It’s the Era of Rationalized Retail

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\"\"Shoptalk 2017 in the Rearview Mirror: Part 1

It becomes crystal clear when you are surrounded by 5,600 of your new friends at Shoptalk, most of whom are developers, entrepreneurs, innovators and startups, that traditional legacy retailers should be quaking in their Ferragamo loafers. We have entered the era of rationalized retail and there’s no turning back. By rationalized, I mean merging the retail process and systems to make them more logical, consistent and interconnected; and balancing the art and science of the retail experience. All our talk about creating dynamic environments filled with dreamy aesthetic and sensory experiences is worth nothing without a rock-solid tech infrastructure that ensures these experiences are meaningful.

The retail workforce of the future is going to be recruited from all the best graduate schools, and our next-gen leaders will be supported by teams of analysts, coders, developers and engineers that have Ph.D.’s after their names. We all know that Steve Jobs and Mark Zuckerberg didn’t graduate with college degrees. Jobs was a one-of-a-kind creative visionary who knew how to use tech Ph.D.’s to make his innovations a reality, as will our future leaders. Like Jobs, they will need to be creative marketing geniuses and brand builders who understand the need for geeks. Technology provides awesome new tools to achieve visions that were never before possible, delivering a wonderful environment and experience. But the profession will always be led by the iconoclasts and change agents that march to that different drummer beat.

Parallax World

The sorry state of affairs today is that we are living in two parallel universes. On the one hand, we have the iconic retail brands anchored with real estate, more merchandise than they can sell in a lifetime, and a strategic plan that is based on old- world MBA tactics. These leaders frequently look worried and beleaguered. You would too if you were trying to steer an aircraft carrier into the fast lane.

On the other hand, we have a whole crew of peppy, enthusiastic young entrepreneurs that are passionate about finding a problem for their solution. The smart ones have reversed that paradigm and have actually created great solutions to meet real customer and business needs. They speak a different language. They have a private vocabulary peppered with buzzwords like stack, API, existential risk, interface, activation, Easter eggs, discovery, and endless aisles. They refer to brick-and-mortar stores as assets, not the mother ship. They use systems thinking and solutions in their designs. They look at the world, and more specifically a challenge, holistically. They are rarely stuck in silos and verticals, they play on a broad playing field. They know intuitively that the future of the retail model is to build it on the base of a powerful interconnected digital structure that will enable the future growth of AI, AR, and a myriad of other technologies that are waiting to be developed. They fail fast and bounce back with another wave of funding.

Getting Bigger

So we are looking at a future of physical stores providing amazing experiences, enabled by a systems-wide tech network. For many legacy brands, it’s too late to pivot internally. The alternative pathway is to acquire the attractive tech startups and integrate their platforms to leapfrog ahead. The big brands with healthy balance sheets are in a position to snap up these innovators to revitalize their businesses. But the price tags are getting higher, which self-selects which big guys are going to get bigger if they are desperate enough to acquire startups that are losing money. In today’s Sherwood Forest, many of the Robin Hoods are being acquired, no longer annoyingly disintermediating the mainstream:, Dollar Shave Club, Mod Cloth, True & Co., etc. Since investors are becoming wary of pouring more funding into models that continue to lose money, this may be an opportune moment for the old-world retail giants to take a giant leap forward.

Brian Cornell, CEO of Target, says the future of retail is digital, but customers will still shop in stores for long time to come. “Be our guest,” he says, and describes Target as a place for rich experiences on customers’ own terms. With Americans living less than four miles from a Target, 55 percent of digital orders are fulfilled in- store. Target has launched 12 new brands and invested $7 billion going after market share. Kevin Mansell, CEO of Kohl’s, says you need a presence in Silicon Valley to recruit new talent from its pool of tech executives. He says this highly trained group sees work in a different way, holistically.

And then we have Amazon, Facebook, and Google, operating from a mindset that there are no limits to innovation, success and scale. Their entrepreneurial DNA enables them to race ahead of the pack and scoop up original ideas and startups without hesitation. Each has a grand plan and vision that they hope will supersede everyone else, because they can.


Anil Aggarwal, successful serial entrepreneur and the brains behind Shoptalk, sums the future of retail up neatly with his observation that retail today is where finance was several years ago. The transformation from paper to plastic to mobile payments seems pretty logical and clear, but the transition was met with resistance for years from traditional finance leaders. Today FIntech is the hottest ticket in finance and a game changer. Retailtech has a way to go, but could be on the same trajectory if it plays its cards right.

So, back to the premise that retail is becoming a highly rationalized proposition. The problem is not in going digital, but rather, how to go digital. Fast. The options are overwhelming: What platforms do you need to invest in to gather the amount of data you need to collect? What systems do you need to deliver highly personalized choice to customers? How do you keep up with so many technology choices driven by customer demand for innovation and speed? And which AI or AR companies are you going to partner with to sell your stuff? You need a really smart, connected curator.

What’s Any Retailer To Do These Days?

Target is looking forward with its concept store and Walmart with its Store #8, both not surprisingly located in San Francisco, are reimagining retail. Macy’s has its idea lab for startups, also in San Francisco and in New York. And West Elm has leaped into hospitality with West Elm-branded boutique hotels where you can buy the West Elm objects of desire furnishing the hotel space. And then there’s Amazon who just wants everyone to sell on its marketplace to unify the retail world into one happy family.

But honestly, traditional retail is in trouble and the clock is ticking. Since 70 percent of GDP growth is driven by consumption (according to eMarketer, over $5 trillion in 2016), it’s worth getting it right. The path forward will integrate a lot of new, sexy systems and strategies. And these strategies are not just icing on customer experience cake. They are critical components for the sustainable future of retail.

What are the smart companies working on with all these new-economy brainiacs? Here are some highlights of the major trends, presented, discussed and predicted at Shoptalk 2017:

  • AI/AR
  • Conversational Commerce
  • Shoppable Video
  • The Customer Channel
  • IoT
  • Personalized Commerce

Details on these innovations will be posted here on our site in the second part of this series on Tuesday, April 4th. For a reminder, be sure to sign up for our email list.



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