NRF Europe – themes and trends
US-based National Retail Federation (NRF) launched its inaugural European showcase event in Paris last week bringing together executives and technology specialists from around the world to share their latest thinking on the sector. So what were the underlying themes and trends?
Physical stores
Subscribe to TRBThe increasing recognition of physical space was in evidence at NRF Europe with a number of retailers highlighting the role stores play in delivering a unique brand experience. Guillaume Motte, global CEO at Sephora, says: “We believe in stores and have a commitment to growing them. Covid-19 was about closing stores but Gen Z say they want to go to stores.”
He believes the physical environment is the route through which the best, most engaging experience can be delivered. “Two years ago we re-entered London [with stores] and we had queues. They could buy the products online but they wanted to queue for the experience in-store. Boring retail is dead but exciting retail is alive and kicking.”
Motte highlighted that up to 10 sq m of valuable space in Sephora stores is given over to dedicated beauty hubs. It is a similar story at Mediamarkt-Saturn where they have coined the term Space-as-a-service that involves initiatives such as giving over floor space to free gaming activity at the company’s Hamburg outlet.
Kai-Ulrich Deissner, CEO of MediaMarkt-Saturn, says the company’s strategy over recent years to compete against online competition such as Amazon has been dubbed ‘Experience Electronics’. “Shopping in an experience and it involves human interaction. Older people go to stores to chat.”
Sephora is also using technology in its stores and Motte says its beauty advisors are now fully equipped with devices to better serve customers. These includes beauty scanners to determine the tone of skin in order to sell the correct foundation colours. In the US he revealed that a new AI tool for hair care has just been launched.
For Sephora its 3,400 global stores also serve as its secret weapon in offering convenience by enabling online ordered goods to be delivered within one hour. This is possible through partnerships with delivery aggregators such as UberEats and InstaCart.
Although value-led retailer Action operates online in the Netherlands and Belgium it is predominantly a store-focused business with around 3,000 shops in 14 countries across Europe. Hajir Hajji, CEO at Action, says the company is opening a store a day and that the business will remain firmly a stores-based model with an offer that keeps people coming back into its stores.
“We have extreme low prices across the 14 markets. If we cannot offer the lowest price then we don’t sell the item. This attracts 20 million customers per week across Europe,” she says.
Communities
Amid the technology on show at NRF Europe there was also recognition that retailers have a focus on people and communities. Motte at Sephora pointed to the 74 million members of the company’s loyalty programme – that he called a community – and highlighted how the rich data was being used to deliver them personal journeys online and in-store.
“For the top-tier [members] it’s about special attendance to events and master-classes. We’re also creating moments of activation where they did not exist by being present at events and festivals, which Sephora sponsors such as beach music festivals and Halloween in Brazil,” says Motte.
Taking the embrace of communities to another level is sneakers and streetwear retailer Snipes. Dennis Schroder, CEO of Snipes, suggests community is in the DNA of the business and that there is a hyper-local focus on this aspect of the business in the different markets within which it operates through various collaborations.
“Collaborations and activations have to mean something and create real value for the community. Relevance is more important than reach. The reach will then follow, he suggests, citing the work the company has done with French football club PSG.
Rather than just focusing on the stars in the team for its campaigns Snipes sought out local heroes around the club such as the local barber and the kebab shop owner. “We put these local heroes at the forefront of campaigns with their own football shirts and we created an area for them in the ground where people get invited into,” says Schoder.
Sustainability
Against a backdrop of increasing pressure on costs and myriad other challenges facing retailers the topic of sustainability has dropped way down the agenda. But it has thankfully not been totally forgotten and made a number of appearances at NRF Europe.
Mark Irvin, EVP chief supply chain officer at Best Buy, suggests it is built into the DNA of the company and it satisfies the need for customers to get rid of their old appliances when buying replacements. Since 2009 he highlighted that the company had taken many tonnes of products back into its network, including parts harvesting, which has made it the number one e-waste sorter in the US.
What is more surprising is the focus on sustainability of the hard discounter Action because it is not necessarily a focus of such retailers who have price as the primary motivator. “We want to make sustainability and low prices go hand-in-hand. It’s in our DNA. We give every penny back to the customer and can do this through sustainability because we are making it accessible to customers by deciding what products we want to offer to them. We make sustainable choices and have clear CO2 emissions targets.”
AI behind the scenes
Not surprisingly AI was prevalent at NRF Europe but it was being portrayed in a less hyped manner and shown more as a powerful tool that can act behind the scenes and complement the existing operations and processes of retailers.
Narek Verdian, CTO at Swiss-based shoe retailer On, says: “AI should be powerful but quiet. We are experts in our field and AI should primarily be a co-pilot.” He adds that the company has been using AI in all areas including experimental activity in the 3D printing of shoes. “Our product team constantly experiments and AI will be a driving force in all we do with technology in the future,” he says.
At Carrefour the technology is being used across the entire business, according to Miguel Angel Gonzalez Gisbert, chief digital officer at Carrefour, who highlights in-store, e-commerce, and the warehouses as now being impacted by AI. And a recent move involves deploying Google’s Gemini AI tool to its 300,000 associates around the world. “Technology will play a role as an ally. It’s a fantastic enabler…but we do not see our employees being replaced by robots,” he says.
Retailers can increasingly plug into specialist AI-powered solutions that operate behind the scenes. Among the solutions in the dedicated Innovators Showcase area at NRF Europe was TradeVerifyd that helps retailers predict and manage supply chain risk by mapping out the product journey from the raw materials onwards and identifying any potential compliance issues and other risks from the likes of weather, geopolitical activity and company failures. With real-time alerts, and secure traceability retailers can act faster, stay compliant, and protect their operations.
Also in the Innovators Showcase was digital body language solution Kahoona that seeks to identify the characteristics of the 96% of people that visit retailers’ websites anonymously. Gal Rapoport, founder of Kahoona, says the company analyses how customers interact with touch-screens between the clicks. “We can understand every user and can get the marketing team to only focus on those people who are likely to spend,” he says.
Investing in store transformations
Substantiating the view that the store is back as a major pillar of retail is the level of investment being made in this area. As many as 75% of retail executives plan a store transformation in the next two years and a specific focus is on in-store technology, according to research from Bain and VusionGroup.
The research presented at NRF Europe found that the adoption of in-store tech – such as kiosks and robots – had previously been low, because of the limited return on investment, but that this had changed. Retailers now expect to double such in-store tech investments in the next three years and 44% of executives expect such a commitment to boost profits.
Such technology helps with the likes of improved product availability, better pricing and promotions, better customer engagement, and improved staff productivity that can combine to deliver a predicted extra 1.5 points of EBITDA.
Gilbert at Carrefour is very much committed to investing in this area: “We’ve 90% of our revenues from stores so a digital transformation has to be about stores. Three or four years ago we did not talk about store transformations but now there are rising expectations of customers and employees in-store.”
The investment will boost personalisation, optimise processes and efficiency, and include AI. The latter was integral to a recent one-year project that recovered 1% of turnover going through self-checkouts. “We’re confident in what we are doing. It’s a unique moment. We’re enjoying this transformation,” says Gilbert.
One of the more buoyant areas for in-store tech investment is Electronic Shelf-edge Labels (ESLs). Jerome Hamvit, SEVP data & retail media at VusionGroup, says there is often much more value derived from them than retailers initially forecast. “At Walmart there were specific targets but when we looked at the details we found they had started to use the labels for things like [assisting with in-store product picking for] e-commerce orders and executing planograms so the ROI was much higher than planned, he explains.
Supply chain efficiencies
It can often be the forgotten aspect of retail as attention invariably focuses on glossier customer-facing aspects but there was recognition from various retailers that improving efficiency across their supply chains is now absolutely essential.
It is very much at the heart of the business model of European retailer Action as the founders have supermarket backgrounds and wanted to adopt similar efficient systems that are prevalent in food retail but less so in non-food. “It’s a simple, efficient model that involves managing centrally and delivering locally,” says Hajji.
This involves a clear strategy comprising: proven technology (following that used by food retailers); simple enterprise software; a team that understands technology; using the same technology in all countries; and becoming more data-driven using AI across all domains.
For Irvin at Best Buy the supply chain has undergone great change as the role of the store has changed – with 60% of all goods purchased online now being delivered in one day and the store playing a pivotal role in this. “We looked at what would enhance this and we built a data footprint that would stand up to AI and from this built a digital twin to map this digital network. We’ve since been able to reduce the cost and footprint of the supply chain, even with more inventory held,” he says.
Much work has taken place at Mediamarkt-Saturn across its supply chain as the business adapts to the new retail landscape and the imminent completion of the purchase of the business by JD.com, which is expected to further enhance its fulfilment capabilities, according to Deissner.
“JD.com will be exporting a mind-blowing supply chain into Europe through this acquisition. It handles same day or next day deliver for 95% of orders to anywhere in China. That’s something that puts them among the world leaders. There’s no shame in getting help from others and JD.com will help us [at Mediamarkt-Saturn,” he suggests.
