Event Report: #NRF14 Preview - Retail's Big Show Hints At Lessons Learned In #MatrixCommerce
Retails Big Show Transformed For 2014
Over 29,000 people are expected to gather at the National Retail Federation's big show (NRF) this Sunday, January 11th, 2014, in New York City. #NRF14 brings the intersection of new retail business models, products, store concepts, technology, society, and culture together!
A few big trends emerge based on conversations with our clients attending the event:
- Building out matrix commerce. Retail faces rapidly changing business models and new payment options that are often misunderstood and poorly integrated. Matrix commerce describes the fusing of demand signals and supply chains in an increasingly complex world of buyers seeking frictionless buying experiences. Channels move from multi-channel to total channels. As the world revolves around the buyer, channels, demand signals, supply chains, payment options, enablers, and big data will converge to create what Constellation coined in 2011 as Matrix Commerce. Matrix Commerce spans across disciplines as people, process, and technologies continue to transform today's commerce models. This shift to a buyer centric model will result in continued consolidation of retail technologies as stacks and ecosystems form around real buyer needs. Lessons learned: There is no single end to end solution. However, strong open standards and a focus on buyer centricity will help provide guide rails to success.
- Dealing with digital disruption. The convergence of the five forces of consumerization described in 2009 and 2010 serve as the five pillars of digital business. Retailers recognize that they no longer sell products and services, as buyers seek experiences and outcomes. Market leaders and fast followers now democratize the data to decisions pathway to enable innovation at all levels
of the organization. Brands realize that B2B and B2C are dead. It’s a P2P and M2M world. Customer efforts focus on context as right time relevancy beats real time information overload. Organizations now shift from engagement to mass personalization at scale. Recent trends at #CES14 indicate that this automation and mass personalization will occur within the next 18 months. Lessons learned: Digital disruption is among us. Customers and even workers now fit five generations of workers by digital proficiency, not age.
- Enabling data driven decision democratization. With the hype of big data past us, most retailers are focused on identifying the patterns in existing data and asking the key questions of the data sets they have or have access to. Having this data requires retailers to simplify how non data scientists can assemble patterns to enhance decision making. Data will provide the demand signals. Data will provide relevancy and right time context. The simplicity of information presented (i.e. data visualization) is required to provide contextually relevant information. For example, knowing that a customer is a repeat customer and always purchases 24 roses for valentine's day on February 12th, could help personalize the experience. Consequently, surfacing an alert at check out with customer history would improve the experience. Lessons learned: Context by purchase, role, relationship, location, time, sentiment, and intent are seven key drivers to consider. Success requires enabling the employees for self sufficiency.
- Empowering the work force for success. Retailers seek any and every possible advantage in automating or creating self-service scenarios for repetitive tasks. Beyond automating time cards and scheduling systems, managers have a mandate to improve recruiting, training, and career development have risen in importance. While robotics and automation would be preferable, high touch, high value experiences requires a different skill set. Lessons learned: Despite the unemployment numbers, the available jobs require higher level skill sets. The war for talent is fought for highly skilled, highly coherent associates. Expect rising demand and poaching for the best and the brightest as bifurcation of highly skilled and easily automated work continues.
- Deciding to friend or not friend Amazon. Given that Amazon's business model successfully convinces competitors to subsidize their operating costs while simultaneously taking out a competitors high margin products and leaving them with low margin commoditization, many competitors have woken up to the seriousness of the issue. Retailers finally realize that their subsidy of Amazon is funding their long term competitor. Expect a coalition of the beaten to figure out who could assist them in delivering the same level of commerce infrastructure as Amazon has built with their competitors money. Just watch out for the synergies from the Washington Post acquisition to disrupt media and commerce. Smart cloud and commerce companies could partner with Google, IBM, Microsoft, and Oracle to scale up similar levels of service. Lessons learned: If you fund your competitor with free data, payment for services, and even your business model, don't expect to survive unless you have also grown your business to the same scale in another defensible component of your business model. Otherwise, you may have hastened your own death.
Figure 2: The Flickr Stream From NRF 14
Source: 2014 R Wang, Software Insider Associates. All Rights Reserved.
The Bottom Line: NRF14 Showcases The New Digital Disruption For A Buyer Centric World
With 52% of the Fortune 500 companies gone, bankrupted, or merged since 2000, the competition is intense. US retail continues to face an assault from minimal product differentiation, stagnant economies, rising real estate and energy costs, out of control regulatory requirements, and short term board room mentality. 2014 is about retail transformation with data, technology, and leadership in tow While retail transformation is nothing new, attendees to this NRF will find a renewed sense of innovation in mobile, kiosks, payment tech, ad tech, and retail solutions. Expect vendors to deliver new partnerships that work towards buyer centricity and deliver on the matrix commerce promise. However keep in mind, the future is about transforming business models, not incrementally improving operations. Retailers who get this shift to digital disruption will emerge as leaders. Those who stay focused on narrow operational efficiencies will cease to exist.
Are you attending NRF? What are your expectations for this year's show? Drop us a line and we can connect! Are you embarking on a digital business transformation? Let us know how it’s going! Add your comments to the blog or reach me via email: R (at) ConstellationR (dot) com or R (at) SoftwareInsider (dot) org.
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