Silicon Valley was the perfect place for the 2023 Global Retailing Ideas Summit, held earlier this month. The conference highlighted retail leaders from some of the fastest-growing start-ups like Grove Collaborative to iconic brands like Levi Strauss & Co. The presenters focused their discussions on a variety of topics: the current climate of the retail economy; how retailers are turning ideas into actions and creating impacts through sustainability initiatives; the latest technology trends; why strategic partnerships are more important than ever before; and last but certainly not least, how DTC (direct-to-consumer) companies are leveraging brick-and-mortar to enhance the overall customer experience.
Former CEO and Chairman of Macy’s Terry J. Lundgren summed up the message of the conference elegantly through the sharing of a maxim that he lived by as a retail leader, “The customer should be at the center of every decision.” Throughout the conference, Lundgren’s sentiment was vividly evident as each presenter shared their journey through entrepreneurship, touting missions of building companies, products, and brands focused solely on the needs of the customers they serve.
Below, I provide a recap of top trends and discussions from the 26th Annual Global Retailing Ideas Summit:
2023 Global Retailing Ideas Summit: Retail Economic Outlook
Although news and media outlets have portrayed a grim outlook for the economy, Sarah Quinlan, Chief Economist with the Consello Group, shared a message with a lot more optimism, but with a few calls to action.
- Point 1: Although consumer confidence is declining, the economy is showing growth. 70% of the US GDP is consumer spending, with US retail sales remaining solid – up 5.4% in February 2023 versus 2022.
- Point 2: Consumer spending during this period has been focused more on services rather than goods. Currently, the #1 gift in the US is a trip for the family. As consumers continue to spend on experiences, retailers need to understand how to better serve their customers in this experience economy.
- Point 3: Inflation has been a continual topic in the newsrooms for some time now, with banner conversations being centered on rising food and rental costs but that doesn’t tell the complete story. Presently, energy costs are down, the single-family home cost is normalizing, and supply chains are now stable in major industries. In the address, it was Quinlan’s opinion that peak inflation has been hit.
- Point 4: A recession is not inevitable, and retailers should be thinking a bit differently in this new normal. Quinlan suggested these key considerations:
- The labor market is competitive, and talent is hard to find even with the reported layoffs. As the labor market remains strong with unemployment at record lows, retailers need to focus on strategies to retain their top talent.
- Retailers should own their goals through innovation and scenario planning to ensure their forecast and inventory levels can support future demand in this unpredictable world.
- It’s time to deploy innovative strategies to attract new customers and increase the spend of current customers.
- Watch the hard data when making decisions on your business and not surveys. Real spending is accurate, not survey spending.
eCommerce and Brick-and-Mortar Working Together to Give a Complete Customer Experience
In the 20-teens, there seemed to be a new DTC company popping up daily, causing many analysts and market watchers to believe that brick-and-mortar retail was on a path to becoming a thing of the past. In recent years, we’ve found that customers still enjoy the brick-and-mortar experience, with many preferring physical shopping to shopping online. The pandemic revealed a lot of things about the nature of people: while many craved more alone time with the rise of technology, others still yearn for social interaction and comradery as opposed to isolation.
As companies innovate with a customer-centric focus, brick-and-mortar is a vital component in the customer journey as well as the retailer’s strategy. Co-founder and CEO of ThirdLove Heidi Zak spoke about how important physical retail is to serve their existing customers and as part of their strategy for new customer acquisition. Starting as an app, ThirdLove’s competitive advantage was embedded in the product design by offering stylish yet comfortable intimate apparel for women in an array of sizes while leveraging customer data to enhance the eCommerce experience. As they continue to venture into brick-and-mortar, understanding how to ingrain the online experience in their stores through their customers’ interactions with store associates is one place where they wish to improve. From a technology perspective, they’re still learning how to leverage customer data effectively in stores to offer a unique and fun experience as provided through their eCommerce channels.
Lovesac’s Founder and CEO Shawn Nelson also gave an impassioned story of his entrepreneurial journey and the evolution of Lovesac stores. In the early years of the Lovesac brick-and-mortar stores. they all carried physical inventory, but as the products have evolved from large beanbags to modular furniture, so has the store experience. Now their stores are set up as showrooms carrying no inventory. Nelson stressed that he wanted to ensure the customer can purchase a Lovesac sectional through whatever channel suits them best. Lovesac is doubling down on the bet that presenting a unified customer experience at the store and eCommerce levels, along with creating a great product and having the right mix of people in place, is the recipe that will continue to help them win in the furniture marketplace.
Making Sustainability Real
Grove Collaboration has set some lofty goals in announcing their plan to be 100% plastic neutral by 2025, and their Co-founder and CEO Stuart Landesberg explained how ingraining their mission into their strategy is helping them to make good on their sustainability goals. A large piece of this effort is around taking a risk on products that resonate with their mission and customer needs. During the product development cycle, they’re always focusing on doing “less bad and more good.” As products come to fruition, a test-and-fail fast approach is used to gather data to understand what the Grove customer community is saying and leverage that information to advise on what products they should launch on their eCommerce site and with big box retailers.
As products launch, the Grove team is also looking for ways to continuously innovate. As an example, they launched green cleaning solutions for the kitchen, bathroom, and all-purpose with spray bottles. Before even focusing on packaging, intensive R&D had to take place on the cleaning solution to ensure it was green and an effective alternative to mainstream cleaners. In continuing to align with their sustainability goals, investments in innovation had to happen in their manufacturing process to efficiently fill the glass vials for the cleaning solution. The glass refillable spray bottle has also undergone countless improvements tailoring it for better customer use. Landesberg mentioned, “Mission and people have to mesh.” Doing the work to put together the right teams and making the effort to create customer-centric, mission-focused products are proving to be profitable for the Grove brand and effective for the planet.
“Partner or Perish”
Toys“R”Us EVP Jamie Uitdenhowen and Vuori Founder and CEO Joe Kudla both discussed how partnerships are vital to the growth of their brands and delivery to their customers. As Toy“R”Us is making its resurgence, they have partnered with another iconic brand, Macy’s, to usher in a new era of Toys“R”Us kids. Uitdenhowen spoke about how their team has been able to leverage Macy’s extensive eCommerce platform and fulfillment processes to offer a seamless customer experience – however, the real magic at Toys“R”Us is still in the stores. As such, Macy’s stores have a Toys“R”Us section, which is also helping Macy’s acquire new customers, as Uitdenhowen says 93% of customers that come into the Toys“R”Us store end up buying an additional item from Macy’s.
Vuori has always focused on partnerships whether intentional or not. No one knew the DTC brand would take off as it did during the pandemic, but Kudla and his team had the right partnerships in place to help them scale quickly. As a start-up, funding is a must – it can either grow your company or sink it. Kudla has always been focused on carrying as little debt as possible, which is why he looked at his supply chain affiliates as partners. When orders started to rain in and there was a need for significantly more production, instead of going after more funding, he made his upstream vendors partners. This helped to give Vuori more flexibility by giving his affiliates a vested interest and enabled him to continue to keep debt low on the balance sheet. These decisions helped Vouri be profitable very early, and as Kudla continues to expand the wholesale business and open more brick-and-mortar stores, he’s taking this same philosophy with him.
Uitdenhowen summed it up best with WHP Global’s mantra, “Partner or perish”.
Looking Ahead: 2023 Global Retailing Ideas Summit Takeaways
CEOs and retail leaders are going to have to remain nimble, find ways to innovate, pursue strategic partnerships, and keep a deep understanding of their missions to retain and attract new customers. As retailers continue their journey in 2023, keeping the customer at the center of every decision is not only going to be important but essential to the health and development of their businesses.
To chat more about the 2023 Global Retailing Ideas Summit or learn more about our retail consulting services, let’s chat.