What did NRF Teach Us About Retail Trends in 2023?

New Business Models Will Make Sustainability Work Financially

Consumer priorities were a talking point around sustainability at the show.

There was a general view that customers care about themselves, their family, and their community first and foremost, and the rest of the world and the environment come below them.

While this could be viewed as a lack of real interest in sustainability, it's only logical that consumers focus in on the personal (what affects them and their loved ones) over the impersonal, which they may know is important but feel far removed from or struggle to deal with the enormity of.

This doesn't let retailers off the hook when it comes to sustainable business practices. The key for retailers will be making sustainability feel personal and relevant to consumers and their lives, while also demonstrating the wider benefits to the planet.

What is interesting is that business model changes are driving many of the more meaningful sustainability activities happening in stores. For example, Golden Goose's Forward concept allows customers to bring in their old sneakers for repair, customization, resale, or recycling.

Rather than provide all of this as a free service though, Golden Goose has a price list for its repair and customization offerings. It shows a conscious effort to find a way to make sustainability work financially for the business in a way that is scalable.

This stops it from feeling like a PR stunt. Often when you see businesses offering things like repair for free, you know it is unlikely to be offered at scale unless it was part of the business model from the very beginning because of the associated costs.

This year we expect to see more brands charging for services linked to sustainability, such as repair, as a way of making them part of the normal buying cycle.

AI Will Enable Resale to Scale

Two of the big discussion threads at NRF were artificial intelligence (AI) and resale/re-commerce – both separately and how they can work in combination.

Naturally, luxury and premium products are easier to resell because the original retail value is high and there is also hype around the product, especially if it is a limited edition. 

However, even though luxury provides better margins retailers still need to be able to handle volume,  and know what to price items at, and where to sell them. For example, several brands have tried launching their own resale operations but found that consumers prefer to buy from a resale marketplace that offers a broader range.

AI will be key in helping the resale model to become a core business strand this year by helping retailers to authenticate products and set prices at scale.

Expert staff in spaces like The Real Real's New York store will remain core to the resale business, helping customers with purchases and giving them the confidence to buy. However, to process higher volumes of products and keep stock levels high, AI will be an essential support.

Self-Checkout Tech Will Scale through Other Sectors

Notably, there seemed to be a shift away from the cool but gimmicky in-store tech that had a presence at NRF in the past.

These tools were often fun to play with but hard to implement in a way that delivered real business value. With much of the world on the cusp of recession, retailers have less money to spend on experimental tech. 

Instead, they are looking at more mature technologies like self-checkout and autonomous store solutions, which already have some consumer interest and buy-in.

There are, of course, lots of ways to do self-checkout from a smartphone browser experience to an app. However, for a lot of people, the walk-in, walk-out experience that Amazon Go is known for is the quintessential experience.

Throughout the show, we heard discussions about the way to scale this technology, which centered on collaboration between vendors. Unless a retailer wishes to use a single-player solution for everything, vendors need to work together to make it easier for retailers to create a solution that covers all their software and hardware needs.

What's really interesting is that autonomous tech vendors are now looking outside of retail into other areas where the technology could be used. One example might be a community warehouse where people can book equipment, access the space, take what they ordered, and return it without the need for a person to be there.

It's through these wider applications that the technology can scale and become cheaper so that it can be accessed by more businesses. This will be something to watch develop over 2023.

Implementation and Change Management Is Critical

There has been a big shift in retail staffing post-pandemic. Some stores have a lot of new hires. Others have staff that is no longer quite sure of their purpose.

This was reflected in the discussions at NRF which talked a lot about staff empowerment and the use of tools to give them information about clients, product ranges, and omnichannel capabilities 

However, there is often a gap between what these tools can do and what staff are getting out of them. This usually comes down to a lack of implementation and change management.

Technologies like RFID have been recognized for years for their benefits around inventory and stock-level management, but use cases often fail because of poor implementation. Companies making the most out of these tools, such as Lululemon, have the right combination of good tech and implementation.

This year we expect to see retailers focusing more on managing the rollout and usage of new technology. Rather than looking at these tools from a software or hardware perspective, retailers need to understand their impact on their organization and business model. Once they do that, they will see where the biggest changes will be and can put in place the training and systems to support these.