NRF 2021: Digital Transformation, High Heels, & Luxury as Pandemic ‘Oreo Cookies’
What were the hottest topics and key takeaways from the National Retail Federation’s 2021 virtual-only show? Many of the talks revolved around digital transformation, personalized customer experience (CX), and using customer data to understand what customers want and how they want to buy it. And—as often happens when companies use data analytics to better understand their customers—their customers’ behavior can defy preconceived notions of “normal” reactions to abnormal circumstances, such as a pandemic and extended lockdowns.
Surprising Speakers’ Findings: Luxury’s Like an Oreo Cookie
Marc Metrick, president and CEO of Saks Fifth Avenue, says that his high-end customers’ buying habits in 2020 at first appeared counterintuitive.
“At the height of the pandemic, people were buying things that there was absolutely no reasonable use for,” Metrick said in a keynote panel discussion titled “Retail’s rethink moment: Reimagining business as UNusual with Saks Fifth Avenue and lululemon.”
“Why would you buy 110-mm [roughly four-and-a-half-inch] pumps when you’re working at home and on Zoom all day?”
The answer, he says, is backed by customer data, and is rooted in the search for reassurance in tough times that things will eventually be OK again.
“They view luxury as the comfort food of the pandemic,” he says. “It’s your Oreo cookie, it makes you feel better.”
Metrick also says that customer data has made personalization possible far outside of the luxury market, where it was pioneered.
“In the past, luxury owned personalization—personal notes to customers, for example—but over time, data became the greatest equalizer, and now we’re using technology to connect online and offline experiences,” he says.
Retailers & Brands Double Down on Customer Personalization, Digital Transformation
Metrick says Saks was already undergoing digital transformation, and the pandemic’s biggest impact on the company was to accelerate the development of capabilities the company was already working on. And the investment appears to be paying off; Saks recently won Luxury Daily’s “Luxury Retailer of the Year” award.
“The pandemic for us was an accelerant to change to what was already happening. We already wanted personalization, and we wanted things to be easy,” he says.
That’s a sentiment shared by Metrick’s lululemon co-panelist, Celeste Burgoyne, who serves as the company’s president, Americas and global guest innovation.
“We’d already done more than three years of digital investment, so when the pandemic hit, we really leaned in and capitalized on our strengths in omnichannel retail,” says Burgoyne.
She attributes lululemon’s continued success throughout the pandemic to several digital-enabled capabilities that helped the company stay on course.
In particular, the purchase and data integration with Mirror, a fitness platform company, helped provide compelling experiences to its customers, says Burgoyne. In addition, the company’s previous investment in data meant it was able to quickly offer digitally enabled capabilities such as two-hour fulfillment of Buy Online, Pick Up in Store (BOPUS) orders.
Doubling Down on Data-enabled Capabilities
For the holidays, the company implemented seasonal stores (temporary kiosks or storefronts) and a virtual waitlist so that customers did not have to physically stand in line to get sale prices or special holiday promotions.
Burgoyne also points to lululemon’s “digital educators,” which used live video chat sessions to make personal connections with consumers, since so many shoppers were unwilling or unable to go into stores.
“Our digital educators conducted more than 4,000 video chat online sessions on Black Friday alone,” Burgoyne said.
The customer data-centric strategy seems to be working, with lululemon revising its revenue guidance upward in mid-January, based strongly on a good holiday season.
The Future after COVID-19—and Investment in Technology—Are Big Ideas for 2021
Martech and the future of retail after COVID-19 were themes in most of the NRF presentations, which were spread out over two weeks this year. Here are some interesting takeaways:
Founder of RetailMinded Nicole Leinbach Reyhle and Treasure Data’s Thomas Kurian discuss the rise of call centers as a critical selling channel due to the pandemic.
Leverage customer data and call centers with sales associates to make up for lack of in-store selling opportunities. Many companies are turning to a winning combination of customer data platforms (CDPs) and contact centers—particularly at the high end—to lead consumers to purchase, as explained in a discussion led by the founder of RetailMinded, Nicole Leinbach Reyhle. Panelist Treasure Data’s Thomas Kurian says clienteling and associate call centers are helping to make up for the lack of opportunities for face-to-face selling. By giving these associates full customer profiles and personalized recommendations, retailers can often close sales without physical contact.
Andrea Bell, WGSN’s Insight Director, explains how consumer psychology and needs are changing in the wake of the pandemic at NRF 2021, an online event.
COVID-19 has changed the psychology of many customers, and the nature of those customers’ previous emotional makeup determines how they’re changing the way they shop. WGSN’s Andrea Bell explained why FOFO (Fear of Finding Out) and FOBO (Fear of Burning Out) will probably be heightened emotional responses to COVID well into 2023, in a talk titled “Consumer behavior: Making sense of the aftermath of uncertainty.” She advised retailers to emphasize subscription models and create personal connections around such as everyday rituals (particularly personal care, food, home goods, and apparel) to appeal to these emotional responses.
Interest in investment in digital transformation, particularly in personalization and in mobile app development, is accelerating, Michelle Evans of Euromonitor International said in her session, “Tech innovation: What consumers want and where retailers should invest.” About half of retail companies surveyed say they plan to accelerate investment in these areas, indicating digital transformation will continue to be a hot topic for most retailers for many years to come.
Retail Success in 2021
For more insights on how retailers can turn the hard-earned lessons of last year into success this year, check out our new webinar series—Retail Brief. Designed specifically for retailers and brands, this series will help you and your team identify the most mission-critical initiatives for success in the year ahead.