The lanyards have been hung up, and the expo taken down; Shoptalk is finished for another year. While our sore feet and hoarse voices will go away in a few days, I hope the important learnings will last much longer.
In my discussions, I was struck by the eagerness of retail executives to learn from each other how to prepare for the future. Whether the topic was how to use AI, changing merchandising strategies, new business models, or anything else, the depth and quality of the conversations went beyond what I have experienced before. This excitement for how technology is changing retail continues to make Shoptalk an essential stop each year.
Here is what I learned from my discussions and from listening to the expert sessions this week.
The AI hype is real
It’s no surprise that AI was the biggest (though not the only) topic this week, and in particular generative AI. According to Shoptalk’s straw poll, a plurality of attendees coming into the show thought generative AI was overhyped. At the end of the show, attendees shifted to think that generative AI deserves the attention it’s getting.
And it’s no wonder, given the applications we are seeing. My team and I witnessed incredible applications of AI including large-scale generation of PDPs, automatic personalized emails for customer service, automatic retargeting content, AI for knowledge management that retains the expertise of departing employees, synthetic customers for market research, and more.
The retail leaders experimenting with these generative AI techniques said that some have created immense efficiency gains quickly, while other tools didn’t quite pan out; but that’s okay. Cutting-edge technologies take time to mature, and the businesses that gain experience with them will prosper and win in the end.
I was gratified to see such interest in AI, which we have been building for a decade at Session AI. Our patented machine learning technology is a mature approach that retailers benefit from immediately. More than ever, retailers see that they must now embrace AI to accelerate their businesses – so believe the hype.
Shoptalk’s own experts acknowledged that the huge attention on AI can make it appear like just a trend, but if anything, the technology’s potential is underhyped in the long run. Retailers need to invest in ways that create clear paths to benefit – and mature AI technologies are right on time. AI like in-session marketing creates a compelling bottom-line impact.
The best aisle
Retailers always talk about their promotional strategies at Shoptalk, and they love to share the collaborations and campaigns that worked best for their brands. Of all the changing variety of strategies discussed this year (including every social campaign imaginable), the changing nature of merchandising stood out.
Specifically, many retailers are moving away from offering the most choice. To earn loyalty and a premium brand perception, retailers are curating the products that their customers will want – decluttering both their physical stores and ecommerce assortments.
We heard about Macy’s merchandisers becoming category specialists in order to carry the best products. We learned about the success of the Kohl’s partnership with Sephora, and how Kohl’s is forming a new store-in-store partnership with Babies“R”Us. We learned that Forever 21 is cutting its merchandise by 30%, and Zappos is reducing its assortment by 40%. In each case, the leaders making these decisions explained them to us.
One of the most memorable quotes at Shoptalk came from Macy’s Inc. CEO Tony Spring, who described what this strategy means for his stores: “It is not the endless aisle, but the best aisle that matters.”
I’m inspired by this trend of “best-aisle merchandising” because of how closely it mirrors one of the benefits we drive with in-session marketing. Our approach to ecommerce marketing helps brands move away from offering an endless series of promotions and discounts, which can exhaust customers just as much as an endless scroll of products. Instead, we help retailers create the best incentive – to motivate purchasing and future loyalty.
Disruptive business models
Every retailer is on the lookout for big changes, and beyond AI, there were several emerging ideas that caught my attention.
For months, Shein’s amazing success has been all the talk, and the reason for this success is being described as the “manufacturer to consumer” (MTC) model. This new model is potentially disruptive to existing DTC models, as well as to other distribution strategies that introduce markup. It will be interesting to see how retailers in fast fashion adapt and what other sectors begin to see successful MTC models.
Experts commented that retailers are seeing a rising degree of horizontal collaboration. In other words, to manage change effectively, retail leaders are moving out of their silos to understand their peer leaders and the impacts that their departments have on each other. It makes sense to me that this way of working is associated with successful change – I see it every day at our customers. So I was glad to see this trend named and identified as a model that successful businesses will want to adopt.
Perhaps the most lasting disruption to business models is attention itself. The way that consumers get and consume information has been changing fast, and according to research shared at Shoptalk, the number of minutes that consumers spent on streaming and social video overtook the time spent on linear video in the last year. Other statistics further prove the dominance of short-form content, social media, and digital platforms.
And with consumers moving quickly among so many different channels, it’s not even fair to say supply has outpaced demand, since supply of media time is effectively endless. Meanwhile, the demand for attention is still limited. So the model of brand value is now attention itself, and the most valuable thing any retailer can earn is attention.
In the year to come, I look forward to seeing how AI, “best-aisle merchandising”, and disruptive business models continue to change our industry.
