Introduction

The Coresight Research team is attending and participating in this year’s Shoptalk conference, held on March 27–30, 2022, in Las Vegas, US. The conference brings together almost 3,000 established retailers, brands, technology companies, investors, Wall Street analyst firms and more under one roof. Shoptalk 2022 features 250+ speakers, 150+ CEOs, 80+ sessions and 600+ sponsors. The conference presents an opportunity to gain insights into emerging trends and recent innovations. In this report, we present our top insights from day three of the show on March 29, 2022.

Shoptalk 2022 Day Three: Coresight Research Insights

Beauty Is About Fun and Creative Connections Deborah Weinswig, CEO and Founder of Coresight Research, interviewed Debbie Perelman, CEO of beauty brand Revlon. They discussed current trends in the beauty industry and how Revlon is unlocking its employees’ creativity. Perelman explained that while beauty is all about fun in a fast-paced and resilient industry, its complexity and marketing challenges are often oversimplified and underestimated. Revlon’s purpose is to drive emotional connections, inspire confidence and ignite joy around products that its customers would not leave the house without wearing. She identified three current industry trends:

• The blurring of many lines—between physical and digital; mass and prestige, skincare and color cosmetics; and among retail channels
• Personalization—the desire for self-expression, play and experimentation, which can be enabled through technology
• The need and desire to have a social impact—promoting sustainability, diversity, inclusion and mental wellness in the workplace

To cater to these trends in its workplace, Revlon changed the way it worked, turning silos into agile pods, which has enabled it to create new products four times faster, Perelman said. In addition, the company is balancing employee desires for flexibility regarding in-office work with its need for creative collaboration by creating “moments that matter” and an environment where employees’ enthusiasm about company values makes them enthusiastic about coming into the office to collaborate. [caption id="attachment_144523" align="aligncenter" width="700"] Weinswig discusses the beauty industry with Debbie Perelman, CEO of Revlon
Source: Coresight Research[/caption]   Supply Chain Leaders Are Facing Multiple Layers of Complexity on a Global Scale Last year turned out to be a perfect storm for supply chain managers, with issues including port congestion, labor shortages, the Suez canal blockage and a lack of truck drivers. Retail has faced these issues before, but not all at the same time. Many of these supply chain issues occurred on a global basis, with retailers having to incorporate widespread implications into their supply chain planning. Macy’s Chief Supply Chain Officer, Dennis Mullahy, stated that the company had to monitor infection and vaccination rates in supplier countries to keep track of status and labor availability at ports. Each supply chain change has a knock-on impact—issues with unloading a container, for example, cause delays for the next party that needs the container, which could hold raw materials for another product and slow down a seemingly unrelated chain. Ultimately, supply chains need to be agile enough to make decisions quickly to handle these issues. Mullahy stated that although pre-pandemic apparel trends had been to engineer shorter lead times in manufacturing, retailers are now ordering early and stretching lead times to gain flexibility and improve the accuracy of inventory forecasts. [caption id="attachment_144524" align="aligncenter" width="700"] Dennis Mullahy, Chief Supply Chain Officer at Macy’s (left), and Phil Wahba, Senior Writer at Fortune (right)
Source: Coresight Research[/caption]   The Thorny Issue of Reverse Logistics Has Multiple Innovative Approaches Shoptalk’s panel discussion on using reverse logistics to satisfy customers and achieve business growth offered three diverse views from companies tackling the returns challenge.

• Arrive, a technology and reverse logistics company, offers a platform that helps retailers manage rental and resale of their goods and returned goods. Returned items are cleaned, refurbished and rated based on their saleability and marketed to consumers based on their usage (new, nearly new, in good condition etc.) When checking out, the consumer has the option to buy a new item or one in various usage conditions, with the resale process managed according to the item’s SKU (stock-keeping unit.)
• Fernish is a premium furniture rental service that considers the lifecycle of furniture. The company acquires products that can be repaired, refurbished or otherwise managed within the circular economy, rather than being deposited in a landfill.
• Target’s Vice President of Global Supply Chain and Logistics, Irene Quarshie, described an image of piles of surplus clothing as both waste and an opportunity. Whereas supply chains have previously been designed for speed, Target is redesigning them to optimize value—incorporating dynamic decision-making, artificial intelligence (AI) and machine learning (ML)—and align return paths with market conditions. Quarshie presented the Target Forward program, which seeks to elevate sustainable brands, reduce waste through innovation and accelerate opportunity and equity. A modern approach to reverse logistics requires developing a growth mindset and treating reverse logistics as an opportunity, according to Target.

[caption id="attachment_144525" align="aligncenter" width="700"] Irene Quarshie, Vice President of Global Supply Chain and Logistics at Target
Source: Coresight Research[/caption]   Google Stresses Privacy and Loyalty with a Preview of Its Technology Roadmap With the end of cookie tracking, Allan Thygesen, President of the Americas at Google, stated that now is the time for digital advertising to evolve in a privacy-first way. To do this, brands and retailers need to invest in cultivating first-party data that is accurate, rich and durable, following the principle that privacy and measurement go hand in hand. Then, brands and retailers can use ML models to unlock this data obtained with consent to solve for the unknowns and create new insights. Looking ahead, Thygesen discussed several Google technologies under development:

• Visual search—Google aims to enable its search engine to translate a phrase, such as “trail running shoes” or “cowboy boots for spring” into an appealing matrix of personalized products for purchase.
• Video—Google aims to make videos shoppable across its platforms with product tagging. The company recently held its first live shopping week, “YouTube Streaming Shop.”
• Personalized experiences—This involves understanding consumer tastes and preferences to engage their emotions earlier in the shopping process, which should drive differentiation. Google expects to see personalized experiences at scale in the future.

[caption id="attachment_144526" align="aligncenter" width="700"] Allan Thygesen, President of the Americas at Google (left), and Zia Daniell Wigder, Chief Content Officer at Insider Intelligence (right)
Source: Coresight Research[/caption]   Brands Are Leveraging Micro-Influencers To Drive Conversion American Eagle, Peace Out Skincare and PepsiCo offered their insights into connecting with Gen Z consumers through a panel discussion, which centered on the role of influencers in brand marketing. While macro-influencers have the ability to drive overarching awareness, Gen Z shoppers value authenticity and the ability to connect with influencers, the panelists highlighted. Having identified this demand, the three brands on the panel are leveraging micro-influencers at a local level. Micro-influencers are better positioned to connect with consumers from specific communities and geographic locations and therefore drive elevated conversion compared to macro-influencers. Craig Brommers, Chief Marketing Officer at American Eagle, explained that brands used to “vet influencers,” but now, it is “influencers that are vetting brands.” This aligns with current consumer expectation of authenticity in what influencers are promoting, meaning influencers have to ensure that brands and products align with the values and interests shared by their communities. [caption id="attachment_144527" align="aligncenter" width="700"] From left to right: Enrico Frezza, Founder and CEO of Peace Out Skincare; Craig Brommers, Chief Marketing Officer at American Eagle; Bart LaCount, Vice President of Consumer Insights at PepsiCo; and Marcie Merriman, Culture Insights and Customer Strategy Leader at Ernst & Young
Source: Coresight Research[/caption]   Consumers and Employees Are Leading Retail’s Transformation In the discussion on retail transformation, letting both consumers and employees lead the way emerged as a common theme for all panelists.

• Revlon surveyed its employees to measure sentiment regarding returning to the office, and the results demonstrated that workers did not want to return to working five days in the office each week. Revlon has piloted a “Moments that Matter” program in which all teams meet in the office on a specific day to encourage collaborative cross-functional meetings (as mentioned earlier). According to Martine Williamson, Chief Marketing Officer at Revlon, the pilot has generated elevated productivity in the office and coming to the office has become an event that employees look forward to, while retaining the option to work remotely.
• Wayfair and Kate Spade are taking a consumer-centric approach to innovation to solve for consumer needs. For example, Kate Spade is evaluating its metaverse approach from a consumer standpoint. According to Jenny Campbell, the company’s Chief Marketing Officer, the company aims to “do NFTs (non-fungible tokens) but do them for our brand so that it can create a better community.” For Wayfair, solving consumer needs resulted in deep investments in 3D modeling, allowing consumers to view furniture within their own surroundings using their smartphones.

[caption id="attachment_144528" align="aligncenter" width="700"] From left to right: Martine Williamson, Chief Marketing Officer at Revlon; Bob Sherwin, Chief Marketing Officer at Wayfair; Jenny Campbell, Chief Marketing Officer at Kate Spade; and Sarah Engel, Chief Marketing Officer at January Digital
Source: Coresight Research[/caption]   Uber Is Arming “Local Rebels” In a mainstage keynote interview, Dara Khosrowshahi, CEO of Uber, stated that the company is “arming the local rebels” against large e-commerce players, such as Amazon. In February 2022, Uber launched its Uber Eats vs. Don’t Eats campaign to introduce nonfood purchases to its business model. In the past year, Uber has added over 120,000 nonfood merchants to its app, promising to deliver the future of on-demand retail. Khosrowshahi explained that the goal is to be “anti-Amazon,” allowing local brands and retailers to deliver products in two hours, against Amazon Prime’s next-day delivery. Nonfood merchants are able to tap into Uber’s global consumer base while driving logistics costs as low as possible. Khosrowshahi sees potential for Don’t Eats to grow beyond Uber Eats as it possesses the ability to transform on-demand retail, giving smaller brands the opportunity to compete with powerhouse retailers. [caption id="attachment_144529" align="aligncenter" width="700"] Dara Khosrowshahi, CEO of Uber (left), and Emily Chang, Anchor and Executive Producer at Bloomberg (right)
Source: Coresight Research[/caption]   Warby Parker’s Consumer-Centric Approach Drives Innovation At the midday keynote interview with online glasses retailer Warby Parker, Dave Gilboa, the company’s Co-Founder and Co-CEO, explained how Warby Parker is leveraging consumer insights to drive innovation. Specifically, Warby Parker has developed two technological innovations to drive customer growth:

• Virtual try-on—Gilboa stated that the technology is the first true-to-scale virtual try-on feature in the industry, leveraging Apple technology to produce a digital representation of what customers would look like in the glasses they are shopping. Gilboa explained that when consumers shop for glasses, they often bring family or friends or rely on strangers in the store for feedback on how they look wearing a certain pair of glasses—and they cannot try on glasses at all when they shop online. Through the virtual try-on feature, consumers can see exactly how a pair would look on a photo of themselves.
• Virtual eye exam app—This development is perhaps the more disruptive innovation for the company. The app uses an algorithm that can determine how far away the user is standing from their phone. During the virtual eye exam, the user stands 10 feet away from their phone while the app flashes letters to test their vision. The user then sends the results to their in-state, licensed ophthalmologist, who can process the results and make any necessary changes to prescriptions. This vastly reduces the amount of time it takes to renew and adjust prescriptions, according to Warby Parker.

[caption id="attachment_144530" align="aligncenter" width="700"] Dave Gilboa, Co-Founder and Co-CEO at Warby Parker (left), and Krystina Gustafson, Senior Vice President of Content at Shoptalk (right)
Source: Coresight Research[/caption]   Nordstrom Is Getting Closer to Its Shoppers The truisms of retail—know your customer and have the right product in the right place at the right time—became even more apparent over the last two years. Yael Cosset, Senior Vice President and Chief Information Officer at The Kroger Co., addressed the rapid changes of the last two years, explaining that “tech invention hasn’t been the wow, but innovation is at its peak. Out of necessity, the way we leverage, data, sensors and robotics is transformative, bringing freshness to data and personalization.” New digital tools to help associates sell, such as livestreaming, are blending and harmonizing retail. A merging of retail channels reflecting consumer expectations is underway at Nordstrom, according to Ken Worzel, Chief Operating Officer at the department store chain. Worzel stated that “digital discovery via video digital touchpoints offers the expertise, product and style know-how of a great sales associate that creates buyer confidence and can be done digitally at scale.” “Closer to You” is Nordstrom’s latest brand promise—covering deep customer relationships, as well as closer geographies and product proximity. Shoppers want speed and access, and using its network of stores and distribution centers, Nordstrom can now offer its shoppers up to seven times more product than a single store. Moving closer to the consumer means personalizing digitally for The Kroger Co., according to Cosset, as the company looks to create a format that addresses the different shopping needs of its customers—from a weekly pantry shop to a simple dinner. By not forcing choices on its shoppers, it is driving two times more spend and retention has improved significantly, according to the company. [caption id="attachment_144531" align="aligncenter" width="700"] From left to right: Yael Cosset, Senior Vice President and Chief Information Officer at The Kroger Co.; Ken Worzel, Chief Operating Officer at Nordstrom; and Zia Daniell Wigder, Chief Content Officer at Insider Intelligence
Source: Coresight Research[/caption]   Influencers and the Metaverse Are Key Building Blocks for the Modern Brand in 2022 According to Christiane Pendarvis, Co-President and Chief Merchant at Savage X Fenty, “if you aren’t thinking about the metaverse, you are already behind. Look at what others are doing, do not let perfection be the enemy of progress.” Pendarvis advised that businesses in the retail industry allocate marketing spend to try out ventures in the metaverse, cautioning that players that want to see success “can’t afford to wait.” For a.k.a. Brands, TikTok is the fastest growing marketing channel, but not the most efficient. Across its five-brand platform, a.k.a. finds micro-influencers to be the most effective as they are perceived as authentic brand representatives by consumers. They are also more cost effective for the brand than working with large-scale influencers, who also often carry a reputational risk. Jill Ramsey, CEO of a.k.a. Brands, stated that the company uses 17,000 influencers and finds it easy to track and measure effectiveness and productivity by influencer.

• Read Coresight Research coverage of the metaverse in retail.

[caption id="attachment_144532" align="aligncenter" width="700"] From left to right: Jenny Baxter Moser, Managing Director at TSG Consumer Partners; Jill Ramsey, CEO at a.k.a. Brands; and Christiane Pendarvis, Co-President and Chief Merchant at Savage X Fenty
Source: Coresight Research[/caption]