Shoptalk 2018 Event Recap by J.P. Morgan Merchant Services, Market Intelligence
Key Themes and Takeaways from the Event
Brands are taking control of their retail destiny – Leading retail brands are actively maneuvering the complex and dynamic retail environment that has forced them to recognize and solve for the increasing pressure they face from a slowdown in foot-traffic and drop in profit margins online, both of which occur via wholesale partner models.
In response to these changes, many brands are advancing their own direct-to-consumer models that provide an alternative avenue to maintain and grow margins while building loyalty with their end customers. Brands such as Nike, Levi Strauss and Samsonite shared best practices on going direct-to-consumer, including developing customer personas (Nike) and the importance of maintaining price parity across direct and wholesale channels.
In particular, Nike’s depth of customer knowledge has allowed it to build custom apps and experiences such as an augmented reality treasure hunt called Stash. Designed for Nike’s rapidly growing “sneaker fanatic” segment, Stash offers access to exclusive shoes to this select base for a limited time. Such offerings are unique to their direct-to-consumer channel and help distinguish it from wholesale.
Multi-modality becoming the new norm – Multi-modality, the careful orchestration of touch, voice, text, images and emojis, was all the rage at this year’s conference. This is the next level in omnichannel experiences, driving merchants to consider a channel-less scenario where the interface they use to engage the customer can mean the difference between conversion and abandonment.
Firms like Rakuten shared insight into their new shopping keyboard, designed to make conversational commerce easier for consumers by presenting retail images, checkout emojis and brand logos for users to select, eliminating the need to type. This contextual, intuitive approach to customer shopping is quickly becoming the new normal in how retail is being created, communicated and delivered to the end customer.
Retailers have learned to be explicit about their end goals when leveraging emerging tech – As conversational commerce finds its footing in the payments landscape, merchants expressed how important a clear objective is in properly applying artificial intelligence and shopbots (within messaging apps). Merchants must decide their end-goal—customer service, lead generation or both. These are strategic decisions that need to be made from the onset.
Conversational commerce is at a similar stage to the early days of social media. As platforms (e.g., Snapchat) and technology (i.e. phones, tablets) advance, so too will the extent to which conversation can drive commerce. Many retailers mentioned the best bot experiences were hybrid experiences, combining chat and human interactions. Images prove more effective than text alone, so a combination of the two is most appropriate.
Data Insights are the most important (and least achieved) retail priorities: Data insights are being leveraged by retailers more than ever to drive better operations, sales, service and product development. Few merchants, on the other hand, have spent the time and resources needed to put insights at the center of their business models, allowing them to be pervasive in their business.
Insights shared at Shoptalk ranged from macro-economic, consumer (generation, age, gender, income) and strategic (i.e. retail location/region level analytics, rapid prototyping/placement performance analytics). Often, the cursory-level client insights are the missing piece to train A/B testing and AI engines. JPMorgan Merchant Services can help to illuminate a spectrum of insights for our clients as they expand their reach into their data.
China at the cusp of tech dominance – Chinese firms continue to grow their presence and influence in global retail. Key retail and payment juggernauts include Alibaba (AliPay), UnionPay, and Tencent (WeChat).
Bingobox, a Chinese startup of 100 fully automated convenience stores, was used as an example of the speed of innovation in China. A market that was once known for rapid replication, China is now becoming a market innovator. With a combined 1400 video surveillance/facial recognition patents filed in 2017 and nearly 4.6M computer science graduates in country, China’s growing position as a technology and commerce heavyweight sees no signs of slowing down.