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NRF leader eyes retail rejuvenation as stores fuse the physical and digital worlds

Retail apocalypse? Don’t try selling that notion to Ellen Davis. She’s not buying.

From her vantage point as senior vice president of research and strategic initiatives at the National Retail Federation (NRF), Davis points to a robust American shopping spree during the recent holiday season as proof that retail is – and will be – just fine.

She understands the digital disruption that has rocked retail. After all, Davis is one of the people credited with coining the phase “Cyber Monday.” But from grocers to fashion merchants, Davis sees more companies bolstering their brick-and-mortar stores with sleek, online experiences – and vice versa. Those fresh looks and mobile tools, she says, are delighting shoppers and driving sales.

At the NRF’s annual Big Show in New York City earlier this month, Davis sat for an interview to share her view on the state of retail.

TRANSFORM: What trends are you seeing for 2018?

ELLEN DAVIS: Economic trends are fantastic. Unemployment is very low. You see wage growth. The housing market is strong. We just passed tax reform, which is going to be good news for a lot of businesses and consumers.

The consumer is willing to spend. We’re coming off a holiday season that saw 5.5 percent growth, which is better than the 3.5 to 4 percent that we forecast.

Over the holiday season, retailers figured out how to unlock a little bit of that wallet. The capacity has been there for a while. The question has just been: What’s the trigger that will get consumers to click ‘purchase’ or get to a store to buy something? So from a retailer perspective, they’re looking at both the economic and the consumer side to say: ‘We’re in a really good spot.’

TRANSFORM: How do retailers leverage that good spot? In what items should retailers continue to invest to capitalize on that momentum?

DAVIS: In order to stay in front or at least keep up with the consumer, we should be changing, especially elements of technology, elements of the store, elements of the buying experience and the merchandise experience.

A big trend I see for 2018 is this continued infusion of the physical world and the digital world in retail, where you can buy online and pick up in-store, or you can buy in-store and have it sent to you.

I’m also talking to many executives who are bringing technology into the store in a way that’s not necessarily a dotted-line connection to commerce. Look at what BJ’s stores are doing with the scan-and-go element, or with mobile coupons. Look at stores that are placing lockers outside so that you can buy items online and pick them up in a locker during hours the store is not open.

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TRANSFORM: What is the state of retail according to participants at the Big Show?

DAVIS: Retailers are proud they proved a lot of pundits wrong. At the beginning of 2017, we heard about a retail apocalypse, that retailers weren’t going to be around, stores were going away, the industry was dying. Then, to see the 5.5 percent increase in sales over the holiday season, it was a dose of optimism. It was validation for what they knew all along: Hey, this is an industry that’s changing – but that’s awesome.

Retailers all recognize the customer is acting differently, spending differently, communicating differently. How do they get in front of them to lead to a better customer experience? You have to change your store footprint. You have to change your digital offerings. You’ve got to figure out how to infuse all of that. You have to communicate to your customers in a very different way.

It’s a sophisticated challenge to solve. But a lot of executives are excited by this. I mean, nobody goes into retail who likes to do the same thing over and over again.

TRANSFORM: In fact, many retailers say they’re already addressing today’s challenges with new tech solutions that help them solve these disruptions now. Do you agree?

DAVIS: Yes. And what’s interesting is there’s a perspective that the consumer is leading the way on this. But I would argue that the retailers are leading the way.

Here’s why I say that: Consumers wouldn’t have any shopping to do on their phones or from a payments perspective if you didn’t have an industry that said, ‘Look, we realize this is a consumer who wants something different from us, let’s provide that to them.’ So you do see our industry – and many of the partners and solution providers in that space – helping guide the consumer to a better experience they didn’t know they wanted or wouldn’t be able to get if that investment from the industry wasn’t there.

TRANSFORM: Amid retail’s digital transformation, is there one technology that truly intrigues you for its potential to help companies thrive?

DAVIS:  I’m so interested in the difference between customer-facing technology – the holograms, the virtual dressing rooms, the things you can see – and then the back-end systems that are so integral to better understand everything from logistics to customer behavior to merchandise mix. With all of the sexiness of artificial intelligence and virtual reality, a lot of the sophisticated, back-end systems that help the retailers analyze data are sometimes lost.

If you’re a company that has literally all that data, what do you do with that? And how do you sort through that treasure trove of information and unlock that? That data can make an instrumental difference in the business that the customer wouldn’t necessarily see but you can provide them a better experience without the customer even knowing it.

Image of Ellen Davis courtesy of NRF and Jason Dixon Photography.