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NRF 2015: Internet of Things rises up the agenda

Although the New York City Garment District has long since lost its prominence as a global centre for the fashion industry (it is now more frequently visited because its restaurants and bars), NYC remains one of the world's great nerve centres for commerce in general and retail in particular. So it makes sense that retailers from all over the world would gather for the annual National Retail Federation (NRF) conference and technology exposition, held every year in New York City in January.

Over the years, the event has morphed from a US trade association's conference into an international meeting of the minds between retailers, technology and service providers, economic thinkers and even political leaders – virtually everyone who has a stake in the global consumer economy.

Shiny objects

The NRF event's exposition hall has for some time featured extravagant displays of shiny object technologies, some of them visionary and others a little on the ridiculous side. Over the years, retailers have seen exotic virtual reality techs (like sentiment-sensing magic mirrors), digital avatars, artificial intelligence applications, robots, etc. This year's shiny object trend was all about the Internet of Things, or IoT.

The scope of IoT has expanded dramatically from the days of Walmart's 2005 RFID mandate or Metro AG's talking refrigerator from its 2008 'Future Store' initiative, to include virtually any device that uses the internet to talk to upstream processes. And the big-buzz IoT topics this year related to beaconing, mobile device tracking, and video analytics.

The difference between these new shiny objects and the past glimmering toys is that they address real problems. One of the biggest problems that IoT may help to address is that while retailers can – and do – track consumers' paths-to-purchase in the digital space, shoppers are invisible to retailers in the store until they get to the checkout counter. Since consumers still overwhelmingly choose the store as the place where their paths-to-purchase are finalised no matter how their shopping journeys begin, retailers want to be able to put the same kind of value messaging in front of consumers in the physical space as they do in the digital world.

Notwithstanding serious privacy challenges that physical tracking may raise, it was clear at the NRF event that retailers and technology companies are addressing the opportunity with new solutions.

Game on!

Beyond all the glittering new technologies on display, the NRF event this year had a consistent theme to it, and that is that the mass merchandising days of 'stack 'em high and watch 'em fly!' are over. There is no longer any argument or real resistance to the reality that consumers are in control of the retail interaction, and that they routinely use information delivered via consumer-mobile devices to investigate, select, and purchase products to fit their lifestyle needs. For consumers, the whole world is a store, prices are ubiquitous, and assortments are virtually endless. The challenge for retailers now is that consumers expect services such as buy anywhere/fulfill anywhere, endless aisle, click & collect, etc. to work. And while many retailers have done what they needed to in the short term with their legacy technologies to make those services available to consumers, they haven't yet figured out how to perform them efficiently and are probably losing profits as a result.

So it's game on for retailers – the starting whistle has blown and its time to execute within the new customer-centric paradigm. At the NRF show, technology providers such as IBM, SAP, JDA, and others showed solutions that focus on optimised and dynamic supply chains that can calculate the optimal fulfilment location for any consumer order, no matter where it was generated.

This year's show also demonstrated that bringing the store into the digital world remains a top to-do for retailers. Beyond the aforementioned customer tracking in the stores, the challenge of integrating the store selling systems with eCommerce remains, and solutions that addressed the challenge from Toshiba, SAP, Oracle, and others were prominently displayed.

Retailers understand that it isn't enough to merely react better to consumer demand coming from new places, but they must predict that demand more accurately and plan their assortments and allocations accordingly. The good news is that there are many new signals coming from consumers that help retailers predict demand – from social media, online search, product affinity analyses, etc. Many of these new signals are what constitutes big data, and at the NRF event new data customer data analysis and planning systems were demonstrated to interested retailers. 

In the end of course, retailers only make money when consumers pay for goods and services. The future of payments was also a big topic at NRF 2015. The US faces a 2015 deadline for EMV (or chip and PIN) compliance, but tokenised and mobile payment systems like those offered by PayPal and Apple were also hot topics.

Summing it up

This year's NRF demonstrated that retailers are in a race to catch up with the expectations of today's consumers. Those consumers now carry the store around with them in their pockets and purses, and that fact has triggered massive changes to the retail business model itself. By all indications, retailers are scrambling to address the challenge. The good news from solutions providers is that their offerings are much more than shiny objects and vapourware.

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