Tue, Apr 12, 2022
From March 27-30, Retail's Big Reunion took place at the Mandalay Bay Resort in Las Vegas, Nevada. After two years of virtual conferences and events, Shoptalk finally held their biggest event ever, with 10.000 attendees, about 650 sponsors and exhibitors, and more than 250 speakers.
As proud supporters of Shoptalk, got to attend the awesome talks, trainings, events, and parties provided during the 4-days event.
Being back to in-person events with a conference of such magnitude was a thrilling experience. We will start giving a big shout-out to the organizers, as every detail was taken into mindful consideration. From the previous days we were able to network with other attendees through Shoptalk app, organize the event agenda and get ready for the big show.
Diversity was part of the agenda: from the topics covered through the gender distribution, it was very inspiring to see as many different perspectives sharing their industry insights.
We arrived at Shoptalk with some goals:
Thankfully, we got all three covered, and we will share everything in this post. It will be an overview of the hottest topics discussed at Shoptalk along with our selected main takeaways and learnings.
The recognition of value that AI can provide to the Retail industry is not new. Already in 2018, McKinsey suggested that Retail, Transport and Logistics, Travel and GPC were the industries with the greatest potential to generate value through AI initiatives.
With the pandemic and the new post covid normality, AI adoption has only been accelerated. Nowadays, AI is a first-class citizen in Retail and there is no single retailer that is not thinking or working on it. At Tryolabs, we have been helping retailers throughout their AI Journey for more than a decade. and our vision is to continue transforming retailers into AI organizations. Therefore, we couldn't miss Retail's Big Reunion. We wanted to learn about the latest trends and innovations to enrich our AI Solutions and share them with you.
Personalization is not a new word in the dictionary of retailers. Seemingly everyone has been talking about personalized customer experiences for the past ten years — but in Shoptalk, it was widely admitted that it's a challenging problem to crack. Companies were transparent about their desires and struggles with their personalization journey.
It is clear that retail is moving from being transactional to being experiential.
The retail market is large and hyper fragmented. It creates a complete sense of overwhelming for most shoppers. Personalization is all about breaking the traditional flow and maintaining closer ties with the consumer, which will turn into loyalty and a great overall experience. It's about respecting the value of the customer's time by providing a cohesive omnichannel behavior that resonates with their emotions. It's about caring.
There are significant, measurable wins to have. Julie Bornstein, CEO of THE YES, a one stop hyper-personalized shop for fashion, showed some early company data that pointed to increases of 1.75x annual spend, 2x annual order frequency, and 1.25x retention rate between those who have experienced personalization and those who haven't. And this is just scratching the surface of what's possible.
How does it work? THE YES achieves its hyper-personalized experience through a comprehensive fashion taxonomy created by the combination of human expertise and machine learning.
Bornstein argues that the process to achieve personalization is long and hard and said in her panel:
If you think about the world today, the amount of content, product, and noise is so overwhelming that the next wave of what will happen in the world of the internet and information is how people will find the right things for them.
Thankfully, we learned that AI and machine learning have mostly ceased to be buzzwords in the retail industry. It is taken for granted that companies are investing significantly in AI because those that do not will be easily outcompeted.
AI has become symbiotic with retail and personalization. But it's not through AI alone that personalization can be solved.
It all comes down to the efficient execution of a holistic personalization strategy: one where the customer is at the center and multiple inter-disciplinary teams (mixing business, data, and psychology knowledge) work together.
We are a bit spoiled by having - worked - a lot on demand forecasting and price optimization solutions. Still, we were expecting larger retailers to be way ahead in the game of using data and AI for smart pricing strategies as well as forecasting their demand.
It became clear that companies are just starting to get their feet wet in the subject. Many haven't yet seen the opportunity. Nonetheless, Jason "Retailgeek" Goldberg, one of the most followed e-commerce subject matter experts on the web, highlighted in his talk that 30% of what is manufactured never gets sold, and another 30% is sold at a discount. You have to sell something people actually want.
According to Anshu Bhardwaj, COO & SVP of Walmart Global Technology & Commercialization, retailers have thought of AI traditionally associated with their personalization efforts. However, she identifies using AI for supply chain and demand forecasting as the next frontier.
Jerome Griffith, CEO of Land's End, admitted that managing trend and demand forecasting is really difficult. He recognized pricing as one of the big levers of the retail industry and highlighted how they see early success with the implementation of dynamic promotions at Land's End.
Main learnings from his talk:
There were entire panels and keynotes dedicated to exploring sustainable solutions for the future of retail. There was a solid consensus that retailers should prioritize circular, sustainable, ESG (Environmental, Social, and Governance) and CSR (Corporate Social Responsibility) initiatives.
Along with a genuine decision to adopt a fair attitude towards the planet and the different communities, retailers have seen that consumers demand this philosophy. They have growing expectations for brands to be more transparent and responsible with their impact on the environment. And overall, it is also good for business, so it's a win-win for brands.
In the Sustainable Technology Solutions panel, we heard from representatives of technology providers such as INTURN, Returnity, Sourcemap, and Trove. From excess inventory optimization, reusable shipping and delivery packing systems, supply-chain traceability and transparency, and RaaS (Resale as a Service), these providers are helping brands become more sustainable and circular with the help of technology.
Resale or recommerce was one of the hot topics in the discussion. Andy Ruben, founder & CEO of Trove, the Resale-as-a-Service in charge of the resale operations for brands such as Levi's, Lululemon, and Patagonia, argues that brand growth from selling items multiple times, more known as recommerce, is a radical idea. This concept differs entirely from the classic sense of economic growth today, based on a production cycle (make more, sell more), which he believes "is not sustainable." Trove's perspective is that resale as a channel is the new sustainable growth model.
In one of the keynotes, James Reinhart, founder & CEO of fashion resale platform thredUP, made the analogy that resale today is like the "ugly Toyota Prius," which people would tolerate just to have an electric car. The following five to ten years will be the "Tesla stage," where we'll see tremendous innovation and evolution in resale.
The challenge seems to be how to measure these circular and sustainable initiatives, and Steph Wissink, Managing Director at Jefferies, recommends thinking about the most critical measures to driving internal buy-in.
Some people might not have noticed, but most of the innovations in the retail world have roots in China. Chinese companies like Shein and Cider are growing at unprecedented rates, capturing a good portion of the market of traditional retailers with innovative approaches. Here, we go through some key learnings that resonated during Shoptalk.
These are mobile apps used for many transactions that are not the main purpose of what the app was originally for. WeChat is likely the prime example, widely used in China (more than 1B active users). Yes, it is used as WhatsApp, but it is also the go-to app for many other functionalities like payment services, money transfers, retail purchases, etc.
Interestingly, super apps became popular because companies couldn't leverage the usual email communication channel, as many people don't use email.
The Chinese companies saw this as an opportunity. The concept of private traffic was born.
Traditional western retailers have been using email campaigns and promotions. These are one-directional (from retailer to the client). But, as every customer in China uses a super app, retailers figured out this opened the door for having a two-way communication channel with their customers.
The way this works is simple. You buy an item, and the seller says "hey, why don't you add me as a contact?". If the seller finds something interesting or has a personalized promotion, it can send it directly to the customer in the app they use every day.
According to Connie Chan, general partner at Andreessen Horowitz, private traffic allows brands to better understand their customers and breed much deeper customer loyalty. It all boils down to creating a sense of community around brands. A couple of years ago — Connie exemplified — travelers who booked tickets to outer countries got an option to join a group chat of other travelers going to the same destination. A travel agent was also in this group. Once they reach the destination, travelers find community, can talk to each other, and do group activities. Finally, the travel agent can send them more tips or promotions for future trips.
Private traffic allows new brands to flourish and makes it easier for customers to reach their favorite brands.
Some Chinese retailers have figured out processes that would put many of their western counterparts to shame. In mid-2021, Shein accounted for 28% of all fast fashion sales in the U.S. — almost as much as both H&M and Zara combined. They had only 13% at the start of the year.
How are they doing it? By optimizing everything from their supply chain to their discovery of trends.
Shein uses a system called Large-scale Automated Test and Re-order (LATR), which can be used to order and deliver products much faster than before. They add thousands of SKUs (individual styles) to their offering each day, starting by ordering a few dozen units from their manufacturing partners, and analyzing how buyers respond. Based on real-time feedback, they quickly react and order thousands more. They discard what isn't selling before getting into massive orders.
This "live experimentation" mentality and abundant use of AI to learn trends from social media, influencers, and competitors ignites their optimized pipeline, which has fueled unprecedented growth rates unseen in western companies.
Whether it is short videos, longer videos, or live stream shopping, everyone recognizes that video is a very relevant part of the consumer experience.
Connie Chan also recognized live shopping as one of the most important innovations, highlighting that video can transfer much more information per minute than any photo or text and therefore bring more confidence to consumers. It's working in China, where companies leverage a strong social media presence. And it's not just about fashion. Medical procedures, fruits, basically anything that can be purchased online can be purchased by live video.
Liyia Wu, Founder & CEO of ShopShops, made a bet that "Livestream host" will be a globally recognized job title by 2024. Anyone with a passion to share, sell and a creator mentality can do it: sales associates, stylists, designers, editors. But it's not the followers in social media that turn people into good live stream hosts. Their top live streamer has less than 200 followers on Instagram but is nonetheless very effective at connecting traffic and directing it to brands.
There's even the notion of "shop parties" where friends can discover products together. You can have reviews, customer testimonies, and live demos.
Whatever the future may be, one thing is clear: video is not going away.
After two years of the Covid-19 pandemic, consumers are finally back in stores. Traffic is growing and growth is projected to continue. The challenge is that consumers expect a new and improved experience from what it was before. Considering consumers' choices today, including shopping online, the physical stores have to be worth it. As Marie Driscoll from Coresight mentioned in Shoptalk's key takeaways closing panel:
Consumers expect everything, everywhere. They expect digital access in the store; functionality quick. Sometimes you go in wanting a quick, efficient pick-up; sometimes, you want to be romanced. So stores have to be efficient and sexy.
So when thinking about the future of physical stores, omnichannel retailers should seamlessly merge the physical and digital journey for consumers. On the one hand, improve and extend the physical experience with the help of technology. On the other, personalize and humanize the digital experience, creating a harmonized shopping cycle between all channels.
It is also worth highlighting that store associates gain new relevance in this new context. Their role extends since they should not only advise shoppers in-store, but they can also help fulfill online orders or become brand ambassadors on social media and live shopping streamers.
The topics of supply chain and logistics were also hot during Shoptalk 2022. Yes, there is a widespread supply chain disruption affecting nearly 100% of the businesses.
You might be surprised to see that Dara Khosrowshahi, CEO of Uber, was one of the keynote speakers at a retail conference. We were, but it all clicked very fast. Uber can be a powerful force for the future of retail.
Forget about rides. They have all the fulfillment technology, pricing, matching, routing, and international expansion. They want to put this to use, via the inclusion of "don't eats" in the Uber Eats program, to out-Amazon on a local basis. It's like a local Shopify. "If Amazon is building an empire, we are arming the local rebels", Khosrowshahi said, building on the phrase laid out by the Shopify CEO. Whatever you want to get, Uber can get it to you. In Uber's future, this vision is so much larger than rides.
Interestingly, the disruption in the supply chain has been a special opportunity for resale companies, as noted by Gregg Brockway, Co-Founder and CEO of Chairish. Users are demanding more pre-loved products because of shipping delays by traditional retailers.
The metaverse concept was present in several sessions, as well as a full-fledged Shoptalk-produced documentary on the subject.
No, Meta (ex Facebook) is not the metaverse. And companies are not investing in it just because of FOMO. There were hints at strategies followed by companies such as PacSun, GAP, Forever 21, Estée Lauder and Nike. What did we learn? They are taking the metaverse really seriously. Retailers averse to the concept is probably because of a lack of understanding.
The metaverse is a reality, but it's in its Palm Pilot days. "There is one metaverse, but different worlds", it was said.
Brieane Olson, President of PacSun, highlighted the brand wanted to meet consumers where they are already socializing. They signed partnerships with Roblox — which was described as arguably the best platform for socialization — and Twitch. They are building their own video game, hoping to create emotional resonance with their Gen-C customers. "It's easy to talk about the hype, but these people haven't used Roblox and actually spent time there", she said. NFTs were also present, with the release of their Mall Rats NFT, each associated with a physical store.
Nike also created their town inside Roblox. Forever 21 built Shop City, where they provide the tools and building blocks, but creation happens at the individual level. The metaverse will allow customers to shop for themselves and their aspirational selves: identities that might be completely different from how they look.
In other worlds, Descentraland hosted the metaverse's first fashion week, where Estée Lauder participated by creating a virtual experience around its hero-product Advance Night Repair. Users were able to step inside the iconic Advanced Night Repair "Little Brown Bottle" to unlock a digital badge or Proof of Attendance Protocol (POAP) and claim one NFT wearable that gave their avatars a glowing, radiant aura.
Liz Bacelar, Executive Director at Global Tech Innovation at Estée Lauder Companies Inc., was one of the most vocal defenders of the metaverse at Shoptalk saying:
You can't escape it; it is the evolution of the internet. It's a shift in commerce, just like mobile was a shift in commerce. In four years, if you don't have people in your marketing team with experience in blockchain, you're not just doing things right.
Tips were to start by asking why it matters to your consumer, figure out where they are (what worlds?), and avoid common mistakes like applying a 2D world mentality. Think metaverse-first, three-dimensionalize your merchandise. Also, partner up with a metaverse developer (of course!).
Brands are socializing and interacting with their customers more than ever. A new wave of interaction has emerged by leveraging gamification concepts and tools enabled by different metaverse worlds.
The fun will win in the metaverse — and it's here to stay.
Retail is also being disrupted by the latest fintech trends in checkouts and payments innovations. These were also part of Shoptalks hot topics. As businesses focus on customer experience, payments are tending to be frictionless. And the Buy now, pay later (BNLP) model as well as the P2P mobile wallets are on everyone's lips and are already a reality in the US.
This hype for the Fintech industry is even more clear when looking at the funding that payments tech startups (Stripe, Rappi, Klarna, Mollie, Toss) got in 2021, which increased by +124% with respect to last year.
But the question we may ask is how these innovations are helping retailers and why it is a takeaway from Shoptalk. For example, streamlined checkout helps reduce abandonment and improves the customer experience. If something was reiterated enough during the conference was that retailers must be where the customer wants to be and buy. To provide the expected service, this step in the sales process — the payment — must be flawless and effortless.
On another note, Laura Kennedy from CB Insights gave a very interesting talk and mentioned some funding trends in e-commerce tech. Funding deals accelerated dramatically in 2021, and we are already seeing numbers 2x of past years. To understand who is getting funded, she suggested looking at early-stage companies, with a focus on other parts of the world. She also left us with the 100 most promising B2B retail startups.
Regarding retail tech, there were some interesting perspectives:
Every consumer company is a tech company, because they run on data. Retailers need to understand what they customers want. You can't be silo anymore.
This vision of every company becoming a tech company was also shared by Katia Walsh, SVP & Chief Strategy & Artificial Intelligence Officer, Levi Strauss & Co. Attracting and retaining talent is not only a tech-biz problem anymore.
In the Attracting, Developing and Retaining Top Digital Talent panel, Katia shared an initiative that stood out: Machine Learning Bootcamps, where a diverse group of employees from various areas of the business — such as distribution centers, retail stores, design, etc, — are trained on machine learning methodology, data science, and analytics, allowing people from different and diverse backgrounds (mostly women, BIPOC and indigenous) to enter the space.
Every company today is a data and a technology company whether it realizes or not. So my job as a leader in the space is to make it clear that when people with the skills come to Levi's, they will absolutely be at the forefront of technology because we are doing really cutting edge things; at the same time, they'll continue to grow and learn.
To drive the change towards becoming a data, analytics, and AI business, Levi's also has a Digital Enterprise Office that helps coordinate and collaborate all the initiatives across all the company's dimensions. It also has a Digital Influencers Community of professionals who love Levi's and want to take the brand to the next level and know it would be impossible to do it without digital and emerging technologies, data, analytics, and AI.
Shoptalk showed, and we agreed, that AI is no longer an emerging trend but a well-positioned technology that enables the advancement towards a more effective, efficient, and intelligent industry. AI in the retail field goes beyond personalization, product search, and recommendations, which are the most popularized use cases.
Companies should be taking AI as a core component in their business, holistically. The strategy should tie every process: supply chain, demand forecasting, plus product development. AI can also benefit the retail industry's efforts to be more sustainable, ensuring that the models are fair, nonbiased, and cost-effective. And it has a huge play in the profitability aspect, which was also widely discussed by several retailers.
With over 12 years of experience, at Tryolabs we help other companies create business value by partnering with them through all the phases of their AI journey, from the discovery of opportunities, building PoCs to prove business value, rolling-out comprehensive solutions into production, and scaling their data science teams. We mix the consulting experience with a suite of specialized tools to improve efficiency and accelerate the implementation of AI solutions.
It was a thrill of a trip for us, and we are already thinking about the next retail conference to attend and even present! If you have your favorite conference in the industry, give us a shout, we would love to know your picks.