Two of the most important conferences serving the retail industry — the NRF and ICR — occurred in January. The National Retail Federation (NRF) included Expo, a marketplace of retail innovation that featured over 800 exhibitors. ICR is one of the leading strategic communications and advisory firms in the U.S. with its heritage in the retail industry. Its annual conference is designed for the investment community. Conflicting dates and, in the case of ICR, attendee qualifications, are roadblocks to attendance.
With this in mind, a recent Retail Marketing Society meeting was designed to identify some of the major takeaways from these two events. Speakers included Richard Baum, founder and managing partner of Consumer Growth Partners; Dan Hodges, CEO of Retail Store Tours; Jan Rogers Kniffen, CEO of J Rogers Kniffen WWE; Edward Yruma, managing director of KeyBanc Capital Markets and Robert Salerno, adjunct professor at FIT.
NRF Recap
The consensus was that the mood at NRF was generally optimistic.
“Nobody seemed concerned about whatever happens in the election this year,” said Kniffen. “It kind of frightens me that everybody thinks it’s going to be fine in 2020 and nobody sees a recession before 2022 … or later.”
The major themes included sustainability (in both the supply chain and the product itself) and artificial intelligence (AI) primarily done through cameras. Only Amazon was talking about voice-driven AI this year. Re-commerce, the new term for re-sale, was another point of interest, covering everything from the RealReal and Poshmark to Yertle. Online mobile multichannel retail — buy online, pickup in store or ship to store — is certainly on everyone’s minds. Across the board, everything that goes with multi-channel retailing was thematic. Finally, experts discussed experiential retail; if you’re not experiential, you’re nothing. Luckily, while cost inflation is a reality, price inflation is not in the cards for retail.
In conjunction with NRF, Retail Store Tours provided curated, two-hour, guided walking tours of cutting-edge spaces by global retail leaders. Each tour visited four to five carefully selected stores at a premier shopping destination. Hodges, whose firm conducted these sessions, pointed out some of what was observed as the drivers for retail success during the tours: the human touch, technology, store design, brand story, staff training, customer management and flexibility. Within the store environment, those that optimize sight, sound, taste, touch and smell are winning. The focus is on the customer journey.
ICR Recap
In contrast to NRF, the mood at ICR was pessimistic and negative.
“ICR attracts a lot of smaller and mid-cap companies,” Baum explained. “The big companies — the big retailers — don’t show up. If you look at what’s happening in retail today, the strong are getting stronger and everybody else is losing shares. At ICR, you’ve got a lot of share losers — not because they’re bad businesses — but because the scalability makes it difficult.”
“First, with apparel, we’ve seen that the consumer appreciates the idea of free shipping and transparency in price,” Yruma said. “This same debate is now occurring in food delivery where there’s the distinct possibility that the company’s going to be bearing the shipping costs, which would obviously change the financial performance of the food ecosystem. Second, the malls are dying — not news — but based on the companies that attended ICR, this thesis continues to play out. Third, there’s a whole new generation of exciting, engaging and compelling brands that are being born.”
Baum noted CaaStle (derived from “Clothing As A Service”), which provides a rental platform used by Ann Taylor, New York & Company, Express and American Eagle, and Faire, a wholesale platform where brands can come and offer their products to independent retailers, as noteworthy up-and-coming brands.
“They not only match up product with buyers but also provide financing for the independents,” Baum said. “Two [more] retailers: Johnny O, primarily a men’s brand and totally digital, and Evereve, a Minnesota-based chain of 86 stores whose target customer is the older woman … is all about service. They have hardly any turnover in terms of sales associates, which is remarkable in retail.”
What Will Happen to All Those Malls?
The demise of the mall was on the minds of attendees at both conferences. The consensus was that out of the approximately 1,100 malls in the U.S., just under 300 of them will survive and succeed. What will happen to the remaining 800? Salerno reported that during an NRF session, densification for malls that have big acreage (at least 40 acres) can provide a solution for a country that is both over-retailed and under-housed. The new model would bulldoze the existing mall structure and replace it with a big focus on housing, supported by a combination of commercial footage and retail footage, such as the one currently underway to replace Valley View Mall in Dallas.
Retail Marketing Society
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