Last week I attended The Lead Innovation Summit, a two day event focused on retailers and brands, with a diverse group of speakers from The Gap, PVH, Authentic Brands Group, DVF, rag & bone, American Eagle Outfitters, Theory, Marc Jacobs, Talbots, Foot Locker, and other retailers, brands and software innovators.
No surprise – these industry innovations were born from advancements in the use of Data and Artificial Intelligence. A few examples:
❇️ AI going beyond “you may also like” to advancements like adding GMROI into search or detecting fraud.
❇️ AI for customer service preventing a brand from sending another “happy-toned” email to a customer that just gave a negative review.
❇️ Data-driven shipping alternatives proving to be more sustainable– a sharing economy – sharing space in distribution centers, shipping containers, cargo planes, etc. X Delivery is an innovator.
❇️ In-store RFID technology (radio-frequency identification) mounted from the ceiling, determining exactly what inventory is on the selling floor, and which SKUs need to be filled in.
❇️ As for the metaverse, some companies like The Gap are strategizing to “try fast, learn fast, think big”, while others said they were just dabbling.
More than ever, Demand Forecasting, Inventory Planning, and Customer Data remain top priorities, but many echoed what was stated by Alex Baillargeon, SVP Digital, Authentic Brands Group…“getting data that is as close as you can get to the customer, the better, like surveys, quizzes, etc., and feeding that into product decision-making.”
90% of the world’s data has been gathered over the last ten years. Yet, the consensus from leaders is that it remains a challenge to utilize that data to its full potential. One leader warned of the trap of cherry picking data just to prove a point one’s trying to make. The brands/retailers that spoke about their success cited that data has to be “evangelical” in the company, in the ethos of the entire company…all the data points talking to each other, not siloed by departments. The companies that consolidate all points of data seem to give the best experience to the customer. While this may be easier for digitally native brands, it can be a challenge for legacy brands.
Leaders in the audience nodded in agreement with Jaap von Riel, SVP and CIO at Talbots, who cited the challenges of finding a balance between innovation and a legacy platform that may be ten years old, and adapting it to today’s needs. Matt Powell, the CTO of FTD, noted that tech teams are having to “move away from being technician-focused…they need to think in a human-first way, meaning the customer, not a systems-first way”. Von Riel added that “tech teams have to understand the business, and at the same time, the business executives are becoming more tech-savvy, which is a good thing”.
With only ten years in for this era of massive amounts of data, there is a need to prioritize investment in both modernized technology as well as talent that embraces it. Nick Kaplan, Chief Growth and Innovation Officer at Saadia Group (NY&C, Lord & Taylor, others), stated that the data, while critical, “only adds basis points to revenue, not 20% comps”, and that the challenge is “having the human capital to utilize that data…people solve our problems.” Indeed there is huge potential for success when data is put to use by curious minds. In my experience as a merchant leader, I’ve seen teams use data to detect “big picture” patterns – and combined with the right strategy – deliver 40% comps in one season.
One clear theme that ran through many innovation discussions can be highlighted by the key point made by Meera Bhatia, COO of Fabletics, which is “the importance of layering on top of the data”, i.e. the human layer, and “designers designing what we’ll wear next season”.
The AI may help predict what the customer will want, but the magic comes from thinking through why they wanted it in the first place.