Looking Forward to Retail’s Big Show
With NRF 2020 Retail’s Big Show approaching, our team is gearing up for three days of immersion in the latest technologies and trends impacting retailers.
10th Jan 2020
Looking Forward to Retail’s Big Show
With NRF 2020 Retail’s Big Show approaching, our team is gearing up for three days of immersion in the latest technologies and trends impacting retailers. We look forward to sessions touching on the key themes planned by the National Retail Federation for this year’s event: Experiential Retail, Inclusivity and Putting People First. But with an agenda packed with inspiring content and hundreds of booths at the expo floor, innovation lab and start-up zone, it can be a daunting proposition to prioritize your time. Never fear, we are here to help.
In order to cut through the noise, we have decided to focus our schedule on brands that have risen to the top of our Digital Strength Index in 2019 by demonstrating best-in-class digital experiences, innovation and savvy investments. Our Digital Strength Index is an aggregate measure of the digital performance of the top 1000 public companies in the US. The index translates a company’s digital strength score into forward top-line growth acceleration expectations. In short, we can correlate the digital strength of the companies we cover to their financial performance, helping to understand which companies are really moving the needle, versus just talking the talk.
Retail continues to face a time of transformation fueled by competition from Amazon and new digitally savvy retailers, changing consumer demands, and rapid technology advancements. The struggle for market share is reflected in the average retail stock price growth which is severely lagging the market overall at 4.38% versus the S&P at 28.9%. In looking at the aggregate data for the 80 retail companies we cover, we can see the disparity between those investing successfully in digital than those that are lagging. The companies with the top 30% in digital strength score have 6.8% increase in stock price in 2019 versus -7.4% for the bottom 30%. Within that set of top performing retailers, several success stories emerge, and even better, many are on the agenda for NRF. Here are a few of the companies we are eager to hear from at the event.
Rated the Top Global Retailer in 2019 by NRF, it’s no surprise that they have a very high Magnitude score, reflecting the overall volume of digital customer interactions. Despite an already large scale, Walmart improved their Digital Strength Index score significantly in 2019, gaining 16 points, with standout performance in search and social related metrics.
Walmart is taking Amazon head-on from many angles and starting to gain ground.
- Leveraging its massive retail footprint to enable same-day delivery at a lower cost.
- Attacking Amazon’s advertising business by offering a self-serve programmatic ad buying platform to marketers.
- Remodeling stores to reflect new shopping expectations and patterns, with an eye to better connecting online and offline channels.
- And most recently, announcing new technologies to secure their place as America’s top grocer – autonomous picking and packing of online grocery orders.
In addition to the technology innovations above, we loved seeing Walmart CEO Doug McMillon taking a stand in 2019 to stop selling both ammunition for assault-style rifles and handguns and e-cigarettes.
Dick’s Sporting Goods
In a crowded market space where mass merchandisers and niche brands are fighting for attention, Dick’s Sporting Goods is not only surviving, but thriving. They’ve been proactive with keeping up with consumer trends by investing in technology and integrating online and offline channels and it’s paying off. Dick’s Digital Trajectory, which correlates digital demand trends to overall revenue trends, is tied at #1 with Walmart. They also have the highest Digital Intensity among all retailers at over three times the retail average.
- Dick’s is laser focused on activating meaningful digital transformation while leveraging physical retail spaces to educate and build communities. They understand that digital and physical should reinforce each other and have doubled down on that with an overhauled website that focuses on a better visual display of products, search and checkout functions.
- Satisfying both consumers’ and associates’ desire for convenience, speed and ease in an increasingly digital world. Thanks to their tech overhaul they can now list sports products online within 30 minutes of a major event, such as a championship win or a player trade. Additionally the new inventory software launched in 2019 called “Merch Search” provides real-time product information, inventory availability and alternative product recommendations.
One company who continually stands out on the DSI is Home Depot. We highlighted them in our Q4 2018 report for increasing their score and once again they are in the top percentile of retailers evaluated. In the past two years they’ve substantially improved their Digital Penetration scores with high Digital Intensity and the 2nd highest site visits next to Walmart. Home Depot’s continued focus on digital has elevated their score from 55 in 2018 to 74 in 2019, an impressive 35% increase.
- The Home Depot’s continued focus on staying on top of and adjusting WITH consumer shopping and buying preferences has been a critical key to success. They understand the importance of digital as an influence, even if most sales occur in-store, and work to create an experience that adjusts to consumer preferences. Half of all their online orders are now being picked up in the store with lockers being added to stores to make it easier for consumers.
- They have a consistent play with Pro Services, investing in and launching a personalized B2B website experience that engages over 135,000 pros
- They leverage digital transformation to elevate employees within the organization with a unique training program called OrangeMethod that supports employees’ career paths and interests.
On the flipside, Kohls is one of the companies that saw a declining DSI in 2019, dropping 14 points over the year. Stock price dropped 19.2% in 2019 and Q3 2019 reported revenue is down. Despite these results, Kohl’s CEO Michelle Gass is set to receive a major award at NRF this year, The Visionary 2020. We look forward to her keynote speech, where we hope to hear more about her initiatives to turn around the downward trend over the longer term.
While our eyes and ears will be on the brands that are excelling with digital, as we hit the floor of the world’s largest retail conference and expo, we’ll also be checking out how new and up-and-coming brands are disrupting the industry to drive better customer experiences.