NRF Big Show Day 2: Age of ‘Humanity’
Welcome to Day 1 of the NRF (National Retail Federation) Big Show, it’s our 9th year in NYC attending this show. Each year is like listening to a chapter in an ongoing book…the book of retail. If our first year was all about the disruption of retail (thanks to the changing consumer, digital and an slowing retail sales)…thank you 2011; this year we have gradually progressed into retail as the Consumer-Centric Corporate Citizen ( the 4c’s if you will). This is a chapter that’s narrative is focused on retail as the empowered protagonist. No longer lagging behind the ‘headwinds’ of the economy, changing consumer or digital disruption – leaning on tech vendors like a crutch to fix sales – but starting to lead this change. To quote the NRF Chairman Chris Baldwin in his opening ‘the customer has more power than every before and we desire to give them even more power’. Yes, the talk is arguably ahead of the actual behaviours (particularly with more ‘traditional retailers’), but it looks like this theme of empowerment will be the chapter title of this conference.
So let’s jump into the key trends that emerged in day 1 (and will no doubt be echo’ed over the next 2 days)
FROM ECONOMIC FORCE TO GOOD CORPORATE CITIZEN:
Retail and the NRF have made great strides since we first attended to raise the importance of being not just being an industry that supports the economy, but one that also benefits the communities it operates within. The NRF Chairman Chris Baldwin, opened the show by saying ‘As retailers win, communities win’. It’s always difficult to make a statement like this and then back it up with proof or behaviours that align (at least beyond the superficial). However it seemed as though there is this desire to show that retail can be a good corporate citizen, not just the bastion of consumerism. There’s a deep desire that has been brewing over the last couple of shows, to demonstrate that it’s an industry that can transform others lives. No doubt the current discussions of climate change, the changing ‘woke’ consumer base have helped force this shift. Where it gets tricky (and my inner cynic comes out) is when we look for what this actually means aka. the proof.
Baldwin’s (or should I say the NRF’s) examples were of retail’s power to lobby government, to provide staff with a career not just a job (something I notice is a key foundation of American retail…and something that is truly patchy in Australia) and finally charitable donations. As soon as I hear charitable donations when it comes to corporations, my ears prick up. As this isn’t truely embracing being a good corporate citizen. Yes, it can be part of it, but it’s not the core. In fact the best way a lot of these retail businesses could service the community would be to reduce their footprint and become more sustainable. For example, just fashion retail along contributes 10% of all carbon emissions (as well as being the second largest consumer of water in the world). As some context, that emissions contribution is more than International flights and maritime shipping combined.
Obviously, it’s easy for me as an observe to say this; but equally as a B-Corp certified business and one that is moving towards Carbon Neutral, it’s incredibly important. This is an industry (aka retail) that contributes 31% of total global GDP has the ability to have huge impact. At the moment it seems that the story is half there…yes it’s taken huge strides just to be a topic of conversation but for retail (or the NRF) to find a platform around sustainability (like they did with careers a couple of years ago) would be truly leading this discussion.
Yes, it’s important to state there are definitely some retailers leading the way like Lush and Williams-Sonoma Group. Lush in particular, moved away from plastic packaging before it became a ‘thing’. Their manager for ethical buying, Heather Deeth stated ‘It’s about taking responsibility and participating – collective action is needed. One company won’t make a different we all need to rally together to solve the climate crisis’.
My prediction that this concept of Consumer Centric Corporate Citizen will continue to grow, and my idealistic self is hoping that action around this is quick, and focused on coming from within the business (not just a charity donation).
FROM TECH ‘CRUTCH’ TO THE PROMISE OF PROPRIETARY TECHNOLOGY:
The second presentation – post introduction from the chairman – was fro Satya Nadella the CEO of Microsoft. What could have easily been a straight up sales talk (hello, you have a keynote) turned into an interesting, almost what I’d call ‘tech-washing’ argument. Satya – who echoe’d one of my favourite thinkers of our time Peter Thiel – when he said ‘every retailer needs to build their own tech intensity’. This is the concept that the only way to succeed in retail is not to have commoditised out of the box technology but rather to have proprietary technology build on top of this (unique to the retailer).
This is an argument I’m fascinated by for a couple of reasons. Firstly the fact that Microsoft is one such commodity tech vendor, and they are essentially now chasing a narrative that goes against the rest of their peers like Google, Salesforce, Facebook, Amazon. Secondly, I totally agree with the fundamentals of this argument and I’ll take you back to an important quote from Peter Thiel ‘Customers won’t care about any particular technology unless it solves a particular problem in a superior way. And if you can’t monopolize a unique solution for a small market, you’ll be stuck with vicious competition’. Essentially the only way to build a monopoly is to have proprietary technology. For example, Personalisation – every retailer most likely has this on their strategic roadmap, however it’s actually a commodity in a way (or will become a commodity) because everyone is going about it in the same way, using the same vendor and system…and ultimately the same proposition to the customer making it an expectation in the future. Finally, my fascination with this argument is how can a retailer do this when don’t consider themselves a technology company?..and in fact that would be why they would work with a vendor like Microsoft, Salesforce, Amazon etc. My point is the argument Satya is recounting is sound, in fact it’s even liberating to hear…but it feels like ‘tech washing’ more than a real desire for retailers to truly reach beyond superficial adaptations and build proprietary technology.
My prediction is Microsoft’s ‘propriety tech’ vendor story will become mainstream this year, and ultimately (and ironically) a commodity told by all other vendors.
FROM LAND LORD TO MAGICIAN
When the Lowy’s sold their shopping empire, it was a very overt sign to what most retailers were feeling, physical retail has fundamentally changed. What we’re starting to see play out is this shift from (land) Lord to (experience) Magician. This is a fascinating shift, being driven by start-ups in the property management/ development space. Where Westfield tried to crack the future of the mall with it’s failed labs experiment, businesses like Showfields and Area 15 are giving it a real crack…and unencumbered by a traditional mindset or existing business. These two businesses are approaching the ‘call of the mall’ by answering the customer in two different ways.
Firstly Showfields, which is 2.5 years old and currently has one site in NYC (11 Bond St). This is the ultimate Retail as a platform provider… meaning their tenants don’t need to know anything about retail to be in Showfields. In fact they hand everything from the design through to staffing. To quote the founder Tal Zvi Nathaniel, the purpose of Showfields is ‘ to allow all brands in the world to have a physical touchpoint, for brands to have a platform to seamlessly open a physical retail touchpoing and for the customer to be the most interesting store in the world’. They’re working with traditional businesses through to non-traditional retailers like the City of Tenesse, who recently had a space at the store showcasing the music history of the city as a retail experience.
Secondly Area 15, which isn’t operational yet (launches April 2020 in Las Vegas), but lives at the intersection of culture, art, retail and food. It’s a traditional mall in the sense that it has tenants but then it’s not in the fact that it’s dedicated an enormous amount of space to eventing (think Burning Man meets a shopping centre). This is designed not to be ‘instagrammable’…in fact it’s the opposite to quote them it’s to ‘create a place where people put their phones in their pockets and it will simply blow their mind’. As we see the next generation increasingly spending their money, time and energy on experiences, this is the answer to this. As an FYI they teaming up with artist collective Meow Wolf for the concept.
Both these concepts live in a post-instagram age, where it’s not about leveraging their customers channels to create media impressions, but rather one that creates real connection.