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

NRF 2021 Day Two: 10 Key Insights

On the second day of NRF 2021, speakers honed in on the importance of leveraging data and AI to better engage the consumer and empower employees, while also highlighting technologies that are gaining traction in retail, such as voice commerce. In addition industry leaders discussed key strategic priorities such as social responsibility and sustainability. 1. Retailers Can Leverage the “Data Explosion” To Enhance Customer Experiences and Loyalty In Microsoft’s “Retail 2020: Wow What a Year!” presentation, Shelley Branston, Corporate VP for Retail and Consumer Goods at Microsoft, highlighted several innovations that the company sees as key areas of investment for retailers moving forward. Chief among them was the importance of leveraging the “data explosion”—created by consumers spending more time online—to better capture the interest and dollars of the modern consumer. Branston noted that every minute, consumers generate 40 petabytes of data in retail, and indicated that opportunities remain for retailers to make use of this information. Brands and retailers can use consumer data to personalize their promotions and loyalty programs to create lasting, valuable relationships with customers. There has rarely been a more opportune time to capitalize on changing consumer behaviors and create long-term relationships: 75% of US consumers reported that they adopted a new shopping behavior during the pandemic, according to McKinsey, and Branston reported that four in 10 European consumers purchased something new online in 2020 that they had only ever previously bought in-store. Using Microsoft technologies to harness this data to understand changed consumer behavior, Dick’s Sporting Goods was able achieve a 33% increase in revenue generated by promotions. Moving into 2021, finding ways to best utilize big data will likely be a priority for many major retailers. 2. Partnerships Can Take Retailers to the Next Level Branston highlighted the importance of partnerships in Microsoft’s presentation, arguing that the Covid-19 pandemic has made it clear that virtually no retailers are resilient enough to handle large shocks without working with others in the industry. Partnerships with tech providers and other retailers are now a vital part of a flexible retail strategy. Branston cited the successful partnership between Walmart and AT&T, where the telecommunications company helped empower Walmart to improve digital health services in its stores, as a prime example of the kind of mutually beneficial partnerships she expects to see in retail moving forward. The data appear to back up the partnership trend: Kearney data indicate that partnerships generally create a 10–15% lift in top-line performance. 3. Data Analytics Provides Valuable Insights for Customer Engagement and Retention International beauty brand e.l.f. Cosmetics is gaining traction among Gen Z consumers, with over 9 million followers across social platforms, according to the company. At NRF 2021, Brigitte Barron, Director of CRM & Customer Growth at e.l.f. Cosmetics, highlighted the strategies that the company employs to engage and retain customers via its website, leveraging Salesforce and Google Analytics technology:

• The website makes dynamic product recommendations based on what the customer has purchased before or based on what other customers have shopped.
• Customers may use virtual try-on technology to test products.

[caption id="attachment_121746" align="aligncenter" width="580"] e.l.f Cosmetics offers virtual try-on technology on its website
Source: e.l.f Cosmetics[/caption]  

• e.l.f alerts consumers who have a high intent to purchase with a pop-up notification, asking if they would like to sign up for the brand’s Beauty Squad loyalty program, offering free shipping on the first order. The company’s loyalty members comprise 70% of e-commerce sales and have a 117% higher lifetime value than non-members.
• By integrating Salesforce e-commerce with Google Analytics 360, e.l.f. is able to understand customer behavior and loyalty patterns in order to offer personalized recommendations of relevant products to loyaly members.

For example, e.l.f. Cosmetics learned through analytics that its skincare shoppers are very valuable customers: Consumers that buy skincare products with e.l.f. have a higher lifetime value, purchasing 65% more often than non-skincare shoppers. The company has also discovered more opportunities to appeal to men by analyzing data on men shopping through the e.l.f website. 4. Voice Commerce Is Likely To Continue To See Strong Growth In a session on the future of voice commerce, Kris Zanuldin, Head of Product at Amazon Pay/Alexa Money Domain, and Scentbird CTO and Co-Founder Andrei Rebrov outlined how voice commerce could continue its rapid growth in 2021 and beyond. The Covid-19 pandemic has helped accelerate voice commerce growth, as many consumers are embracing placing orders via smart speakers, such as Amazon’s Alexa. This type of commerce satisfies consumers that are looking for touch-free ways to make physical purchases. Rebrov also argued that voice commerce has found success in part because voice is many consumers’ most natural mode of communication and interaction. [caption id="attachment_121747" align="aligncenter" width="380"] Consumers can place voice orders and receive voice delivery alerts through Amazon smart speakers
Source: Amazon[/caption]   Robrev and Zanuldin highlighted two case studies of successful implementation of voice commerce tools in 2020:

• Scentbird, a digitally native perfume subscription brand, worked with Amazon to add Alexa delivery notification features to its fulfillment infrastructure, helping keep consumers informed and engaged during the fulfillment process.
• Amazon worked with Exxon to implement voice-driven pay options at gas stations nationwide, enabling touch-free purchase options for consumers wary of touching public surfaces.

Moving forward, voice commerce appears poised to grow even further: Zanuldin cited survey data from Amazon indicating that one in five customers expect the proportion of purchases that they make over voice commerce to increase in the next two years. 5. A Focus on Sustainability Is Table Stakes Microsoft identified sustainability as a key trend moving into 2021. Consumers are increasingly aware of sustainability when making purchases: At NRF 2021, Branston reported that 67% of consumers now evaluate sustainability when shopping. Indeed, a Coresight Research survey conducted in August 2020 found that the Covid-19 pandemic has made environmental sustainability more of a factor when shopping for 29% of US consumers, compared to 16% that stated that the crisis made sustainability less of a factor. As a result, retailers must focus on sustainability—as well as transparency, values and ethics—in their strategy in 2021 and beyond. To that end, Branston reported that Microsoft will be carbon negative and water positive by 2030. She also cited prominent examples across the industry of retailers focusing more on environmental efforts: Walmart has committed to transition to 100% renewable energy usage, while H&M will use 100% renewably sourced materials by 2030. In another session on day two of NRF 2021, Ron Jarvis, Chief Sustainability Officer at Home Depot, said that of the thousands of suppliers that pitch their products globally, most either lead or end their presentation with a sustainability or social responsibility strategy (see our fourth insight below). This is a huge difference from a few years ago, when only one in 20 companies would have such strategies in place. Jarvis emphasized that today, companies must have a sustainability strategy on the agenda or it will not survive; it is table stakes. 6. Social Responsibility Has To Be a Strategy, Not a Response Industry leaders from Ulta Beauty and Home Depot discussed social responsibility initiatives and sustainability at NRF 2021. Dave Kimbell, President at Ulta Beauty, urged that social responsibility cannot be a response or a short-term action; it needs to be built into the core of the company and its values because that is what consumers expect today. According to Kimbell, Ulta Beauty has a value-based culture based on its vision and mission, and the company remains flexible so it can evolve. The leaders drive the agenda and expectations and “unleash the power to the teams,” but all 35,000 employees have to feel aligned personally. Kimbell emphasized that listening to its associates enables Ulta Beauty to better understand the issues impacting its teams, consumers and the world—especially since its associates directly interact with customers. Kimbell said, “If we only relied on the leadership team, we probably would not get it right.” 7. To Lead Effectively, Retail Executives Must Work with Experts and Embrace Innovation Indra Nooyi, former Chairman and CEO of PepsiCo, spoke on the importance of retail leaders communicating with experts to understand crises and adapt business accordingly. Nooyi spoke of her experience chairing “Reopen Connecticut” this year in the midst of the pandemic, where she helped assemble a team of business leaders and scientists who collaborated to help consumers stay safe while maintaining their livelihoods. Nooyi argued that the driving force behind innovation in retail last year was the rise in e-commerce. She said that in 2020, the industry saw growth in e-commerce that was not expected to happen until 2023, and that most technological innovation that took place last year was aimed at supporting this growth. However, Nooyi spoke optimistically of the future of brick-and-mortar retail. She told the NRF 2021 audience that consumers have unprecedented pent-up demand and are keen to resume normal life, including shopping at stores. Nooyi predicted that when the pandemic is finally brought under control, consumers will fuel a revitalization of physical stores. 8. AI Is an Essential Component of the Modern Store Trey McMillian, Retail General Manager at Dell Technologies, emphasized in a discussion with Azita Martin, General Manager of AI for Retail & CPG at Nvidia, how important AI-driven retail innovations are in optimizing the store. Both speakers agreed that intelligent stores are now a necessity for retailers as they are expected by shoppers. Computer vision technology driven by AI can help retailers access real-time insights into traffic flows and product stocking. This can be especially useful in the current environment, where retailers are focused on in-store customer safety by limiting close contact and are dealing with disruptions in supply chains. McMillian also highlighted loss prevention as a key area where retailers can see tangible benefits from implementing AI-driven technology solutions. Just over a year ago, Dell and Nvidia partnered with a large US retailer to implement AI-driven shrinkage-prevention technology at self-checkout registers. The implementation of this new technology helped the retailer reduce shrinkage by 40% in a matter of weeks, according to Nvidia. 9. Keeping Employees Connected and Safe Drives an Effective Workforce Leaders from alcoholic beverage retailer BevMO! and apparel retailers American Eagle Outfitters and L.L.Bean discussed the role that employee health and safety plays in an optimized omnichannel retail model. As retailers have innovated through the Covid-19 pandemic, they have required flexibility and resilience from their associates: Stores were shut down and reopened at a moment’s notice, and new initiatives such as curbside delivery were rolled out rapidly. The panelists discussed how they leveraged Zipline, a retail communications solution platform, to better stay connected with employees through the crisis. Through Zipline, the retailers were able to easily communicate with employees at home and conduct surveys with employees to understand their situations and how they were coping through the crisis. Field leaders also utilized Zipline to communicate with store teams directly, enabling the real-time communication that is increasingly vital in a retail environment defined by rapid change. Moving forward, the panelists indicated that they expect a focus on employee health and communication to be an important area of focus for retailers. 10. Reflecting the Demographics of the New Consumer in the Workforce Is a Necessity As Gen Zers and millennials continue to make up a larger portion of the consumer base, retailers must find ways to connect with these diverse and technologically savvy potetnial customers. Kristin Howell, Global Vice President for the Industry Businesss Unit at SAP, spoke to the importance of building a workforce that reflects the preferences and demographics of the new consumer. By adjusting hiring practices to hone in on associates that can understand the ways of thinking of the modern consumer and leveraging technology to empower store associates to have more meaningful interactions with customers, retailers can help boost sales growth and develop better customer relationships.