NRF RETAIL S BIG SHOW day 3 HIGHLIGHTS
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1 NRF RETAIL S BIG SHOW day 3 HIGHLIGHTS DEBORAH WEINSWIG Executive Director Head Global Retail & Technology Fung Business Intelligence Centre deborahweinswig@fung1937.com New York:
2 NRF RETAIL S BIG SHOW DAY 3 HIGHLIGHTS Retail industry professionals from 40 countries descended on the Jacob K. Javits convention center this week for the NRF's Big Show. Here are the highlights from some of the sessions and exhibits we saw on Day Three of the event. CREATING AN ALWAYS- ON, ALWAYS OPEN SHOPPING EXPERIENCE This lively panel discussion drew on the experiences of three industry leaders who had been instrumental in executing omnichannel strategies at their respective firms: Peter Longo, President of Logistics and Distribution at Macy s; Eileen Dileo, EVP of Operations at Hudson s Bay Company and Ken Duane, CEO of the Heritage Brands and North America Wholesale at PVH. Their talk focused on three main points: the elements of omnichannel success, the role of technology in solving inventory problems and the need for retailers and brands to collaborate to create a win- win for the industry as a whole. The takeaway: The businesses that do fulfillment the fastest, the smartest and with the most accuracy will be the ones to flourish in the new world of retailing. For these panelists, the phenomenal popularity and widespread use of mobile devices has been a game- changer for the industry, accelerating the need to adopt seamless, always- on, always- open shopping experiences. The old, silo- ed way of doing business is a "fatigued strategy," Longo said. If you put the customer first, [you ll find that] a lot of your existing business processes do not satisfy the growing customer demand. Macy s has spent the last few years working toward a single view of inventory, marketing and merchandising. The company s recently announced operational restructuring takes this strategy one step further. Longo believes that there are three fundamental ways to achieve success in the omnichannel world: have a great product, similar pricing across channels and great marketing. Companies need to stay one step ahead of the time- starve, impatient consumer of today, more accommodating and faster at meeting her (or his) demands, urged Dileo. 1
3 PVH s Duane provided a brand company s perspective: Around 50% of PVH business is overseas, split into three regions Asia, Europe and the Americas. It has supply- chain hubs all over the world, so it has to pay close attention to the differences in the supply chain in those regions, and work intimately with partners to meet goals. The panelist all pointed to the growing importance of supply- chain visibility and inventory accuracy. To achieve their goals, they ve all relied on the steady advances in RFID, which they agreed has driven a revolution in inventory management and fulfillment. We ve only touched the tip of the iceberg in applications for RFID, said Dileo. Retail systems need to be capable of telling a retailer not only if a certain item is in stock but also where that item can be found whether in the store or in some other part of the supply chain. Inventory degradation occurs at about 2%- 3% a month. You don t want to make decisions based on bad data, said Longo. He introduced the concept of pick to the last unit, meaning that the last unit of a product in every store is easily locatable and sellable. Duane spoke about how there s always a cost associated with embracing new technologies, but sometimes you have to go all in. Such was the case with RFID for PVH. You need to take an assessment of the costs from beginning to end of the supply chain, because there s a huge margin improvement. He also highlighted how even small suppliers are beginning to see RFID as a standard operating procedure. The demands of the always- on, always open omnichannel strategy require that you know where your inventory is at any time, in any part of your supply chain, all the time, Duane noted. The need to collaborate was another key theme. Duane described the importance of partnerships: The future will encourage us to work more closely together. We have to narrow down the noise out there. He later added, We re partners. We work for win- wins. Or we look for common solutions. You have to talk about your issues. How can I be better partner? If you don t collaborate you have no shot. Macy s Longo seconded the sentiment. The age of I win, you lose [is over], as opposed to we both find ways to win. You are collaborating around an organizing agent that allows trade and commerce to go smoother. But perhaps the strongest call for collaboration and the need to operate as part of an ecosystem was made by Dileo at the end of the discussion, when she turned to face the audience directly. To our suppliers and retail partners sitting out there we need you. We cannot do this alone. We cannot do it in a silo. ENTERPRISE- WIDE OMNICHANNEL: A BROADER APPROACH WITH BETTER RESULTS Omnichannel integration is long past its buzz word stage and is now a common theme and major strategic focus of most retailers and brands. Spurred by the influence of media and gaming, customers want greater flexibility in where and how they shop, and immediate availability of product. To deal with these growing demands, it is common for retailers to work to strengthen the link between stores, ecommerce and inventory. However, the often fail to address the larger ecosystem channels, solutions and data sources that can maximize return. Sean Cook, CEO ShopVisible, a maker of e- commerce software with a built- in order management system, believes that retail and media are undergoing the greatest transformations of any industry today, driven by the influences they have had on each other and the increased connectivity of devices. What s happening in the world of media and gaming is having a profound impact on what consumers have come to expect from retailers. 2
4 Key Takeaways: The retail industry has yet to define what an omnichannel experience at its best looks like. It s more than just giving customers more purchasing options. It must also incorporate data and process solutions. As consumers digital interactions increase across ever- advancing platforms, the intensity of their demands is likely to increase. How do we meet these expectations? That s the million dollar question! Mobile purchasing platforms are key. Consumers made upwards of 50% of their holiday purchases with a mobile device Consumer expectations have been set by the media they watch and instantaneous tech capabilities: any place, any form and anytime Convenience to the customer and profitability go hand- in- hand By increasing your platform capabilities, you empower not only your customers but also sales your associates, who are also accustomed to using multiple devices Everything is moving to the cloud; SAS- based solutions are on rise The challenges to this approach are myriad. Companies are falling short when it comes to translating big data into intelligence that can be dialed down to a store level. Retailers and brands are still looking to expand globally, but have had difficulties implementing effective strategies. Consumers are still very much concerned about the security of their personal data. With everything so connected, there is a greater sense of urgency for transformation now. Solutions must be interconnected and actionable, from sourcing to fulfillment to store- level operations. Retailers need a 360- degree view of the customer to deploy non- siloed solutions. SCALING THE GREAT WALL OF CHINA China is one of the fastest- growing consumer markets in the world, but also a notoriously tough place to do business. Sherri Wu, Head of International E- commerce Business Development, shared her thoughts on the best practices for succeeding in this highly competitive marketplace. Fast growing m- commerce. China has 650 million Internet users, of which a little less than half (300 million) also buy online. Because the Chinese s leapfrogged desktop shopping in favor of mobile devices, m- commerce is a particularly strong area of online shopping growth. Roughly 40% of AliPay s payment transactions go through mobile channel. Unique shopping habits and preferences. Shopping is a social event and part of an aspirational lifestyle in China. At restaurants, it is quite common to see diners showing off their recent purchases on their mobile devices. Chinese people love bargaining and communicating to sellers. That was the premise behind Tabao s decision to add a chatting system to its online platform. The Chinese love luxury brands from around the world. Alibaba is a seeing robust demand for authentic brands, though the Chinese are not particularly loyal to them. 3
5 Many IT challenges. Alibaba faces tremendous e- commerce challenges caused by irregular Internet, hardware and application- program- interface (API) connections. The group is working to develop more effective IT solutions for vendors, an area that many consider one of its strategic strengths. The platform is currently handling 2.85 million transactions per minute. Optimistic about business model. Wu said that Alibaba is very optimistic about the global scalability of its business model, and reiterated that global expansion remains an important part of its long- term plans. Deborah Weinswig, CPA Executive Director Head Global Retail and Technology Fung Business Intelligence Centre Global (FBIC Global) New York: Hong Kong: Marie Driscoll, CFA Christine Haggerty John Harmon, CFA Amy Hedrick Fong Lau Lan Rosengard Jing Wang 4
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