U.S. retailers may still be trying to get their arms around how disruptive technologies can benefit their businesses, but presenters and exhibitors at the National Retail Federation’s Big Show, held in January in New York, highlighted some early victories and a lot of promise—from machine learning bringing powerful new influence on pricing, promotions and personalization to partnerships creating new streams of shopper inspiration and new advances in efficiency, operations and uniting the digital and physical shopping worlds.
The mood among nearly 40,000 attendees of the annual show was a hopeful one, in spite of an acknowledgement that the sport of retail is as difficult as ever—and stagnant pricing in many categories of retail trade accompanying that have suppressed a boon despite relatively strong U.S. economic health.
“If retail prices stop falling and stabilize, or even start going up, the earnings of retail firms will skyrocket simply because of all the productivity enhancements that have been adopted and that we’re seeing [at this show] haven’t really translated to growth in earnings that one might think, simply because of the declining price of their final output,” said Steven Blitz, chief U.S. economist for London-based TS Lombard, while presenting an economic update at the show. “But if that ever should stabilize, that would lead to dollars going to the bottom line as a result of all this activity. It will just explode to the upside.”
What follows are some highlights from presentations at the show.
Waste Reduction Begins With Managing Demand
While just about every technology enhancement comes with promise of productivity and labor savings, “it’s a nut that’s been very hard to crack,” said Michael Falck, co-founder of Relex and president of its North America division.
Relex, based in Finland with U.S. offices in Atlanta, specializes in automated demand forecasting software that, according to Falck, can help to solve one of the leading contributors to inefficient labor deployment, estimating that 35% to 40% of store’s labor costs are in shelving.
More precise ordering is also a major element in squeezing out inefficiency in other areas as well, including food waste, Falck noted.
Flexibility for Tight Workforce
In a competitive market for both jobs and sales, efficiency and customer experience counts more than ever.
Kai Fickenscher and Adam Hatch of WorkJam describe their workforce management system as a “Slack for wage jobs,” which can efficiently orchestrate functions such as scheduling, shift swapping, messaging and even training. The system is now in place at some Kroger distribution centers (DCs), “because they felt their customer experience really starts in the DCs because in grocery it’s all about being in stock,” Hatch said.
WorkJam, based in Montreal with U.S. headquarters in Cincinnati, takes manual tasks to the cloud and provides employers with new visibility into their hourly workforce.
“If we’re selling out of a special product, or there’s a shortage in a store, what I’d have to do before was make a bunch of calls and beg, borrow and plead for a bunch of people to work. Now I can just broadcast shifts, and I get them filled because people want the hours. That’s a multi-threaded benefit,” Hatch said. “You save time for the manager, you’re adding a shift and helping to keep in stock and there’s a retention factor here as well. We hear nightmare stories about turnover in the DC world. There’s so much labor demand; they’re walking to work at a site across the street for 20 cents more an hour. But people value flexibility, maybe more than they like an extra 20 cents an hour.”
Microfulfillment and the Last Mile
Automated microfulfillment, which promises an efficient solution to local e-commerce, remains a hot topic in food retail.
“Investment in the supply chain is no longer just a cost-adder,” said Matthew Walker of Dematic, an Atlanta-based warehouse technology firm, which is nearing the completion of an in-store pick center at a Meijer store in Michigan.
Fabric, the Isreal-based startup flush with millions in new investment, demonstrated what Chief Commercial Officer Steve Hornyak called a proprietary and flexible solution he said will work with a wider variety of existing locations than legacy shuttle systems. Its first U.S. in-store grocery unit will be rolling out later this year in Virginia.
However retailers approach e-commerce, it won’t matter if they can’t efficiently orchestrate order fulfillment, said Guy Bloch, CEO of Isreal-based software firm Bringg.
Bloch said his solution ties together customer orders with stores, warehouses, inventories and delivery fleets to determine the most efficient means of fulfillment, giving retailers the same power that marketplaces such as Instacart or Amazon can exert once they attract the order. Walmart is a customer.
“Any company that ships foods and services to their customers, if they don’t do a complete digitization of their last mile, they will fall behind,” Bloch said. “The ones who digitize will be the ones who can create a customer experience. And they will grow sales just because their customers love buying from them.”
New Insight on Promotions
A theme heard throughout the show was how artificial intelligence is bringing radical new perspectives to legacy retail practices, bringing not only new efficiency but also previously unattainable depth and insight.
“It’s good at things that people aren’t good at,” said Gary Saarenvirta of Daisy Intelligence, Toronto. Daisy is bringing sales and basket data to bear on price and promotions, providing new insights to assembling flyers.
Twenty five customers using the program—including SpartanNash and Walmart Canada—are seeing average sales jump by 2.9%, Saarenvirta said.
“It's hard to figure out which of the 500 products we should promote this month and the combination of them is what matters,” Saarenvirta said, adding that AI can interpret and optimize for basket “ripple effects” (how hamburger promotions affect hot dog sales, for example) to a far greater depth than a merchant or vendor could. “The merchant still sets the strategy,” he was quick to add. “AI isn’t going to say, 'Hey you ought to be a high-low retailer.' The retailer tells the AI that.”
Customer Info To Go
Just days before the show, point-of-sale software company PCMS announced a rebranding behind a revamped version of its Vision Commerce Suite. The company and product, now known as Flooid, enables retailers to tap into shopper profiles that encompass in-store and online activity from a variety of sources and follows them wherever they shop, providing a platform to harness the “fluidity” that defines how customers shop today.
Donna Stevens, group VP of product management for Flooid, said the technology will launch with a U.S. food retailer in March and at least one more later this year. Flooid is based in the U.K. with U.S. headquarters in Cincinnati.
According to Stevens, the Flooid basket is a data cloud that follows shoppers across platforms, helping retailers “truly deliver the promise of omni-commerce,” and cuts across bespoke solutions. “So when I’m in the store they know what my interests are, what my discount levels, how I sit in their world as a loyal shopper, and how I like to shop, and it follows me as an identity,” she said. “From the retailer’s perspective, they are able to take all that information and they can push that into a checkout experience, or an interactive promotion experience, or an email that they send to my phone.”
Personalization Gets a Vote of Confidence
There were signals that personalized promotion is coming of age all around—one of which was the acquisition of one the field’s pioneers, Precima, by Nielsen Global Connect.
“I've got to hand it to Nielsen: They've seen the possibilities of personalization and they're buying us for our capabilities,” Brian Crain, head of business development and marketing for Toronto-based Precima, told WGB. Crain said Nielsen and Precima are “complements” to one another more than competitors, noting their programs often reside at the same retailer.
Personalized promotions—or the technology that can sort through millions of offers and strategically match them to customers at the right price point—is driving sales lifts of about 2.3% at participating retailers as well as increased loyalty, because “customers feel like they're understood, with offers and content that speak to who they are as a person. You’ll get the sales going, and you’ll retain the customers,” Crain said.
Robots on Subscription
Zebra Technologies Corp., Lincolnshire, Ill., had a busy booth showing off a variety of newly launched technology aids for retailers, including an E-Commerce Logistics Suite from Norway’s StrongPoint, which facilities e-commerce picking (finger scanners, goggles and lighted shelf tags) and pickup (ambient, chilled and frozen lockers installed at stores); and a new in-aisle robot, SmartSight, that leverages computer vision, machine learning and workforce automation that can transmit stock conditions, pricing and plan-o-gram issues directly to Zebra’s worker devices.
Zebra officials said the robots were available on a subscription basis for retailers.
Data for Growing Independents
Jamie Gray of point-of-sale provider Loc Software, Raleigh, N.C., specializes in servicing smaller grocers, including independents such as Fareway, Skogen's Festival Foods, Dorothy Lane Market and Pete's Fresh Market. Data from its systems, he said, are providing those grocers with customer insights that rival their scaled competitors, providing an extra edge to retailers whom he said are already out-servicing their larger rivals.
“The [independents] that are managing their business are growing like crazy,” Gray said. “It’s service. People are saying, ‘I’m tired of going to Walmart. I give them $200, and they won’t even say hello or thank you.' The customer service isn’t there overall. If you go to a place like Skogen’s or Pete’s Fresh Market, it’s an event.”
Expanding Service, Saving Labor
Kimberly Carroll of Apex Supply Chain Technologies, Mason, Ohio, showed off heated and ambient pickup lockers that promise new convenience for shoppers while opening up new marketing, basket-building and efficiency benefits for retailers.
In a deli, for example, shoppers who order ahead a rotisserie chicken will find their orders safe and warm with no waiting in line and be notified when the order is ready. Along the way, retailers can cross-promote and message while deploying counter-service workers to do more value-added work, such as slicing meats.
“These types of solutions cost less than a couple labor hours, so if you think about it, $18 a day for one of these solutions is not that big of a deal if you can reallocate that labor into making or slicing or doing some other value-added thing vs. being there at the ready,” Carroll said. “It lets you expand service styles so you can not only have that traditional counter style for walkup customers, but it gives them some additional bandwidth to capture a larger share of a customer’s wallet.”