The National Retail Federation’s 2014 Big Show in New York was alive with high energy and record crowds. Supply Chain Nation sat down with Gartner research Vice President Kevin Sterneckert to get his take on the hot topics at NRF and what they mean for retail. Here is a summary of his comments.
SCN: What were two or three of the hottest topics at NRF this year?
Sterneckert: The topics that seem very clear to me were security and risk, and I believe that had a lot to do with the breaches that happened at a couple of retailers, and appear to be much bigger than previous instances. I would say the other two were how can retailers accelerate their ability to deliver across channels to the consumer, and how can retailers leverage big data and the cloud to deliver faster and more robust capabilities to decision-makers throughout the organization to meet the needs of the consumer.
I believe the customer is really driving the pressure on retailers to deliver. We talked a lot about eCommerce, omni-channel and multi-channel, but I think it should really be “aCommerce,” and that really means anywhere commerce—that is what the consumer is really asking for and they are rewarding retailers who are able to deliver. That is putting pressure on software companies to identify the opportunities so they can deliver a holistic solution.
SCN: Were there any big surprises at NRF this year?
Sterneckert: I don’t know that there were big surprises, but I do think that risk and security were not on everyone’s top agenda in October. The circumstances that happened with a few retailers put that topic on the agenda. So while it wasn’t a surprise, if you asked people in October what are the big things you will see at NRF, I don’t think security and risk would have been on their agenda. I think that is a statement about where retail is at. As long as it’s not a squeaky wheel, it’s not a focus of retailers because of how expensive it is. It is sort of like insurance—you really hate it until you need it. And when you need it, you’re glad you paid the premium all along. And that is what I think we are finding is that retailers who have paid the premiums are happy that they have and some who may not have are feeling the full force of those decisions.
I think it was surprising that we had the attendance that we had because it broke records. Gartner’s 10th annual Sunrise Breakfast actually had to shut down registration because the fire marshal does not allow more than 300 in the room. That was a bit surprising because that was a significant increase over the prior year, and we expect next year we will need a room able to handle a few hundred more.
There were a number of innovators that were in the basement and I think there are some interesting technologies beginning to come forward leveraging big data, social and the cloud, and finding ways to deliver capabilities to retailers that have been difficult for them to accomplish in the past.
SCN: There was a lot of talk about serving the omni-channel consumer. Where are most retailers at in this journey?
Sterneckert: There are a few that are doing really well and they are far ahead, like Nordstrom and Macy’s. On the average, if you’re looking at a five-state maturity curve, with five being the most closely aligned with what customers want today and what they will want in the future, I see that most retailers are at a level two or three. I still see a lot of companies that have data silos where the information is not available across the enterprise. Inventory transparency across all channels is not a trivial delivery. So that is another element in the equation—do they have the ability to know what the quantity is on one channel and deliver from another channel based upon that inventory visibility. That is not easy for most retailers.
I would say the majority of the conversations I have with retailers today include some commentary of their intention to eliminate that friction, and I think most retailers understand that they have to completely eliminate friction from the process. So there is heavy investment and because each retailer finds themselves in a different place around where they are along that maturity curve, what they need varies dramatically from one company to the next. So I don’t see one answer fitting all, and I don’t see most companies wanting to buy the same thing. At the end of the day, I believe those that get it and will be in business for the long hall understand the end-state, and what they are marching toward is anywhere commerce.
SCN: What was your biggest take-away from NRF?
Sterneckert: I would say that it is an energized industry, an industry that is willing to invest, and that understands the stakes. Most companies understand there is high risk, and many companies understand that they have to innovate. Sometimes they are innovating outside of technology providers and are developing centers of innovation to develop their own technologies and differentiated capabilities. We see retailers willing to fail, willing to try. We see retailers buying software companies so they can have IP internally and use it as a competitive advantage. And we see that retailers are going to spend about eight percent more this year over last year on software, and last year was an eight percent increase over the prior year. So I think that is a big take-away—that retailers are very interested in investing and they understand the stakes if they choose not to.