Retail’s “Big Show” at Jacob Javits Center in New York has been an annual must-attend event for retailers and those involved in the retail ecosystem for most of the 100+ years since its 1911 inception. However, since the Great Recession of 2008 and the subsequent retail disruption/apocalypse (call it what you will), the tenor at this event has been as cold as the January wind howling across the adjacent Hudson River. This year there was a marked difference. While too early to judge the overall impact of consumer migration to digital plus weak mall traffic and an over-stored environment, a strong holiday season (up 5.5 percent year over year) and positive macro factors had the 36.500 attendees in better spirits than I’ve witnessed in the last 10 years.
First of all, the content changed and better reflected the forward thinking required of retailers today who want to be viable tomorrow. While the big stage had retail and media legends that spoke to change, including Walmart’s Doug McMillon, Arianna Huffington, and Levi’s’ James “JC” Curleigh, the really interesting conversations were at the NRF’s Innovation Lab. The energy was tangible among the 45 or so startups and on the Innovation Lab Stage where 15 sessions focused on innovative technologies, consumer expectations, and collaborations that are transforming retail. Over 4,500 people attended the Lab to get a taste of the excitement and optimism of change agents shaping the future.
NRF’s Innovation Lab consisted of two exhibit areas; Retail 2020, which showcased 25 technologies transforming the shopping journey (from awareness and consideration to engagement and post-purchase) and the Emerging Technologies Showcase, curated by NRF’s Innovative Partner, XRC Labs’ founder, Pano Anthos, where 22 very early stage startups offered promising technologies for the future of retail. During a tour of both areas, Pano spoke to the promise of the Emerging Technologies. “Funding and the implementation timeline are unknown for emerging technologies. The ideas are good, the technologies still unproven. Whether these startups will see these ideas to their fruition in the marketplace is unknown. We do like these technologies though, they are pushing the envelope, the technology will survive and if not these particular startups, then others” Pano stated. He should know. XRC Labs is a NYC-based innovation accelerator Pano founded in 2015, sponsored by Kurt Salmon, Parsons School of Design at the New School as well as a number of retailers and brands, and designed to unite entrepreneurs and investors to create the next generation of retail.
The New Lexicon: AI and Personalization
The Lab was largely informed by AI, or more aptly, machine learning. These technologies are pivotal for the personalization consumers demand today. Pano spoke on the innovation Lab Stage, moderating a discussion on “Robotics and AI: Trailblazing Technology for Future Retail.” He paraphrased the Jeff Bezos mantra, if you aren’t willing to fail you aren’t testing; by definition, testing means you will fail; if you aren’t failing you aren’t testing– and you won’t grow. He stressed the need for a corporate culture and business environment where testing and failing is accepted and expected . JC Curleigh, CEO of Levi’s reinforced the need for innovation invoking Bob Dylan, “You better start swimming, or you’ll sink like a stone ‘cause the times are a changing.’” Pano’s panelist, Michelle Bacharach, CEO and Co-founder of FINDMINE, suggested embedding innovation in your annual performance review rubric to measure how many new things you tried this year and how fast you got to a solution regardless of whether it worked or not. Joe Jensen, VP and GM Retail Solutions, Intel added, “The rate and pace of innovation is staggering. if you tried something a few years ago, its a completely different ballgame today, its human nature not to go back, but keep pulsing and checking, the use cases are maturing and the ROIs are really good.”
Five Innovative Startups
The Lab was a field day of ideas. The following companies are interesting innovators worth investigating and partnering with.
- FINDMINE. Michelle Bacharach’s, CEO and co-founder, personal pain point of “how do I wear this?” spurred the creation of FINDMINE. This outfitting engine uses AI to curate outfits from the brand’s full product catalog in the same way a personal shopper would, but at scale. Rather than divert a potential shopper to Pinterest, Instagram, Facebook or a blogger to see how to pull off a potential head-to-toe fashion purchase, retailers can integrate FiNDMINE technology into their websites and keep the shopper involved and informed with personalized wardrobe choices. The technology can also assist sales associates with styling advice. According to Michelle, customers will spend up to 200 percent more when they consider an item in the context of an outfit and in A/B testing (with FINDMINE/without FINDMINE), sales rose six percent. FINDMINE saves the merchant time, improves efficiency and provides upsell opportunities without addiional work. FINDMINE clients include American Eagle Outfitters, John Varvatos and Milly.
- Genostyle. Advanced algorithms and AI enable retailers to characterize individual shoppers’ preferences and styles by knowing each customer and thus deliver personalized product suggestions. Genostyle’s co-founder Veronica Cabezas is passionate about meeting the unique fashion needs of each customer and foster fashion self-expression, the antithesis of a mass retailing one-size-fits-all mentality. Genostyle operates with a fashion typogreaphy that distinguishes among bohemian, classic, edgy, glam, hipster, minimalist, preppy, punk/grunge, romantic, sartorial, sporty/active, tailored, vintage or western styles. This customer-centric solution reduces thousands of recommendations to style matching recommendations, reducing the paralysis of choice. Genostyle was recognized for Innovation in Fashion Tech at the 2016 NY Fashion Tech Lab and is in a pilot with a UK retailer where apparel sales increased 17 percent with Genostyle’s technology.
- LexSet. Using AI and AR, LexSet’s integrated online platform for furniture retailers and manufacturers/brands lets shoppers tailor their home furnishings online search and discovery to their own space. It also makes furniture recommendations based on spacial constraints, existing furniture pieces and each shopper’s unique design aesthetic. LexSet founders Leslie Karpas and Francis Bitonti came together at research lab Intellectual Ventures (IV). IV gave them access to a portfolio of 38 high-profile context recognition and AR patents and they created four distinct LexSet tools that identify, recommend, visualize, and instruct. Head of LexSet branding, Kate Croft, said, “Our mission is to celebrate interior design and make it accessible to everyone. LexSet answers the basic questions of buying furniture—will it match? will it fit? —so that people can focus on creativity and self-expression.”
- STRYPES. Here’s a personalization tool enabling customers to interact with brands online through 3D visualization and collaborate on product design and styling to see the results in real time. CEO Alexa Fleischman says the technology is product agnostic and can be used in multiple vertical consumer goods categories. The co-creation innovation increases brand engagement by involving customers in the creative process. Strypes ensures product relevancy to each customer, ultimately increasing customer loyalty, AUR and conversion rates. Strypes enables brands to bring out shoppers’ creativity in a fun way. Not surprisingly, Strypes’s CTO came out of the gaming industry. Early customer data show that shoppers who interact with Strypes’s platform spend an average of 28 percent more than shoppers who do not. Canadian brand Roots currently works with Strypes where, engagement, conversion and AUR are showing a positive lift.
- Facenote. This facial identification platform recognizes customers in real time as they enter the store. Created for enhancing customer service, Facenote is an opt-in solution. Customers opt into into the system by sending a selfie. Ten seconds later Facenote’s proprietary platform uses a feature- recognition mathematical process that can instantly identify each customer at any store location. The solution enhances and personalizes the shopping experience with a very low implementation cost. CEO Eduardo Rivara believes the recent launch of facial recognition on Apple’s iPhone X and Samsung’s Galaxy S8 supports mass acceptance of this application. He believes this level of personalization isn’t creepy anymore, and today’s consumers are willing to share their data to get better, faster in-store service. Facenote ups the game for loyalty programs in both the retail and hospitality industries. Eduardo sees great potential for facial recognition with shopping center developers, international tourism companies, gyms, and airport VIP clubs. Facenote is in commercial pilot with Melissa Shoes in three Florida locations, including Dadeland and Lincoln Road.