?”. 

When climate becomes a business imperative 

Kate Hardin, Executive Director of the Deloitte Energy and Industry Research Center, began her speech with data from a recent survey of 23,000 people in 23 countries. It showed that 72 percent of respondents believe climate change is an emergency, and 57 percent are worried or anxious about climate change. But 55 percent had purchased a sustainable product or service within the last four weeks, and 30 percent said they had paid more for that product or service — significantly more. Almost 20 percent reported that they had waited longer for it. 

This suggests that consumers are beginning to think about this and take action. 

Sustainability isn’t about a single choice, Hardin said. It’s about billions of choices made every day. 

In terms of business, there’s often a focus on the “costs” of new technologies, of taking action in this area. “What we would suggest is that actually, there’s another way of looking at this, which is thinking about the costs of inaction,” Hardin said. “What are the costs of not making these choices?” 

Kate Hardin and Javier Quiñones at NRF-2022

Hardin introduced Javier Quiñones to extend the retail connection to sustainability. As it turns out, his connections to sustainability have been both professional and personal for decades. 

When he joined IKEA in 1997 as a part-time worker, the first thing he did was attend sustainability training. Today, as both CEO and CSO, he doesn’t sit in meetings and take one hat off to put the other on, he said. Managing both is “very natural.” 

“It’s so important, and for me it’s about living by example,” he said. “It’s part of who I am, and part of the role of all leaders at IKEA. It’s part of everyone’s job description, actually.” 

Sustainability, he said, is part of IKEA’s DNA. The Swedish retailer aims to positively impact people and the planet, including collaborating with suppliers to create fair working conditions, using resources wisely and inspiring customers to live more sustainable lives at home. 

But one difference stands out amid the finding that consumers would be willing to pay more for sustainable goods and services: “We want to make sustainability affordable for the many, not only affordable for a few,” Quiñones said. “That’s extremely important in the way we see this from the brand’s perspective.” 

In 2015, the company decided to focus on LED lighting as the most sustainable option, and to eliminate any other types of bulbs. When that effort began, LED bulbs went for $7-$8. Now, however, they’re as inexpensive as $1.29. 

Overall, IKEA has the goal of being a circular and climate positive business by 2030. In 2021, it added another step in that journey: a Buy Back & Resell program to give gently used IKEA furniture a second life. IKEA has also continued to invest in sustainably managed forests, and owns solar and wind farms. 

Second life of your furniture in IKEA

For others just starting out, he said that sustainability efforts must come from the company core, with leaders willing to be fully committed. It’s also important to remember that it may require a cultural shift, and that doesn’t happen overnight. 

The good news, however, is that Quiñones, a self-described “extremely positive” person, believes retail is ready. In short, the industry must be, because “time is ticking.” 

“The important thing here is that we start, that we have long-term plans, but that we also break it into the short term,” he said. 

It may only be one step forward on what promises to be a journey, but that’s still one step forward. “Start with movement,” he said. “Getting paralyzed is not an option.” 

Key takeaways 

In America, October, November and December are called the holiday season, that is the period when people make the most purchases. In 2022, 14.1% more was spent on purchases during this period than in 2021 (taking into account 5% inflation). 

Also, one can talk about the retail industry development dynamics based on the indicators of employment of people in seasonal work. In the 2021 season, 685,000 retail workers were employed, although the expected figures were 650,000. 

All this indicates that the retail industry (including offline retail) not only does not decline, but continues to develop actively. 

If you are interested to know which SMART business solutions can automate your business processes and improve customer journey, please contact us at sales@smart-it.com

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