First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  - Jan. 22, 2016 -  

Supply Chain News: Brick and Mortar's Last Stand? NRF 2016 Trip Report


OK, I am not long back from the National Retail Federation's "Big Show" at the Javits Center in chilly New York City this week.

Thousands of you have watched my video reviews of the first two days of the show. You can access them both here: NRF Day 1, NRF Day 2. It was a hectic couple of days.

As always at these types of events, I try to look for themes, and nothing really hit me while I was in Manhattan, but on the flight back, an idea took popped into my head - was this brick and mortar retail's last stand? Or maybe better said, its zenith?

Gilmore Says:

The supply chain software world is at a major inflection point - my friend Art Mesher, formerly CEO of Descartes and a CSCMP Distinguished Service Award winner - terms this trend "clean slate."

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I obviously exaggerate a bit for effect, but bear with me. There is no question this was a hopping show, with some 34,000 attendees. That was an all-time record, and maybe a couple of thousand above the total in 2015. By 10 o'clock Monday morning - a national holiday, by the way - the show floor was already packed. Most exhibitors I spoke to during my two days there were very happy with their traffic.

But how much of that traffic was focused on ecommerce or "omnichannel" versus brick and mortar concerns? (And yes I get in an omnichannel world perhaps that is not in some ways an apt distinction). I obviously don't know that mix of attendee interests, but I will note that there were simply dozens of web commerce vendors - software providers that offer tools to manage ecommerce sites, an increasingly complex challenge, especially if you are trying to do so globally - and most of the ones I saw there seemed very busy.

These web commerce vendors are very hard to tell apart, and often do not do a great job of articulating their differentiation, if there is any. If you are in the market for such capabilities, good luck with your search. It may be a long one to find what is best for you.

But back to my point, it is interesting that a good number of these web commerce providers were promoting that their solutions would somehow drive customer traffic to the store. "Click and collect" is the most obvious strategy to achieve that aim; there may be others. But - again exaggerating a bit - if the ecommerce strategy is geared around somehow figuring out a way to get consumers from the web or mobile device into the store, you are probably looking at things the wrong way. And click and collect alone will not save brick and mortar.

I offer those thoughts in the context that since the start of the year Macy's - an on-line leader, by the way - said it is closing 40 US stores, and Walmart more recently said it is closing some 270 stores globally, more than 150 of those in the US. While the Walmart news coverage has been a bit overblown - this is more of a "mix" issue, as it continues to open other stores - nevertheless, the retail trend is undeniable: Mid-double digit percentage growth in US ecommerce sales quarter after quarter, versus low single digit growth in brick and mortar volumes.

This retail transformation continues on, ultimately with significant impacts on retailers and consumer goods manufacturers. I will note that Scott Galloway of NYU's Stern School of Business has opined that "Pure play etailers without physical stores are doomed in an omnichannel world without a brick and mortar presence." Perhaps that is true. But just how much presence, and what the role of those stores will be, are issues in flux.

Ok, with that, a look at some of the most intriguing new solutions I found at this year's NRF show:

The most interesting product I found was from a company called Profitect, which provides a prescriptive analytic solution for retailers. The term "prescriptive analytics" gets thrown around a lot, rarely with much in the way of detail other than that such capability is coming, but Profitect appears to have put some real meat on the prescriptive analytics bone.

It has defined a large number of events or scenarios that indicate something is amiss (you can also of course create your own scenarios). A very simple example: sales are occurring at a store for a SKU which the inventory system says is out of stock. The Profitect solution not only automatically identifies this anomaly, but then sends an alert to the appropriate person(s) as to what needs to be done in response. The company has a large library of such event-action combos (turns out most retailers would react to a given issue in the same way), but you can easily craft your own best practice. Very cool. There is no question that increasingly the computers will tell us all what to do, and here is an early example.

I also liked the new planning solution suite from JDA, which was launched at NRF starting with an assortment planning module. As I noted in my Day 1 video, the supply chain and retail development world has simply all gone to the Cloud and mobile. JDA's is simply an excellent of example of this revolution, running on Google Cloud, with an "app-like" interface instead of the spreadsheet orientation that has historically has characterized planning software, plus its full of analytics and more.

The supply chain software world is at a major inflection point - my friend Art Mesher, formerly CEO of Descartes and a CSCMP Distinguished Service Award winner - terms this trend "clean slate." Make your technology plans and decisions accordingly.

Keeping on an analytics theme, Teradata - most known for its giant retail databases - is increasingly focused on analytics as well, and was featuring a new set of them focused on the supply chain. I couldn't spend enough time to really understand this well, but this "visual BI" solution looks at the "health" of a company's forecast from a wide variety of dimensions, and interestingly then analyzes how well inventory was positioned based on that forecast. I have not seen anything exactly like this out of the box in the BI world.

Digimarc was back, with its unique technology that can embed a bar code invisibly in an image, whether that's in a magazine photo or the packaging on a can of soup. That approach enables very rapid POS scanning- no need to find a bar code. But at NRF the Digimarc news was a partnership with standards organization GS1. The main takeway I gathered from the conversation - more soon - is that GS1 wants to be the central repository for all consumer product information, versus the "every company for itself" approach now used in scanning QR codes with a smart phone and seeing product data.

Instead, GS1's envisions that consumers will scan a product's packaging with the hidden Digimarc, and the info comes back in a standardized way from the GS1 repository. Interesting move for sure.

Changing gears, lots of developments on the hardware side of things. Zebra was there - after having acquired a part of Motorola Solutions in 2014 - with its exciting new TC8000 wireless terminal. This device looks like nothing you have seen before, much different than either the traditional "brick" or gun designs that have been around for 30+ years, and instead is more wand-like, with the displayon a stick in-line with the scanner, reducing motion and tilting. It is an exciting innovation, and Zebra says it will generate low double digit productivity gains for some companies.

Italian company Datalogic - the only real alternative in wireless data collection to the Zebra and Honeywell duopoly after all the acquisitions in the sector - had an interesting new set of terminals that also break the traditional mold. One is more like a mini-tablet, the other a gun version of the same device. They are small, brightly colored, and use a more modern operating system (green screen appears at last to be dead). These devices are worth taking a look at for retail or distribution applications.

Infosys recently acquired a very interesting solution called Pandaya that it says reduces the cost and time for SAP or Oracle ERP upgrades by more than 70%. Impact Power Technologies offers batteries for wireless terminals in the DC it says last much longer per charge and have a much longer lifespans, saving many companies tens or even hundreds of thousands of dollars per year.

I covered a lot more - see the Day 1 and Day 2 videos. Will break out these solutions as individual clips in OnTarget next week.

Any reaction to our NRF 2016 review? Are we close to brick and mortar retail's last stand? Did you find any cool new solutions at the show? Let us know your thoughts at the Feedback button (email) or section (web form) below.


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