There’s almost too much choice when it comes to retail tech today. And while that’s certainly better than the opposite scenario, the plethora of options out there can complicate the path to meaningful innovation—which is already a rocky road for large organizations versus smaller, digitally native brands, according to retail expert Stephen Sadove.
Speaking at WWD Retail 2030 in New York City last week, Sadove pointed to the vast aisles of exhibitors jockeying for attention at January’s annual NRF Big Show as evidence of the myriad players angling to solve retail’s challenges. An industry in transition and evolving for a digital future, retail has attracted scores of tech startups in recent years, each hoping its bolt-on solution will be the silver bullet for the likes of a deep-pocketed player such as Nordstrom or Walmart or Macy’s.
But all of the options out there—each making bigger promises than the last—can be overwhelming for organizations entrenched in legacies powered not by data but by the merchant’s intuition and other operational expertise, Sadove noted. Many department stores and large chains are finally onboarding hundreds of analysts to make sense of their troves of data, which the former Saks Fifth Avenue CEO describes as “the next frontier.”
When some big corporations are gathering 1.5 terabytes of data daily across 5,000 attributes, as EY’s consumer products and retail market leader Shyam Gidumal noted, the imperative to place data at the center of decision-making and invest in tools to manage it becomes clear. If “omnichannel” was the “last wave” that forced retail to advance, then data is the next, according to Sadove. “The biggest issue is culturally changing to be data first,” he said.
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Data is great, but it’s nothing without the right infrastructure and mindset in place. As Sadove added, “culture change trumps strategy every time.”
Some retailers struggle to innovate because the tech vendors are pitching solutions that offer incremental improvement in some core competency while others dangle ideas that could truly be “transformational.” Evaluating all of this requires resources that many retailers simply do not have, Sadove said.
The former retail CEO said he experienced this firsthand while at the helm of Saks, describing how he was “inundated” and “overwhelmed” by the avalanche of innovation options. The luxury department store chain ended up doing what Sadove called “reverse mentoring,” having the more senior staff counseled by younger employees who were more in tune with tech and “what’s really going on.”
Though that approach seems antithetical to how many organizations operate, “that’s the type of culture change I’m talking about,” Sadove explained. Digitally native brands have the inherent advantage of being born with data at their core, he added, giving them a cultural leg up on their older competition.
Unfortunately for retailers, the macro picture around the consumer doesn’t leave them with much breathing room as the early(ish) days of 2019 indicate a “deceleration of growth” in consumption, particularly in contrast to the fourth quarter, Sadove said. As things get tougher overall, expect to see increasing pressure in supply chain costs as well as labor, he noted, and a tighter focus on what differentiates one chain from the next.
Today’s consumers want to purchase and access product in any number of ways, from resale to rental to sharing in both the value segment and luxury segments.
“Because there are so many more choices out there, it tells you you’ve got to be so much more precise in understanding and micro about…the story that you’re telling,” Sadove said. That’s easier for a brand to achieve—like Nadaam and its Mongolian goat cashmere, for example—than for a legacy department store, but not impossible, he added.