Retail Marketing Magic: 5 Retail Trends to Watch from NRF 2023: Retail's Big Show
I stood on the NJ Transit platform, taking in the crisp January air while waiting for my train to New York City. It was Day 2 of NRF 2023: Retail’s Big Show and I was eager to get to the Javits Center.
There were countless passengers waiting: a group of 20-something college students, a mother with her preschool-aged daughter, a pair of businessmen glued to their devices, a young man with a bicycle, a group of raucous international travelers with suitcases, and a woman with perfectly coiffed grey hair and bright red lipstick.
As I looked around, something dawned on me: all of these people will make a purchase soon, whether today, tomorrow, or later this week.
However, each will have influenced and been influenced by the trends and insights discussed at the very NRF event to which I was headed.
That is the magic of retail marketing.
Ready for the top retail marketing trends? Let’s go!
NRF 2023 Trends with Katherine Zimoulis - VP, Marketing at Imagine
1. The Rise of the Pressured Consumer
There are numerous types of shoppers and nearly as many reasons to shop. It is part necessity, part social experience—and a form of entertainment for many.
Nevertheless, there has been a recent shift in how people spend.
According to David Dobson, RHCG Industry Director at Intel, food inflation is causing discretionary spending to shift to staples. Consumers are under pressure, says Sajal Kohli, leader of McKinsey’s Global Retail and Consumer Packaged Goods Practices.
As a result, retailers need to think: Why would people want to come to my shop?
For example, restaurant foot traffic is back, says Bruce Hoffmeister, SVP and CIO of Cracker Barrel. However, the process to get there was far from smooth due to COVID-19 variants and inflationary pressures.
Restaurant dining reflects discretionary spending; accordingly, retailers, grocers, and restaurants must create value for the consumer.
Here are some of the ways they are accomplishing this:
NRF retail trends: the pressured consumer
Loyalty Programs
QSRs are driving value through loyalty programs. According to Christopher Thomas-Moore, SVP of Customer and Store Experience at Dominos, it is about the value equation, which includes benefits over the “price” paid and the perceived or real value that customers receive.
Similarly, Travis Freeman, SVP of Demand Generation at Inspire Brands, views loyalty programs as a mutual exchange of goods, and uses them to provide customers with offers, rewards, and more.
Personalized Pricing
Research from the Dunnhumby Retail Preference Index indicates that personalized pricing levers are three times more important than pre-pandemic levels. Thus, pressured consumers are looking for price, promotions, and rewards to stretch their dollars without compromising on quality.
Private Label
In grocery retail, Trader Joe's, Aldi, and Wegmans rank toward the top of the Dunnhumby Retailer Preference Index due to the quality of assortment, employee satisfaction, and prevalence of private label products. With this in mind, look for private label brands to come up big this year amidst the rise of the pressured consumer and continued supply chain challenges.
NRF retail trends: perspective from Martin Wolf, Seventh Generation
2. Diversity & Sustainability Take Center Stage
The message was heard loud and clear: the retail industry must create a more sustainable commerce system that is representative of our diverse population. Nevertheless, retail experts frequently acknowledged, “It’s a journey.”
As Martin Wolf, Director of Sustainability and Authenticity at Seventh Generation, notes, “No one company will change the world.” However, we all need to be on the path.
Although customers want to shop sustainably and expect brands to be working on sustainability, finances often drive shoppers’ decision-making processes.
Kohli notes that U.S. consumers are lagging behind the rest of the world in that they want more sustainable products, but shoppers are not necessarily willing to pay for them—especially as they take on additional financial pressures.
Accordingly, how can retailers offer the best prices while also helping shoppers make more sustainable choices, and how can brands communicate that to customers?
In addition to sustainability, diversity and inclusion were important topics. Lowe's Companies, Inc. CEO Marvin Ellison emphasizes the importance of diversity and inclusion, stating that decision-makers must reflect the cultures that they are serving.
Ellison’s vision for the future of retail? Investing in programs that empower young leaders and expand access to opportunity.
3. Digital Makes Its Way to the Back of the House
Retailers continue to focus on the blend of digital and physical (i.e., "phygital"), and there are numerous opportunities to leverage digital to improve the omnichannel customer experience.
Take grocery, for example.
Grocery stores and food retailing has lagged other categories in terms of digital penetration. Kohli expects digital to reach a tipping point in grocery and go from 11% to 20-25%. The pandemic accelerated this trend, and we are now witnessing all-time-high grocery app downloads and digital commerce.
For QSRs, customer-focused digital will offer guests more control over when, where, and how they want to be served, predicts Bruce Hoffmeister. People have less patience for inefficiency, so it is all about valuing their time.
Meanwhile, for many retailers, phygital experiences such as digital gamification, interactive digital signage, and live commerce/streaming can target multiple generations—both digital migrants and digital natives.
The reward here is data, and the result is better forecasting and increased customer loyalty.”
Nevertheless, it is interesting to note that the conversation around digital transformation has shifted considerably to the back of the house. Brands are now increasing their reliance on retail technology and digital platforms to unlock efficiencies and make store associates’ jobs easier.
David Dobson of Intel noted that there has also been a significant rise in computer vision; retailers are flooding their stores with cameras, which enables real-time analysis regarding customer experience, point-of-sale conversion, loss prevention, and more.
Along these lines, Colin McGuire, VP of Corporate Systems at Chipotle, reports that it is harder than ever to keep restaurants staffed and trained. Specifically, it costs upwards of $6,000 to replace a QSR employee, according to Ira Gleser, Director of Retail and Consumer Goods at Microsoft.
That is why Domino's is investing in technology to improve team members’ lives and redeploy store associates to be effective elsewhere. At White Castle, VP of Corporate Relations Jamie Richardson highlights that team members have embraced digital and robotics (e.g., Flippy).
Look for more retailers to deploy digital platforms to simplify processes and improve store efficiency.
4. AI, AI Everywhere
When famed English poet Samuel Taylor Coleridge penned, “Water, water everywhere / Nor any drop to drink,” surely he was thinking about the presence of AI at NRF 2023.
Despite being surrounded by artificial intelligence messaging, we are likely not yet at the point of generative AI—similar to the now-famous ChatGPT—being able to transform the retail industry.
Still, there was an abundance of technology masquerading as AI to capitalize on the buzziest of buzzwords of 2023, along with mentions of the “metaverse” and e-commerce. The exhibitors on the expo floor were flooded with technology to support payments, automation, checkout, people management, robots and robotics, waste management, and more.
Meanwhile, many of the brands on stage talked about developing a digital-first mindset. For example, “We’re a digital company that happens to sell clothes,” or “We’re a tech company that happens to have delicious burgers.”
In order for that mindset to work, organizations like Inspire Brands are developing a single data-and-technology spine that powers all of their restaurants. This enables the company to learn from one brand and apply it to other restaurants in its portfolio.
That type of real-time adjustment can occur only with a centralized stack, says Travis Freeman.
5. Curated Experiences FTW
Curated retail experiences will become a driving force in the retail industry as consumers return to in-person shopping.
Petco, for example, is repositioning itself as a health and wellness store. To accomplish this, CEO Ron Coughlin says that they have eliminated products with artificial ingredients—including some of their best-selling SKUs.
Coughlin’s team is making Petco a destination that offers everything for a pet’s wellness, such as grooming, vet, food, treats, and vitamins, all of which are paired with a strong loyalty program for customers. Meanwhile, the brand is exploring partnerships for store-in-store concepts (e.g., a 10-store trial is in progress with Lowe’s) while testing a rural store concept that caters to farm animals.
Another trend in curated retail experiences is the idea of "retail as a community store."
As Matt Alexander, CEO of Neighborhood Goods, puts it this concept brings people together with a curated experience that caters to local audiences. In doing so, retailers keep shoppers coming back to see what is new and even use the retail space as an event space for concerts, events, live podcasts, and more.
Other brands are leaning into the experiential side of retailing.
Rather than offering everything, Sprouts CEO Jack Sinclair aims to make the choice for the customer, noting, “It will be so good, people will rush to it.” He is inspired by experiences like walking through fruit markets and taking in the colors, smells, and freshness of products.
How can this curated nirvana be achieved?
LVMH Chairman and CEO Anish Melwani relies on the skills of a creative director who can shape a world for others to enjoy.
Target also leans into design, working to foster a guest experience based on deep emotional connections. As Cara Sylvester, EVP and Chief Guest Experience Officer at Target, put it, “When guests feel seen, cared for, and heard, it brings the kind of joy that inspires them to take care of their communities.”
If that’s not magic, I don’t know what is.
Want to learn how to apply these trends to your retail marketing? Let's chat!
