NRF's Big Show: The Great Retail Convergence

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The need to adapt to a rapidly changing retail environment marked by the convergence of offline and online commerce was among the rallying cries retailers heard at the National Retail Federation's Big Show in New York in early January.

As consumers move between retailers' Web sites, mobile apps, and brick-and-mortar stores, they expect to receive the same experience at each channel, noted Alison Paul, vice chairman and U.S. retail and distribution leader at Deloitte.

"I've got news for you," Paul said to thousands of retailers during a keynote session. "There are no channels anymore. It's only you and the customer."

Retail, Paul added, is no longer about one channel, but rather "all channels, all the time."

Retailers that do not provide consumers with a seamless shopping experience are leaving a significant amount of money on the table. Paul referred to a recent Deloitte study that found customers who shop across channels spend three times more than store-only customers.

"The retail revolution is demanding that we rethink our operating model from technology to merchandising to supply chains to people," Paul noted. "Unifying your system and fixing the merchandise organization to capitalize on this revolution won't be easy…but consider the alternative."

Providing in-store employees with the authority, information, and incentives to offer that seamless experience is essential, she added. Giving in-store personnel the authority, for example, to match prices and negotiate with customers could go a long way in combating showrooming.

"By training our people and arming them with information and tools to solve problems versus standing idly by while shoppers leave without anything in their bag, this is the opportunity, the differentiator for the cross-channel retailer," Paul noted.

The need for change was highlighted throughout the three-day conference. In another session, Howard Schultz, chairman and CEO of Starbucks, said businesses that hold onto the status quo in their operations or dealings with customers are bound to fail the test of time.

That was the impetus for the coffee retailer in 2009 to launch the Digital Ventures unit to determine how to serve customers more quickly through mobile payments.

Schultz—who shared the stage with Walter Robb, co-CEO of Whole Foods Market, and Kip Tindell, chairman and CEO of The Container Store—said he believes that the rules of engagement for businesses and their leaders have changed.

Furthermore, he alluded to a "seismic change" in consumer purchasing behaviors as a result of the rise of social, digital media, and mobile platforms. This change, combined with recent events like Hurricane Sandy; the Newtown, Conn., school shootings; and the fiscal cliff crisis, put a damper on the holiday season and will continue to have a profound effect on the consumer.

Although retail sales were up 3 percent during the 2012 holiday season compared to 2011, the $579.8 billion total still fell short of NRF's prediction for 4.1 percent growth.

However, there were glimmers of hope. For one, companies have been adapting their core business models to gain a competitive edge. One way they are doing this is by mixing purpose with profits, Tindell said.

At The Container Store, company culture is key to its strategy. The company strives to take care of its employees, who, in turn, are more willing to take care of its customers, Tindell says. When customers and employees evangelize on behalf of a company, it makes it easier to succeed in business, he added.

Conversely, the magic is lost if companies "maniacally focus on the shareholder only," Tindell said.

Big box retailer Walmart is also looking to change its company culture. At the NRF show, CEO Bill Simon announced plans to hire 100,000 veterans during the next five years and recommitted to buying and supplying $50 billion worth of domestically made products during the next decade.

Simon said opportunities exist for technology to affect the course of retail. Walmart, for one, launched an in-store mobile app in December that gives customers store-specific coupons and offers through geo-fencing.

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