Content Guy's Note: The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.
This week, insights and analysis from the recent ShopTalk conference.
And now, the Conversation continues…
KC: One of the things that seemed clear from all the stories I read about ShopTalk, and our subsequent conversations, is the fact that more and more bricks-and-mortar retailers seem to have accepted the notion that collection actionable data - and then actually using it - is the best way to compete with online retailers, which have easier access to it and a greater ability to employ it. I’m wondering the degree to which it was your sense that this is a real shift as opposed to just talk, especially in the grocery segment, which I’ve always thought has largely mismanaged - or even ignored - the loyalty data to which they’ve long had access.
Tom Furphy: Based on the session descriptions, the content and much of the reporting you would certainly have a sense that data collection and leverage is becoming an important theme for retailers in their quest to deliver compelling shopping experiences. Especially in light of the competition from online retailers. However, I have to say, I think the industry is still mostly paying lip service to this.
Most retailers admit they would like to use customer data more effectively. Yet very few are actually doing so. We heard a number of sessions where retailers talk about data, yet the best they’re doing is offering targeted discounts. Something they should have been doing 10 or 15 years ago. The exhibit hall sported several companies that collect and analyze data for retailers. But what I felt was missing is how to actually apply the data in a way that benefits the shopper and enriches the shopping experience.
We saw lots of examples of service providers using AI, Machine Learning and even robotics to drive efficiency and scale. We saw smarter shelf labels, more refined personalization, robotic facilities and task automation that was all fairly interesting use of data and technology. But I was left wondering how it would truly benefit the customer.
One presenter, who I will not name, pitched his company as allowing retailers to “monetize their shoppers” by leveraging their customer data to attract brand dollars for targeting. While there are absolutely benefits to using data to market to shoppers, which when done right can benefit the shopper and add to the bottom line, the notion of “monetizing shoppers” makes me cringe.
Retailers shouldn’t ask “How can I use customer data to sell more? Or how can I monetize my shopper?” They should ask “How can I use customer data to make my customers’ lives better?” Be it helping them run their daily lives or making the retail experience richer, data can be used to unlock so much goodness. Yet somehow retailers cannot get over the hump.
KC: It is interesting to me - and not just me - that a greater emphasis on the use of customer data by retailers is taking place at the same time as there is a lot more focus on privacy issues, with a lot more discussion about potential regulation by the federal government. To what degree was this dichotomy on display at ShopTalk?
TF: I didn’t see this dichotomy on display, but perhaps I was not in the sessions where it was discussed. Outside of Amazon and maybe a few others, I don’t see the data being used at a scale where retailers are that concerned. I think folks realize that the big platforms, like Google and Facebook, have a responsibility here because the data is an asset that they monetize externally. Retailers use it internally, directly with their customers. So as long as it is kept secure and is used in a meaningful way to benefit shoppers, retailers should be fairly covered from a privacy standpoint.
I had a number of conversations throughout the week with service providers, manufacturers and retailers that work with the larger platforms. They are trying to wrap their heads around balancing the new privacy standards of the larger platforms with generating and using the data in meaningful ways. The more it’s protected, the harder it is to use commercially. But that’s probably a good thing given the breaches and abuses we’ve seen.
KC: I found it interesting that Erik Nordstrom, co-president of the retailer that bears his family’s name, commented that their biggest problem is an “inability to move fast enough,” and that the company needs “to be more agile.” That’s remarkable to me, because I think most people would observe that Nordstrom has been as fast and agile as anyone in the retail business. Is this him just being self-effacing, or are things moving so fast that even Nordstrom, which is at the head of the retail class, can’t keep up?
TF: Courtney Reagan of CNBC interview with Erik Nordstrom was one of my two favorite sessions of the week (the other being Jim Donald’s session). He has such a practical view of his business and strong focus on the customer. Ms. Reagan was asking him questions about the economy, the state of retail and the outlook for department stores. He avoided answering and kept coming back to talking about the shopper and solving her needs. That’s what they think about all day, every day. He talked about store services and the new inventory-less Nordstrom Local format that focuses on services.
He said that he doesn’t think about the economy other than in the context of what it means for his customers. He said that he’s not an authority on the retail industry. When asked about the prognosis for the department store sector, he didn’t answer. He said he doesn’t think of Nordstrom as a department store. He thinks of his company as a fashion retailer.
A couple folks that I spoke with afterward said they were underwhelmed by Erik’s session. They were expecting him to espouse great knowledge about many subjects and share insights into all the cool things that they’re working on. He did discuss many of their innovations. But did so without a sizzle reel, flowery words or broad proclamations. It was clear that he’s a merchant solving problems for his customers. It reminded me of Bob Wegman and Jeff Bezos. They both cut through the clutter to focus on their customer. Retail needs more of this.
Erik did say that Nordstrom struggles with moving fast enough. As technology and shopping trends emerge, he wishes they could be faster at putting them to work for their customers. And you’re right. Nordstrom’s speed and agility is at the head of the retail class. But because they are so obsessed with the customer and keeping up or staying ahead of them, they feel they need to be doing better.
I had a chance to catch up with Erik and ask him about BevyUp, our company that Nordstrom acquired last year. I was super impressed at how well he knew the team and could speak specifically to the technology and to the team and their contributions. This is a leader that knows and cares about his business deeply.
KC: Finally, I know you think that ShopTalk is one of the best conferences around, along with its Grocery Shop offshoot later in the year. Can you tell me why, and why retailers need to embrace these shows?
TF: It really is a great show. The range of content is spot on for the industry. And as I look back over the four years of the conference, it has evolved each year. The first couple years were about discovering capabilities and business models to serve the new shopper. It was about sizzle and inspiration. Then it shifted to how companies are using technologies and new models to serve shoppers in meaningful ways. It was about possibility. Now it’s about how companies are scaling and working toward profitably and owning the next generation of shopper experience. It’s about application and scale. You can really see the progression staying in step with the times.
As someone that tends to live in the CPG and Grocery segments of the industry, I did recognize the impact of splitting Groceryshop off into its own show. I used to really struggle to hit all the sessions that I wanted to when the content encompassed all retail verticals. With the grocery content removed from Shoptalk, I had few conflicts and was able to focus on a broader set of capabilities and perspectives outside of our industry. If you had to pick one of these two conferences, I would recommend to anyone in our industry to hit Groceryshop first, then Shoptalk second if you have budget for both.
One of the things I really like about Shoptalk/Groceryshop is that attendees have a great opportunity to interact with retailers and brands. There are thousands of pre-arranged speed dating sessions between retailers, brands and service providers. The feedback that I’ve received on these has been very positive from both sides of the desk.
Also, there is ample opportunity to network in the formal settings, in the hallways or at off-event gatherings. Unlike traditional industry conferences where retail and manufacturer executives hold private sessions and seemingly work hard to stay out of the spotlight, very senior executives can be found engaged in deep conversations everywhere.
It was a great show for our CEP companies. I was humbled by the attendance at an evening event we held during the conference. We brought together a truly impressive group of brands, retailers, platforms and partners. We had a great time and it was a thrill to see our clients and partners interacting with such great energy!
The Conversation will continue…
- KC's View: