NRF 2018: IoT and Fulfillment for the Customer Experience

NRF 2018Earlier this week, I attended the National Retail Federation’s (NRF) Big Show at the Jacob Javits Center in New York, NY. This marked the tenth straight year that I have attended the event as an analyst. Over the years, certain key themes have emerged, and many of those themes have remained in place each and every year. Namely, these themes and trends include omni-channel (or at the least the evolution from multi-channel to cross-channel to omni-channel), mobile, cloud, and customer experience. Not surprisingly, this year was no different, as these themes remained in place. There was more excitement though around the store’s role in omni-channel, as well as the emergence of connected stores and warehouses with the use of sensors. Here are some key trends that I saw at NRF 2018, and how they are shaping the future of retail.

Store Fulfillment

One of the biggest unknowns about the future of retail is the store’s role in the e-commerce boom. Not surprisingly, more retailers are looking to make their stores a focal point of their omni-channel strategy. While historically the store has been the weak point, things are starting to change. One of the suppliers that I met with that is helping to change the store’s role is Zebra Technologies. Zebra showcased a new rugged handheld device that is used in stores and distribution centers for enterprise-wide inventory visibility and task management. Because the devices are shared, they have swappable batteries which allow the handhelds to run all day. Target is using the handheld along with their My Checkout app to arm store associates with the ability to better service customers. The store associates can look up inventory for a customer on the handheld; if the item is out of stock, the customer has a few options. First, they can have the item held at another store for pickup. Second, they can have the item shipped to the store they are in for a future pick-up. Or third, they can have the item shipped to the customer’s house. In this case, the order management system will determine the best location to pull the inventory from for fulfillment. The handhelds are equipped with a payment sled, so the store associate can process the order immediately. These capabilities help to ensure the customer can get the item they want in a quick and efficient manner.

IoT for Distribution

Another emerging trend was around the use of sensors to make better decisions. One of the suppliers I talked to was SMARTRAC. The core of what I was shown was the use of near field communication (NFC) chips that are embedded in everyday objects, mostly to enhance the customer experience. The company showcased a new Adidas soccer ball that had an NFC chip in it; customers could tap on the chip with their smartphone to see where other users had tapped, get product information about the ball, and have dynamic interactions. However, from a supply chain standpoint, the tags serve different purpose. Specifically, the tags serve as a checkpoint system for remote warehouses that are shipping the soccer ball. The chip is scanned at every location along its journey, and limits are set up for the number of activations that occur every day within a warehouse. This helps to keep better tabs on the balls and reduce shrink.

IoT for Fulfillment

Another example of connected sensors is Zebra’s Smart Lens. In this case, the sensors are not being used for distribution, but rather for in-store fulfillment. Clint Reiser is going to write more about this in a future article, but I wanted to briefly touch on how JDA has partnered with Zebra to use Smart Lens with their Store Optimizer. The Smart Lens is a set of mobile sensors that feed an analytics engine. JDA is able to use the sensor to track out of stock items on store shelves; the data is fed into Store Optimizer, which alerts a store associate when items need to be restocked. Store Optimizer also alerts the associate to where the product is located in the stock room so replenishment is more efficient. The use of sensors and item-level tags ensure that customers can get the item they are looking for in the store.

Smart houses, and connected devices have also been gaining traction lately. SAP Retail demonstrated connected devices at their booth, with a focus on robotics and IoT. The smart refrigerator is another example of a product that is mostly geared towards customer experience, but has a fulfillment angle to it a well. The smart refrigerator that I saw had a large touch screen on the front of the door. The screen showed the contents of the refrigerator without having to open it; scanners inside were able to display the expiration dates of any food inside as well. The refrigerator also gave product recommendations based on changes to a consumer’s diet or flavor profile. These items could then be added to a digital shopping list. The refrigerator made recommendations to buy new items, such as milk or yogurt, if it was low or was rapidly approaching the expiration date. The consumer could then take the digital shopping list using the refrigerator, and place the order through the touchscreen on the door for an e-commerce delivery.

Final Thoughts

Another year, another NRF. The theme of fulfillment was strong this year, but not in the traditional sense of shipping e-commerce orders from a distribution center. Instead, fulfillment became intertwined with the customer experience, and served as the backbone for ensuring customer satisfaction. Connected devices and sensors will continue to play a big role in fulfillment as the world becomes more connected. These themes and trends will continue to evolve over the course of the year, and we’ll check back on them frequently to see what is new.