NRF 2023: Building New Connections in Retail
The National Retail Federation’s Big Show returned to the Javits Center in New York City to showcase the latest and greatest in retail industry innovation. This year, conversations centered around building connections, with brands exploring new ways to use data to connect their systems, their networks, and omnichannel customer experiences. Here are some of our biggest takeaways.
1. A Shift in Priority
It would be remiss to not acknowledge the turbulence that the retail industry has faced over the last few years. The pandemic grounded supply chains, diminished in-store traffic, and slingshot digital channels into center stage—changing the types of products and services retailers brought to their now digital-first customers.
In a post-lockdown world, however, strategies are shifting yet again—with real challenges, and some silver linings. Prolonged economic uncertainty and inflation is prompting both consumers and retailers to be more conscious about how they spend, with a renewed focus on efficiency and cost savings. New data privacy laws are also becoming more prevalent, with increasing third-party cookie deprecation seeping into how retailers approach the future of their data collection strategies.
On the other hand, brick-and-mortar is re-emerging as a renewed channel as the ability—and the desire—to shop in person regains momentum. This poses an incredible opportunity for retailers to reimagine the brick and mortar experience by introducing technology that connects online and offline channels, while building first-party relationships with shoppers.
And retailers are going there.
2. Retail Media Networks Enter the Physical Arena
Over the last several years, large retailers like Amazon, Walmart, Petco, CVS, and Target have launched media networks across their owned media channels, partnering with CPG brands to distribute highly targeted advertising to their shoppers. While this trend started in the digital realm, the next big frontier is in physical stores. According to research from Insider Intelligence, “in-store retail media will prove that physical stores are the next major media channel,” with retail media networks expected to surpass $40 billion in revenue in 2023, and $60 billion by 2024.
“Retail media networks will be among 2023’s biggest winners,” Andrew Lipsman, principal analyst, retail and e-commerce, Insider Intelligence, said during a session exploring retail media network trends.
Some brands have already begun to experiment with new ways to use retail media networks to create highly targeted in-store experiences.
During the session “Engagement Where it Matters: Connecting Your Omnichannel Message from Click to Brick,” Johnson & Johnson walked through their comprehensive omnichannel campaign consisting of 50 SKUs across 10 categories that prompted buyers to fill their baskets with a portfolio of Johnson & Johnson products. Online, customers could access coupons and view deals. When they got to the store, a suite of promotions for key audiences were available right on the digital store shelf, attracting different buyer segments with highly relevant messaging.
3. Investing in Employee Experiences
The key to successful in-store promotion is seamless integration into the customer experience. At the session, “Retail Media Networks: How the Physical Store will Power their Next Phase of Growth,” Kristi Argyilan, SVP, retail media, Albertsons, pointed out that customers don’t always want to be inundated with ads. Instead, Argylian suggested companies ask themselves: “is it invisible enough for the product and the associates to still be the hero?”
Sales associates are on the front lines when it comes to elevating in-store customer experiences. Empowering employees with customer data allows them to deliver white-glove service with a personalized touch. But, it also means listening to employees, providing the right training, and building a culture of trust.
“Culture plays such an important role in driving results,” Brian Cornell, CEO, Target, said.
At Target, company culture is ingrained in their business strategy—from the brands they work with, to the products and store experiences they design, and the tech vendors they partner with.
“Actively look for ways to make your teams’ lives easier,” Cara Sylvester, EVP and chief guest experience officer, Target, said. “…When you care for your team first, they will care for your customers, and your community.”
4. Solving the Attribution Issue
As physical and retail converge, retailers are still trying to figure out how to clearly attribute their marketing mix. “No one has figured out how to connect it all, it’s a journey we all have to go on,” Argylian said.
At Nestle, operational efficiency and centralized data management is key when it comes to demystifying customer data complexities across channels and teams. According to Patricia Kristman, Nestle, simplifying how you acquire data across systems and platforms is the first step. Then, you need a way to ensure the right data gets to the right people, so they can swiftly act on insight.
At Nordstrom, a comprehensive attribution platform gives the retailer better visibility into how digital marketing across their media network influences in-store purchases.
“We always knew that digital drives in-store sales—now we’re actually seeing it,” Aaron Dunford, senior director of digital merchandising and marketing, Nordstrom, said. With technology fueling insights on the backend, Nordstrom is able to be more transparent with their brand partners, and work with them to launch creative new forms of in-store experiences.
“It’s more than just an attribution play, it’s an experience play,” Dunford said.
5. Putting Personalization (and Privacy) First
But what about collecting that data in the first place? While consumers crave personalized customer experiences, data privacy remains a growing concern. According to recent Treasure Data research, nearly 40 percent of consumers admit they deliberately withhold their personal information from brands.
“Customers really want you to know who they are, but they also don’t want to give up their information,” Irene Sibaja, Treasure Data, said during the “Beyond buzzwords…From “Customer-centric” to Connected Customer Experiences,” panel hosted by Treasure Data.
“The ability to actually collect data is becoming a challenge,” Nick Antoniadas, VP, marketing activations, HelloFresh, added.. “…Somehow, these two things [personalization and privacy] have to come together.”
6. Building Trust Through Loyalty
At Petco, building a direct relationship with customers also means becoming a one-stop shop for all of their needs—and trading value for loyalty. Over the last several years, the pet care retailer has expanded their products and services to become a full pet health and wellness brand supporting every stage of the pet lifecycle—from adoption, to nutrition, grooming, and everything in between. Through this platform ecosystem, Petco can build a holistic view of their customers, partner with CPG brands and other retailers to recommend the right products, and create highly personalized experiences that meet their needs.
Where the industry is going, Petco Ron Coughlin says, is achieving what he described as “segmentation of one,” the ability to speak to a customer is a way that’s directly relevant to their personal experience.
“Where that goes is going to be one of the most profound changes for our industry,” he said.
The Future of Retail
Retailers across verticals are experimenting with new ways to do more with their data to better connect with customers while improving the efficiency of their operations. But, as Lowe’s CEO Marvin Ellison said during his keynote chat on digital transformation: “The most important part of a construction process is the foundation.”
A centralized data foundation serves as the fundamental backbone for combining different data sources, managing privacy and consent, and creating connected customer experiences.
With a centralized data foundation, retailers can follow and orchestrate customer journeys from the first touchpoint to the last through actionable insights, segmentation, and hyper-personalization.
Find out how you can maximize customer data for personalized engagement that boosts sales and drives growth with Treasure Data here.
Want more insights? Tune into the on-demand webinar “Strategies and Tactics to Increase Customer Loyalty and Improve Profits,” to learn more about how emerging and advanced analytics can help businesses meet elevated consumer expectations, grow loyalty and increase profit.