Think of one word to describe the 2014 Shop.org Summit in Seattle this week, a 2.5-day event specifically for digital and multichannel retailers.
If you thought of the word "transition," I'd say you were correct. Transition implies two things:
- A passage from one state, stage, subject or place to another
- A movement, development or evolution from one form, stage or style to another
Retail is clearly in a transitional state. It is undergoing even more fundamental changes than were driven by the emergence of e-commerce in the mid 1990s and, before that, by big box stores. With the emergence of omnichannel retailing, technology is becoming a retail imperative, and this is bringing about transformative change.
While omnichannel is a buzzword, people are looking to create new definitions for to reflect a more customer centric view of the changes, for better or worse its here to stay because it does encompass the structural changes retailers are attempting to make.
Looking Back
From my perspective, there were some key differences between this year and the last annual Shop.org Summit in Chicago.
A year ago, retailers seemed to be in better spirits gearing up for the holidays even though they knew a shortened holiday season would create some challenges.
But on top of the shortened holiday season, some rough weather emerged that helped create tepid growth driven primarily by discounts and double digit declines for in store shopper visits. Add in a first half of 2014 where the consumer discretionary sector was the only one to decline and it is easy to understand why the retail mood is on edge.
As a result, this year’s temperament seemed more somber — and it can’t be attributed to Seattle’s weather, which cooperated pretty well once Monday passed.
Quite apropos, this year’s event took place in Seattle given that the company responsible for much of retail’s angst, Amazon, is based here. In fact, there was a Tuesday morning keynote session titled “The Amazon.com Story” featuring author Brad Stone leveraging his recent book, “The Everything Store: Jeff Bezos and the Age of Amazon,” which pulls back the covers on their culture of relentless drive and ambition that is transforming retail.
Driving Change
Amazon has done more than any other retailer to contribute to the transitionary state that the majority of brick and mortar retailers find themselves, so this clearly was the main draw.
Jeff Bezos was not in attendance — and some people may find it coincidental that the Shop.org Summit here occurred at the same time and the Amazon CEO was visiting India. But I am confident there was an Amazonian or two present in the audience taking detailed notes that could then be dissected back at corporate.
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While not surprising, its unfortunate that neither Jeff nor one of his lieutenants was available to be quizzed at the summit, given the commotion Amazon is creating.
It's All About Technology
Whether publicly discussed or not, Amazon’s intense focus on leveraging technology to reshape the retail landscape was the omnipresent gray cloud casting its shadow over the proceedings. Given there is currently no retailer currently able to compete directly against Amazon online, omnichannel has become the default path for the majority of retailers to follow given their expertise in operating physical stores.
This is the reason I selected transition as the descriptor for the summit. Retailers now have to embark on a transformation as they attempt to retool themselves to more effectively compete in the coming years. To support these efforts, here are three overarching themes I picked up from the show:
Data/Information/Analytics – Retailers today are struggling to manage their own products and customers. At the same time, data and its demands are growing, largely because content is a key driver of commerce across the different sales channels. A host of vendors are focused on solving the challenges of more effectively managing product information, analytics/business intelligence, distributed order management and related issues. Just about every vendor in the exhibition hall can lay some claim to converting data into actionable information for retailers. Better leveraging data/information to make smarter business decisions is a trend that’s here to stay and will continue to grow.
Cloud and Software-as-a-Service (SaaS) – While the move to the cloud started several years ago, an emerging play is order management in the cloud. While still early, more and more retailers are considering moving their order management to the cloud. In e-commerce, this is becoming routine. But for most retailers, this is still a fairly small percentage of their revenues. What took me by surprise is the number of companies (such as Demandware, NetSuite, OrderDynamics, to name a few) that are proposing to manage orders across all sales channels (including contact centers, e-commerce, mobile, point-of-sale, etc.) in the cloud. While larger retailers still run order management (think IBM, Manhattan Associates, Oracle, SAP, etc.) on-premise, this trend is worth following. If it catches on, this suggests just about any function can go to the cloud.
Mobile – No surprise here that mobile is the emerging marketing and sales channel, similar to what e-commerce was in the mid/late 1990s. Smartphones in use on earth should surpass the number of PCs in use in 2014, but what this means for retailers is still not clear. Today, mobile is more an information gathering and research channel than one that transacts. But mobile phones are increasingly important tools for location-based marketing, which will enable retailers to message people as they walk in and around physical stores. Technologies such as iBeacons are making inroads after being launched in 2013, so this holiday will better reveal their strengths and weaknesses. As such, mobile marketing is the dominant use today and companies like Branding Brands, GPShopper and Vibes Marketing have taken the lead. Of particular interest is Vibe’s focus on leveraging the capabilities of Apple’s Passbook and Google Wallet to reinforce retail loyalty programs.
Whew. While clearly not an in-depth summary of the show — that task was too big for one person to manage — technology vendors are clearly aligning with brick and mortar retailers to support them as they transition and transform their business to provide more integrated and immersive customer experiences. As such, I find myself already looking forward to the 2015 Shop.org Summit in Philadelphia to again check up on of the omnichannel progress being made and the impact its having in the retail world.
