Retail Innovation Front and Center at Shoptalk 2018

Shoptalk 2018 is taking place this week in Las Vegas. This conference, which is in its third year, focuses on retail and e-commerce innovation and includes 8,400 attendees (including more than 700 retail CEOs). Members of Drinker Biddle’s Retail Class Actions Team are pleased to be in attendance at Shoptalk to share insights; to learn from retail leaders, industry experts, and retail and marketing professors from the Wharton School of the University of Pennsylvania; and to participate in interactive “discovery zones” focused on artificial intelligence, the store of the future, emerging technologies and grocery e-commerce. Cutting-edge technologies are being developed, tested and implemented to provide a seamless, frictionless experience for the consumer; having firsthand experience with these products is critical in order to proactively assess where potential legal and compliance traps may exist. Many of the tools being aggressively pitched to retailers to optimize their marketing, expand and enhance their knowledge of customer preferences, and maximize their profitability—such as artificial intelligence, biometrics, data collection/analytics, employee management, and virtual and augmented reality—are accompanied by compliance challenges that should be contemplated and addressed before their launch.

There were some interesting takeaways from Day One of Shoptalk, including the following themes that were highlighted by six Wharton professors during three sessions:

• Focusing on Customer Lifetime Value to identify and encourage the company’s best customers (more important than simply adding more customers).
• Bonding with the customer (“bonding, not branding”).
• Viewing the customer as an orator/advocate who believes in the product/service and feels compelled to share it with others.
• Showroom over stores.
• Identifying relevant influencers who can help with visibility.
• Erosion of brand loyalty and efforts to keep brands relevant.
• Understanding different customer touchpoints.
• Being the best at something and leveraging that expertise to be the best at something else (being the best at one thing is no longer enough to ensure success).
• Acknowledging room for different strategies and approaches and for robust competition.
• Understanding the opportunities presented by machine learning and its limitations.
• Creating physical spaces that deliver elevated and immersive experiences for customers while also being operationally efficient and unburdened by inventory.
• Focusing on selling the right product to the right person at the right time (using location tracking and the cell phone as a distribution device to ensure the “right time” aspect).
• Pushing out discounts and offers in real time based on physical location in store.
• Using neuroscience (data from Fitbits, eye-tracking and brain scans) to assess what customers think of products (with the acknowledgement that legal and ethical issues are implicated).

In separate sessions, there were animated discussions of the need for growing retailers to consider whether to create their own accelerators to explore new technology, invest more in R&D, or partner with companies that specialize in helping retailers build out their technology. Several panels explored how even large and established brands can partner with start-ups and early-stage companies to accelerate innovation and growth, with full acknowledgement that new innovative companies and established brands often don’t speak the same language, and flexibility and cultural changes may be necessary on both sides to make the partnership a success.

Keynote remarks were given in the general session by Jeff Gennette, CEO of Macy’s; Brian Cornell, CEO of Target; and Gianna Puerini and Dilip Kumar, Vice Presidents of Amazon Go.

Jeff Gennette discussed Macy’s rebranding efforts, which will continue through 2018. He described the current retail environment as “the most competitive we’ve ever seen,” and shared Macy’s objectives, which are to (i) remain “laser-focused on the customer”; (ii) cultivate its robust digital presence and healthy brick-and-mortar business (he noted that “you can’t starve one to feed the other”); (iii) enhance its customer personalization capabilities; (iv) grow its “Backstage” outlet store presence; and (v) leverage its powerful brand. Jeff expressed optimism for the continuing growth of their business and their strategic vision and said to look out for an all-new Macy’s app experience in the coming year.

Brian Cornell of Target discussed the need to embrace change and to offer consumers a more connected physical and digital experience. He shared lessons learned from the Target/Lilly Pulitzer partnership from a few years ago and expressed Target’s philosophy to face issues and find workable solutions. He shared Target’s plan to (i) focus on more of the company’s own brands; (ii) encourage and reward their people through higher wages and employee investment; (iii) partner with key brands (e.g., a new partnership with Hunter); and (iv) leverage stores as hubs. He highlighted Target’s recent partnership with Shipt, which offers same-day delivery nationwide for multiple retailers, and the origin of that relationship. Target’s defined objective is to be “America’s easiest place to shop,” and the physical stores play a key role in their strategic plan.

The Amazon team discussed the development of the Amazon Go camera/algorithm technology and the challenges in its implementation, both foreseen and unanticipated. They discussed consumer reactions to the technology, trends in sales and other metrics, and plans for the use of their technology going forward.

Our team is presently attending Day Two of Shoptalk, which includes presentations by leaders of Facebook, Fresh Direct, Nike and Ulta Beauty, and we look forward to sharing more of what we learn in the days to come.