What themes will we be seeing in the retail tech space over the next year according to the 2022 National Retail Federation’s Big Show?
Published: 28 Jan 2022
Retailers and technology providers typically head out to New York City in January for Retail’s Big Show, organised by the National Retail Federation (NRF), and it continued this year – albeit with visitor and exhibitor numbers reduced due to Omicron.
But the low-key nature of this year’s event didn’t deter it from again being a great indicator of forthcoming technology-driven trends and themes in the retail sector. This was boosted with an expanded Innovation Lab and Start Up area showcasing some of the more cutting-edge services.
There was no escaping sustainability this year, and various offerings involved improving the efficiency of the supply chain to reduce both costs and waste. During Covid-19, issues around the environment have been exacerbated by the dramatic rise in online sales, which has squeezed margins because of delivery costs and increased waste as a result of the growth of returns.
One solution has been around for years, but has really come into its own during the pandemic. The likes of Tesco and Matalan have rolled out RFID tags onto many products, which have enabled them to dramatically enhance visibility of stock across their supply chains, which has significantly boosted their ability to provide click and collect across their store estates.
Dean Frew, chief technology officer at RFID specialist SML Group, says: “There is a realisation by many retailers that they have an inventory problem. When customers buy online, they expect to be able to go to the store within a few hours to collect the goods. But with inventory accuracy for clothing and footwear at 65/60%, and in some cases as low as 50%, retailers simply don’t know where the right items are in the supply chain.”
This can often lead to the cancellation of customer orders and refunds being issued when items cannot be found. “Buying online for collection in-store has driven the conversations [we have] with retailers about the technology,” he says. “When online went crazy with Covid, they realised they could not just use warehouses for [fulfilling] online orders. They needed to be able to use their stores.”
As well as helping click and collect, RFID technology is also enhancing retailers’ ability to handle returns. It makes it easier to bring returned products back into a retailer’s supply chain and therefore increases the prospects of reselling the items – even boosting the chances of doing so at full-price.
Digital tools for physical problems
Returns are often caused by the ordering of incorrect sizes, and although many tech-based solutions have appeared over the years, the problem has persisted. Morgan Linton, co-founder of Bold Metrics, reckons he has developed a sizing tool that could make the difference. Whereas in the past they often involved shoppers taking photos of themselves, his solution involves asking customers five questions, such as their height, weight and shoe size, for Bold Metrics to ascertain 50 body measurements.
The offering uses machine learning to constantly increase its level of accuracy, and feeds the data relating to products that have been returned into the system to further refine its capability. It works with the likes of Canada Goose and has helped it reduce returns by 32% – as well as increase conversion rates by 20%. In addition, Linton says the data is supplied to the brands so they can potentially change the way the clothes are made in the first place, thereby further driving down return rates.
Feeding data back into the manufacturing process to reduce returns and waste is a path also being taken by Ralph Lauren, which continues to experiment with on-demand production for customised products. It found its on-demand activities have been able to provide valuable learnings. Some of the customisation elements chosen most frequently by customers have been fed into the main production lines. Likewise, components that customers have preferred not to include have been removed from the core products.
The customisation of items is an exciting area for Jason Berns, senior vice-president of product and manufacturing innovation at Ralph Lauren, who says it involves a high level of profitability and zero waste.
“When you make [an item] for one person it can really drive up the margins,” he says. “It’s also experiential and helps drive value in a new way. We’ve done store activations [for customisations] and certain stores have had digital screens for the configuration of the item, so we know it’s also a great experience for online retail.”
Also looking to use customer data to reduce returns is Allison Lee, founder of Hemster, whose tech-enabled tailoring service works with around 100 brands. “We’re making tailoring accessible at the point of sale – booth in-store and online,” she says. “Instead of customers returning an item, we ask if they would like it tailored to fit for free. At our [workshop] site, each garment takes only 10 minutes to change.”
Using the data it generates on the customers, Lee says it is possible to create a “silhouette” of the individual that can then be shared with the brand to ensure future purchases will be a perfect fit for the customer. “We can lower returns by 20%, and people buy more when they know it’s free tailoring,” she says.
Robots and buzzwords
Automation and robotics solutions were in evidence again at NRF, but the days of numerous robots wandering the aisles looking for a problem to solve are definitely over. This year, logistics and fulfilment was very much seen to be utilising automation technology. Among them was Ottonomy, which was showcasing its delivery robots that operate within airports in the US for delivering retail products and food and drink from brands located in the travel hubs.
Meanwhile, Gatik uses autonomous vehicles for delivery between retailers’ main distribution warehouses and their fulfilment facilities, including micro-fulfilment centres. Sam Saad, vice-president of strategic initiatives at Gatik, says the company works with Walmart and focuses on specific repeatable routes that do not change and are therefore suited to being undertaken by driverless vehicles. He says it can reduce the cost of transportation by up to 30%.
A bit more experimental is Dronedeck, which is partnering with retailers in Indiana for a trial of its smart mailbox service that sits at the end of consumers’ driveways. It receives deliveries of ordered goods by drone, which are then deposited securely in the unit.
Such offerings are examples of the rise of contactless exchanges, which have accelerated across all parts of retail during the pandemic. Robomart sits firmly in this domain. Its store-hailing proposition involves customers requesting a visit from the mobile shop via an app where they can view the available products. When the mobile store (a converted, tech-rich van) arrives, the whole process is contactless – including RFID tags on the items and payment being made through the app.
Carson Denbow, responsible for marketing at Robomart, says the service is currently being used in Los Angeles, with the vans typically arriving in around 10 minutes, from locations hosted by REEF Technologies, which will shortly be opening its first venues in the UK. Because shoppers are not pre-ordering the goods, and the vans house up to 80 products, the proposition drives a high level of impulse purchases.
Undoubtedly, the new buzzwords at NRF this year were metaverse and non-fungible tokens (NFTs). While the retail sector has been dealing with the online and offline channels, it has now been joined by a third route to selling goods – metaverse-commerce. This decentralised, virtual world involving NFTs, the blockchain and avatars has certainly caught the imagination of tech providers who have been seeking to shoehorn some of these elements into their services – regardless of whether it really makes sense or not. This has a similar feel to previous years, when artificial intelligence was visible on every booth.
For retailers, it’s very much a case of experimenting with the existing metaverses, including Roblox and Fortnite, where individuals are represented by their avatars.
Among those engaging with this new area is supermarket Carrefour, which has built a store in Roblox featuring people receiving credits when their avatars eat healthily. Nike has been very experimental on many fronts in recent years, and has created a virtual representation of its US headquarters in Roblox among various initiatives.
One reason to investigate this new universe is to get closer to younger consumers – who are clearly retailers’ potential customers of the future.
Patrice Louvet, CEO of Ralph Lauren Corporation, says: “We have to innovate, experiment and try new things. This is what we’re doing in the metaverse. First, it’s about engaging with customers to create an experience. On Roblox you can have a virtual coffee in a virtual Ralph Lauren store. How big a revenue source it will be I don’t know, but we are thinking of buying space in this decentralised land.”