NRF 2021, the annual “Retail’s Big Show” event hosted by the National Retail Federation (NRF), has moved online for the first time, taking place entirely virtually over six days, from January 12 to 22. The Coresight Research team is presenting takeaways from each day of the event in separate reports. In this report, we offer 10 key insights from day one.

NRF 2021 Day One: 10 Key Insights

The first day of NRF 2021 highlighted new digital strategies, the importance of an agile supply chain and the growing value of loyalty programs. The event saw industry leaders discuss the unprecedented speed with which retailers pivoted in 2020 and outline how the industry can continue to adapt to a changing global landscape and evolving consumer behavior. 1. Retailers Must Adapt to Pandemic-Driven Changes in Consumer Spending Across the day’s sessions, retail leaders emphasized that changes in consumer spending patterns and engagement driven by the global health crisis will not disappear once the Covid-19 pandemic is over. In a conversation with Deloitte Chief Economist Ira Kalish, Walmart Chief Customer Officer Janey Whiteside indicated that Walmart is planning for a long-term shift in its customers’ spending haits. Whiteside expects some pandemic-induced job losses to be permanent, and reported that in a November survey, about 50% of Walmart customers reported that they were worried about the economy, and 40% did not expect a speedy economic recovery. To adapt, Walmart has honed in on its core message of everyday low prices to help consumers balance their budgets now and through the foreseeable future. 2. Surging Digital Channels Will Retain Importance Post Crisis Whiteside and other speakers throughout the day indicated that they expect consumers to continue to utilize the digital shopping channels that they have shifted to during the crisis. Walmart reported that since the Covid-19 outbreak, more than four times as many customers have utilized the company’s delivery and pickup options. Walmart has adapted its stores to cater to consumers who may use this model for the foreseeable future: The company has added 40% more pickup time slots and has begun to use its stores as fulfillment centers to facilitate widespread fast home-delivery options. [caption id="attachment_121705" align="aligncenter" width="700"] A Walmart curbside-pickup location
Source: Walmart[/caption]   3. Streamlined Inventory Management Systems Are Key to Omnichannel Success In a panel on the future of digital retail, Salesforce leaders highlighted the importance of a strong, flexible inventory management system in the new world of retail. As consumers continue to engage with retailers across a wider variety of channels, having real-time knowledge of where all inventory sits has become vital for most brands and retailers. Amit Chetal, Americas Retail Lead at technology company Cisco, highlighted flexible inventory management as a key component of the modern retail strategy. Even more important than being able to view inventory across channels is the ability to easily and quickly move inventory across channels to meet the consumer where they are, Chetal said. In a separate panel, Samsung leaders also outlined the importance of investing in a strong, agile content management across online and offline channels. 4. Supply Chain Will Be One of the Top Three Retail Areas of Change, According to Google In the session entitled “How Google is Helping Retailers Transform the Shopping Journey,” Carrie Tharp, VP of Retail and Consumer at Google Cloud, and Vicki Cantrell, CEO and Founder of Vendors in Partnership, discussed consumer and retail trends. Tharp reported three future areas of change for retailers:

• The role of the store—As retailers are setting up capabilities for curbside pickup and adding features to make the store more convenient, they are rethinking store designs. For example, Tharp said that Starbucks is considering a new, “walk-through” store design.
• The rapid acceleration of digital capabilities—Having the infrastructure in place to quickly implement and enhance digital capabilities is important. Consumer expectations are continually rising around product search, availability and transparency. For example, Tharp said that Google searches for “who has + in stock” have soared 8,000% in the US year over year, and searches for “curbside pickup” grew 3,000% year over year globally—both for the period March to May 2020, amid the pandemic.

[caption id="attachment_121706" align="aligncenter" width="520"] Source: NRF[/caption]  

• Focus on supply chain—The Covid-19 pandemic has underscored the importance of a nimble supply chain. Tharp highlighted that the supply chain was one of the biggest issues for retailers during the 2020 holiday season, and she expects it to be an area of focus in 2021.

5. Drugstores Empowered by Technology Will Continue To Play a Vital Role in Crisis Response Walgreens Director of IT Field Services Robby Schwanz emphasized the importance of tech-empowered drugstores in pandemic recovery. Walgreens has proved itself to be flexible in times of crisis: The company has played a role in Covid-19 testing efforts, and following a string of earthquakes in Puerto Rico, it deployed emergency mobile pharmacies within a matter of hours to communities cut off from access to pharmacy locations. With Walgreens locations within five miles (8km) of 80% of the US population, the company is primed to play a major role in the distribution of vaccines in the country this year. Schwanz identified technology as a key enabler of a successful health and retail business. He said that supply technology, coupled with the use of consumer data to facilitate personal experiences and the use of new digital channels (such as the myWalgreens app), will help Walgreens and other companies like it to accelerate growth in 2021. 6. Consumer Spending Shifts Emphasize Value of Loyalty Programs for Retailers The pandemic has led to unprecedented shifts in consumer purchasing habits. According to Salesforce, one-third of consumers have switched brands since the start of the pandemic, and 80% of those consumers plan to keep buying from the brands that they have switched to—making it imperative for retailers and brands to understand how they can get the most out of those new customers that may come back to them. Salesforce leadership argued that customer loyalty needs to be integrated into all aspects of any retail business model. The company identified three key components of a loyalty program that retailers need to consider:

• Identification of customer segments—Retailers need a 360-degree view of their customers.
• Loyalty strategy—Retailers must identify what behaviors they want to affect and how they will measure success.
• Flexibility—Retailers must ensure their loyalty programs are agile.

In addition to directly driving repeat purchases through rewards, loyalty programs can also help retailers form emotional bonds with consumers and acquire data that can be useful for engaging in personalized customer outreach. Understanding the growing importance of loyalty, Salesforce announced that it is releasing its own loyalty management software in February 2021. The patform will be integrated into the existing Salesforce ecosystem. 7. Consumers Expect Every Interaction To Be Personal Personalized customer experiences have gone from a perk to a necessity for many shoppers. According to Salesforce, 84% of customers say that being treated like a person rather than a number is essential in retailers winning their custom. Large retailers, both offline and online, are now expected to provide the same level of personalized service that was once associated only with small businesses. Keith Mercier, General Manager of WW Retail and Consumer Goods at Microsoft, identified personalization and consumer data collection as one of the most important areas for retailers to focus investment in 2021. 8. AI and ML Are Helping To Transform Grocery Retail In the session produced by supply chain solutions provider Blue Yonder, entitled “Customer-driven commerce: How predictive, personalized digital fulfillment capabilities are transforming consumer experiences online and offline,” retail industry leaders discussed how they are using artificial intelligence (AI) and machine learning (ML) in their organizations. Cheryl Williams, Chief Information Officer at Wakefern Food Corp, the largest retail food cooperative in the US, staed that the company implemented AI and ML for store replenishment, replacing a legacy system. The implementation has helped the company to significantly increase its in-stock position, allowing it to focus on its inventory, according to Williams. Hardeep Kharaud, SVP Merchandising & Promotions at Loblaw Companies Limited, a Canadian company that specializes in grocery and pharmacy, said that the company has been working with Blue Yonder to implement AI and ML. Kharaud explained that Loblaw started out with small tactical projects that make “people’s lives easier while also delivering a benefit.” With each success, the company is accelerating its AI and ML journey. Last year, the company began working on using AI and ML in its fresh grocery department. Both Williams and Kharaud outilined opportunities to leverage AI and ML for pricing. Williams highlighted that prior to AI and ML, there wasn’t the ability to consume large amounts of data at such a granular level; now, Wakefern Food Cor is making unique promotions and recommendations based on AI-empowered data. Kharaud predicts that the entire supply chain will benefit by becoming more efficient and reducing costs—predicting what the customer wants at the retail level will inform the distribution node to the supplier and eventually to the manufacturer. 9. Technology Is the Backbone of the Store New retail technology should not be confined to use in online channels. Speakers on the first day of NRF 2021 highlighted the importance of leveraging technology to improve the in-store experience for customers and employees. Eileen Mahoney, EVP and Chief Information Officer at PVH Corp. spoke about how the company had leveraged solutions provided by Cisco and other technology providers to introduce interactive digital displays in stores, introduce contactless payments and give store associates the ability to make real-time adjustments to promotions and displays. 10. The Role of the Store Associate Is Changing As the function and workings of stores have changed, so has the role of store associates. During the pandemic, many store associates have been forced to work primarily from home, focusing on virtual clienteling and customer service. Technology that enables them to stay connected with consumers digitally is key for retailers to maintain strong customer relationships. Cisco offers a cloud-based unified communications solution that PVH Corp. and other retailers have used to connect customers, employees and suppliers all in one place. Using this system, retailers can ensure that customer questions via all digital channels are seamlessly routed to the appropriate associate, helping shoppers to have a personal experience even when they are not able to physically go to stores. Zebra’s intelligent workload optimization solutions can also help associates communicate with each other more effectively and improve workforce efficiency. The role of associates that remain in the store is also evolving. Technology such as automatic stocking systems and digital shelf labels empower associates to focus their time on the customer, rather than spending most of their day on mindless tasks. Furthermore, store associates must now be equipped to work as fulfillment workers as stores play a greater role in fulfilling online orders. Retailers should continue to invest in technology that enables their associates to focus on the customer and work more efficiently.