Key Takeaways from NRF 2023

Customer behavior continues to evolve – For retailers to call customer behavior unpredictable is a reality, and how! The solution is moving away from a transactional process (focused on buy and sell) to Customer Genomics, from identifying every unique persona to a 360-degree view of customer interaction, and from a website inquiry to a product purchase to a customer support ticket.

Demand Forecasting continues to be driven by traditional statistical models, and it is no surprise that it involves much guesswork. Retailers still need help with sales cannibalization, where one product’s promotions and uplift can induce negative sales for other products in the same category. We must also consider external and unknown factors (Weather/Competition) rather than rely on recurring demand patterns and internal business decisions. To be front runners, retailers must apply AI across their core processes 1) Demand, 2) Operations 3) Merchandizing.

Inventory Optimization- Broken and disjointed supply chain processes, multiple disconnected modules, and add-ons for promotions and seasonal management have cascaded decision-making. As Retail evolves, cutting-edge analytics to monitor excess and obsolete inventory is essential for increased visibility into end-to-end inventory. Such advanced monitoring provides the data needed to implement strategic decision-making based on predictive metrics like capital allocation, sell-through rates, etc. This allows an organization’s strategies and forecasts to remain agile in a rapidly changing environment.

Promotion Optimization- With a consumer having multiple choices, retailers struggle with customer loyalty. Hence promotions can be an effective way to drive customer loyalty. However, Retail being a thin-margin business, the value is unlocked when promotions are optimally deployed to increase uptake and have a cost focus. This yields maximum ROI on the promotions investment dollars and can be enabled in a transformational way by applying advanced analytics and AI.

Retail Media Networks- This is a silver lining of sorts. Hence, launching a retail media network has recently become the top priority for most retailers’ technology, operations, and monetization teams. Given the cutthroat competition in the vertical, it gives access to high-margin revenue streams when eCommerce players barely make any profits from the platform sales. Retailers need to understand their audiences thoroughly, their purchases, average ticket size, and product categories, among other factors, before opening their ad slots to any advertiser.

ESG-Sustainable businesses have reduced operational expenses and improved brand positioning to attract customers and increase market share and profitability. But with so many initiatives and KPIs to monitor in the broad umbrella of ESG, it is becoming increasingly difficult to get insights. Retailers focusing on sustainable practices can improve the efficiency of the e2e process within the retail supply chain ecosystem. Textile is the 4th highest pressure category for primary raw materials and 5th for GHG emissions. Almost 32 percent of retail consumers are adopting a more sustainable lifestyle. Retailers need to address this growing mindset to stay relevant.

Shrink Management- Shrink has impacted retailers worldwide. As per National Retail Security Survey (NRSS), shoplifting has become a $100 Billion problem for retailers. This does not include employee theft and customer fraud through self-checkout. According to the survey, 37% of retailers’ shrink is due to external theft, followed by employee or internal theft at 28.5% and process or control failures at 25.7%. Retailers must go beyond just RFID and use AI to prevent and reduce theft and help mitigate Shrink.

With many countries worldwide expected to be in recession in 2023- Retailers will face disruption as the industry adapts to consumers’ ever-changing wants and needs.

Those who can distinguish themselves will continue to thrive and survive. We at Fractal can meet retailers in different parts of their journeys and help them transform and help them make this change.

Our industry experts proactively engaged in these three days at NRF 2023 to understand retailers’ challenges. We showcased the Fractal to help retail enterprises create a faster path to value. The accelerators include Trial Run – a data-driven cloud-based experimentation platform; Asper.ai – a purpose-built AI platform to unlock revenue growth and enable interconnected decisions; Senseforth.ai – a conversational AI Platform; Customer Genomics – an AI-powered Customer Intelligence platform; IVA – Image & video analytics, among others.

A big vote of thanks to our Partner Microsoft for their partnership at NRF. A vote of thanks to all our clients, partners, and friends. We are delighted to be the Analytics & AI Services Specialists Peak Matrix leaders in 2021 & 2022 by Everest Group.

We are looking forward to a great 2023!