14 Takeaways From Shoptalk

The Shoptalk conference in Las Vegas this week brought together technologists, retailers, entreprenuers, suppliers and more to discuss how emerging technology and the digitalization of society has upended retail, while providing a glimpse of what commerce will look like in the future. Attendees heard a lot about how data, artificial intelligence and machine learning are being applied to solve problems both large and small in a world where omnichannel is rapidly becoming the only channel.

Following is a list of facts, quotes and other moments from the dozens of presentations and meetings at the show. More coverage from Shoptalk can be found here, here and here.

Chieh Huang, CEO of Boxed, gave one of the show's most memorable keynote addresses, describing how he built the online stock-up-and-save business from his garage to AI-powered warehouses that, among other things, shoot “selfies” of prepared orders in the warehouse to send ahead to shoppers. Huang drew an ovation from the crowd after discussing how a group of women employed by Boxed drew attention to higher prices on products for women; now, when it encounters higher retail prices for pink razors than blue ones, prices are adjusted.

Tarang Sethia, 7-Eleven’s director of CRM and loyalty, discuses using the convenience chain’s burgeoning loyalty program to create “experiences that truly differentiate us.” One is an upcoming augmented reality game he described as “'Pokemon Go' meets 'Deadpool' in 7-Eleven.” Other perks to watch out for: frictionless “walk-out” shopping on items such as coffee and gasoline, which Sethia colorfully reminded attendees wouldn’t necessarily be the sole domain of Amazon for long.

It sounded creepy when it was announced, but the in-home delivery test conducted last summer between Walmart, the delivery facilitator Deliv, and August Home, the provider of “smart” locks and other connected home technologies, was a huge success with its test audience, August Home’s CEO Jason Johnson said. The project tested delivery of items from Walmart using Deliv workers, who got one-time access codes to unlock doors and bring items inside shopper's homes, including food which was delivered straight to their fridges. No items were lost or stolen, and test households gave the service high Net Promotor Scores and indicated a willingness to pay for it. In addition to addressing a plague of “porch pirates,” Johnson said it could pave the way for consumers to gain more comfort buying high-value items online for delivery.
 

With a gigantic economy and much deeper online sales penetration than the U.S. (18% vs. 8%) one vision of the future of commerce can be seen in China. JD.com is the third-largest internet retailer in the world with annual sales of $55.7 billion. Its “boundryless retail” includes deliveries by drone and unmanned robots, an unmanned convenience store, and fully automated sorting centers, explained Hui Cheng of the company’s JD-X Research Center.

Nilam Gananthiran, chief business officer of Instacart, told interviewer Jenny Lefcourt how surprised company officials were when demand for its concept proved as strong in Evansville, Ind., Rockford, Ill. and in Buffalo, N.Y. as it was in San Francisco where it launched. “It should have been intuitive for us. The consumer in the heartland has the same pressures on her time as the consumer in New York has. Every wants those two hours back,” he said.

Instacart is using data to attack “friction” to lower costs including better store navigation and checkout options, he added. One presenter, an early stage investor in Instacart, said the service is now a $4 billion company.

On the show exhibit floor, Ahmed Beshary of Brooklyn-based Caper Labs, showed off a shopping cart outfitted to provide frictionless commerce. With a price scanner and pay pad built into the handle and the basket capable of weighing items to price produce, it’s essentially a self-checkout lane on wheels, but that’s only part of it. Caper intends use cart-mounted cameras and AI to develop intelligence on how items get into – and out of -- the cart in the first place. Two units were deployed last week for the first time at Food Cellar stores in Long Island City, N.Y.

In addition to robotics and other technologies revolutionizing efficiency and speed in retail warehouses, the role of the warehouse itself is also changing as a result of e-commerce. Seasonal items and promotions, the race to provide faster fulfillment, and other factors have created a need for a dynamic marketplace of flexible warehouse space that can be dialed up and back to meet real-time needs, said Mark Siebrecht of Flexe, who happens to have invented such a thing. He predicts “warehousing as a service” will follow similar disruptions that made software a service (SAS’s cloud-based enterprise system) and infrastructure as a service (Amazon Web Services).

“Google is mapping the ocean floor. Elon Musk wants to put a man on Mars, but you can't find a gluten-free sausage,” says Markus Stripf of Spoon Guru, an app that finds relevant foods for any diet, meeting consumer demand for customization, convenience and wellness. Stripf said he made the trip from London to seek out new retail partners for its search data, which powers Tesco in the U.K.

Paul Lightfoot, CEO of Bright Farms, spoke about how the company has partnered with retailers to craft a new model for the supply chain. Bright Farms’ packaged salads, grown in local greenhouses, are about a week fresher than competing product typically from South America, he said, and their addition to stores are lifting category sales while meeting consumer demand for local and fresh, providing an example of how suppliers can use innovation to tackle legacy problems just like retailers.

Perhaps the most impactful example of the future of the retail store is Amazon Go. Dilip Kumar, VP of technology for Amazon’s retail stores, told of the challenge Amazon’s engineers faced using computer vision to “interpret a scene” not unlike self-driving cars, then building algorithms to solve the question of “who-took-what” – all without interrupting the shopping experience.

Brands taking their products directly to the shopper was a theme among several supplier representatives.  Many are building powerful private brands while doing so, such as the direct-to-consumer wine company Winc, whose co-founder Xander Oxman said the online format and the data trail it leaves allows for faster brand development and adjustments. Stuart Landesberg of the natural home products company Grove Collective noted that packaging and shipping costs can come down dramatically online vs. products made to stand out on store shelves. Grove sells items like window cleaner in tubes the size of travel-size toothpaste, which consumers can mix with water at home. Window cleaner is 90% water after all, Landesberg said.

A representative of 7-Ventures, 7-Eleven’s incubator, said the venture fund likes shopping among companies that can build a  brand, online community and data prior to investing with an eye toward launching a brand in its stores.

Legacy suppliers and retailers are also getting into the direct-to-consumer business. Gina Boswell of Unilever said the company launched its first new brand since Axe several years ago – a personal-care line known as Love Beauty Planet – online only. Retailer Albertsons in the meantime said it was hoping to facilitate such sales through an online marketplace that will market such items to its massive shopper base.

“I’m not a grocer, I’m a technologist. Well, I guess I am a grocer now,” says Pradeep Elankumaran of Bay Area digital "micro-grocer" Farmstead. Elankumaran, whose company utilizes AI for just about everything -- to predict demand, reduce shrink, facilitate delivery, ease consumer anxiety about purchasing fresh items online and more – says he is determined to take on giants like Amazon-Whole Foods despite employing fewer people than a single Whole Foods store. Farmstead announced $2 million in new funding at the show. “Grocery is an $800 billion space, with only 8% online penetration, which is nothing,” he says. “Ninety-two percent of the market is wide open.”

Forty-seven-year-old grocer Earth Fare is growing behind new AI-designed “smart flyer” that anticipates what customers want, and when they want it, CEO Frank Scorpiniti says. The Asheville, N.C.-based company is partnering with Daisy Intelligence to execute the change, which Scorpiniti says has freed up its merchants and marketers to focus on products, merchandising, customers and new stores. Earth Fare is seeking to build about 10 new stores a year through 2020.

Marc Lore, Walmart’s digital CEO, said the company’s “slowdown” in fourth-quarter sales was planned so as to build a “healthier base.” Its shopping spree of digitally native brands such as Bonobos and ModCloth added over the last year are helping to bring new shoppers into the Walmart franchise, but benefits don't end there. Lore likened those brands’ effects on Walmart to how original content boosted the overall value of Netflix. He said the company could still buy more.