"Right now each of us has a front row seat to the reinvention of retail and the role of technology, mobile devices, apps and payments in delivering that reinvention on how consumers and merchants interact and how that interaction is influencing their buying decisions and their shopping journey."
Kicking off Retail Reinvention 2015 — aka R2 Summit — that sentiment from MPD CEO Karen Webster can sum up what the industry innovators from across the retail, payment and commerce landscape brought to the discussions that opened up free-range responses about everything from innovation in retail technology, digital retailing and engagement tactics to fraud management, EMV and security to cross-border commerce.
And those at Day 1 of the R2 summit got that front row seat to how those conversations fit together. So what exactly is the "art of reinvention," as Webster phrased it, and how can it help merchants reinvent themselves so they can better navigate both the current and future wave of disruption across the retail, payment and commerce landscape?
"It’s time to reinvent your business," Webster told the crowd.
And yes, revenues are up. Profits are too, she reminded the crowd. Investors are happy. But that doesn't mean now is the time to slow down. In fact, it's quite the opposite. It's time to reinvent, re-energize and get the wheel moving faster than ever before. As the conversations of many of the panels concluded, technology is evolving faster than retailers can keep up with, and consumers are hungry for more. They want more engagement but with less friction.
Citing the words of Sun Tzu, the Chinese military genius who wrote "The Art of War" in the sixth century BC, Webster dug deep into history to provide a reminder of why merchants need to constantly be aware of where their weak spots are and how they can use their strengths — and customer loyalty — to compete in the rapidly shifting retail market that's heading more and more to online and mobile and less to the bricks-and-mortar businesses.
"It’s the things that you can’t see that can make you vulnerable and often blind to the threats of a dynamic and vibrant market. And the innovators you may not be able to see yet but see you — and more importantly — a very different future," Webster said.
Webster cited a handful of other examples to show how not reinventing yourself can lead to the demise of a product line that was once lauded as innovative. Like the typewriter, or the PC or BlackBerry. There's always going to be someone disrupting the traditional business model of something that was great at the time, and it's up to the innovators to help reinvent an industry. But it's up to merchants to understand the consumers' needs and understand how to adapt to those needs.
What happened to those who missed the boat and didn't adapt until it was too late? Well, Webster remarked: It gave "innovators who saw the world a different way the time they needed to build momentum, cross the chasm and become mainstream — and reinvent the sectors they entered."
So what is Retail Reinvention all about? It's about understanding the consumer's path to purchase and how technology in commerce and payments influences and drives that path. Of course, that task isn't so black and white, and as the panelists demonstrated, there is no silver bullet solution to dealing with any of retail's challenges.
"The consumer’s path to purchase is anything but linear, and discovery is influenced by any number of factors and actions taken in any point of time," Webster said. "And innovators who see a future that’s different — one that leverages advances in computing power, new technologies, apps, data, the cloud and connected devices — not just to reimagine a different retail experience but to reinvent the relationship that consumers have with the brands they love today and retailers hope they’ll discover and fall in love with tomorrow. Putting incumbents — wherever they play in this evolving ecosystem — on notice, on the defensive and in some cases out of business."
Why Vulnerability Is Important In Business
Marcus Lemonis, the host of CNBC’s “The Profit," kicked off R2 by sharing with the roomful of payments, commerce and retail leaders why it's important to be vulnerable and transparent with consumers.
"When you think about business, it’s really about understanding the customer," he said, which he noted starts with creating an authentic connection with that customer.
"When you’re dealing with customers ... the level of vulnerability you have with those customers will determine the level of tenure with those customers," Lemonis said. "The relationships you have in business can be dramatically strengthened by your ability to be transparent."
Taking Back Payments
Leading into the first topics of the day, Phil Heasley, CEO of ACI Worldwide, spoke about what it takes for retailers to play a more connected role in consumers' journeys by taking control of their payments destiny. This means being at the forefront of which payments options you offer and being innovative in how payments are accepted — both online and in-store.
"Retailers can now push payments wherever they want payments to go," Heasley said.
"Five years from now, we’ll be talking about the disinflation of payments the same way we talk about the disinflation of fuel," he later commented.
But retailers also need to evolve, said Lemonis, who sat in on a fireside discussion with Heasley and Webster. It's not unlikely that the retailer with the best technology and the best plan in place to innovate to what consumers are asking for will be able to keep up with the evolving customer journey. After all, technology is moving faster than retail evolution, Lemonis said.
That doesn't mean retailers can toss a concept like loyalty aside. In fact, that may play a bigger role than ever in driving customer retention. Of course, retailers have to balance this while they invest in omnichannel, mobile, fraud prevention and security. And, of course, they've got to keep their eye on the bottom line to keep investors happy. Loyalty, however, seems to be the age-old metric that can still make or break a retailer, many of the panelists concluded.
"Brand loyalty I think is stronger than it has ever been if there is truly brand loyalty. Shopping experience is almost merging with the brand," Heasley said.
The Digital Retailer And Engagement
As we learned from hearing Patrick Gauthier, VP of Amazon Payments, during the session where PYMNTS released its research project in collaboration with Amazon about the digital shopper's journey and how consumers decide where, when and how to shop online and mobile, there's no real difference in how consumers view how they choose to pay on a particular platform.
"Online is no longer a singular channel. It’s a plurality of channels, and it needs to be treated that way," Gauthier said.
Gauthier joined a panel of senior industry execs from across the retail ecosystem and discussed how retailers of all sizes and categories are using technology to recast the customer experience and drive engagement. And what did that panel conclude?
Consumers expect more out of engagement. Generic, impersonal loyalty programs will no longer do the trick. Consumers care about who is collecting their data, but they are often willing to share if the merchant engages with them in a helpful and unobtrusive manner. But they also want that experience to be frictionless, and they want new and engaging channels to interact through.
"I think if you don’t look for new ways or new channels to interact with customers, you only get people who already shop with you," said Brian Hamilton, chief revenue and strategy officer at Stack. "The lower the switching cost, the more engagement matters. My ability to shop somewhere else is really very easy," he later commented.
In terms of path to purchase, where should engagement happen along that journey? Well, according to the panelists, that should happen from before the moment the consumer starts their commerce experience to far beyond the purchase.
"Engagement needs to happen across the entire journey, but it needs to be the right engagement ... Constant promotion is not the right way to engage. You need to have the right sequential way to engage. The right combo of investments are in each of those areas," commented J.J. Hirschle, director of retail for Twitter. "Making sure you have the right message at the right time is critical."
What else did the panel of executives conclude? Be faster and be careful how data is used and shared. After all, once that consumer trust is broken, it's twice as hard to bring that customer back or attract new customers.
"The customer is moving so fast. We talked abut mobile for five years, and then everything changed. Big scale retail needs to move faster. They’ve got to get up to the speed of the customer, or the customer will leave them behind," concluded Pat Dermody, president at Retale.
Privacy, Data, Security And Beyond
The second half of Day 1 of the R2 Summit kicked off with a discussion about the use of data and analytics to develop and drive better business decisions that delight customers and preserve profits. As pointed out by featured speaker Souheil Badran, president and CEO or edo Interactive, retailers face increasing pressure to deliver measurable ROI and find new customers.
The problem? Today's consumers are multichannel, making traditional, mass-audience brand interactions difficult. And the data show that consumers are signing up more for loyalty programs, but they aren't actually loyal customers. That's where Big Data — if executed right — really matters.
Data matters particularly because of its ability to help optimize operations and reduce fraud; maximize insights and IT economics; acquire, grow and retain customers; transform business practice and create new business models.
"There is no 'silver bullet' [in retail]. You have to look at your data," Badran said.
The panelists also concluded that to truly understand the path to purchase, retailers need to have the tools in play to help break down that complicated data — that's the only way to tap value from such a complicated and invaluable resource. Whether that be data from card-linked offers, beacons or traditional marketing efforts, Big Data can make a big difference in ROI and retaining and attracting customers, the panel concluded.
Moving away from Big Data and more toward what that data can expose, one statistic shared at R2 showed why fraud management for that Big Data really matters: $16 billion stolen from 13 million ID fraud victims in 2014. That's the figure that Michael Reitblat, CEO of Forter, shared with the group.
"Everyone will be breached at some point. If Chase and the White House got breached, everyone will get breached. What we have to do as an industry is learn what we do once someone gets breached," Reitblat said.
Even after the widespread implementation of EMV, the online fraud rate is anticipated to spike 55 percent in the two years following. But as one panelist commented, "EMV is a distraction for us." Some argued that encryption and tokenization are where the conversations need to be focused.
"Tokens are coming. If you don’t have them, you will. We have to accept it," Steven Mattics, president of credit and payments at Nordstrom, said during the panel.
So, what can we conclude from insightful conversations that came from the industry execs from across the retail ecosystem? That every aspect of retail is being reinvented — whether retailers are ready or not. And only those willing to reinvent themselves will likely come out on the other side.
"Make no mistake, the reinvention of retail is underway, and in some categories, the reinvention has been a devastating disruption. But those who survive this retail reinvention will do so by looking for ways to reinvent themselves before others do it for them, bucking conventional wisdom and digging deep to glean insights from those subtle clues that consumers and innovators are leaving," Webster concluded during her opening remarks.
And that was just Day 1.