Analyst Corner

Top NRF 2019 Takeaways-What I Saw, What I Liked, and What We Think It Means

If I’m counting this was my 15th NRF. It was a great show by just about any objective measure I could imagine. I continue to see more and more things that I really like and that resonate with the retailers we speak with. There was an overall positive vibe and a definite synergy between what the consumer wants, how retailers desire to service those very complicated customer journeys and the solutions that the vendor community is offering to meet those challenges. As a matter of fact, we think this is so important we’re currently working on research titled It’s Not You, It’s Me: Why Personalizing the Customer Journey Returns Extreme Results. More information about that can be found here. It is a multi-client sponsorship opportunity so let us know if you’re interested in participating.

As a general observation we saw strong traffic at the show, even until late on Tuesday afternoon. While I didn’t make it down to the first floor much, just about all the booths that I visited had very strong traffic. Our research and national data suggest that retail is strong and spending is robust and I didn’t see a single thing or have a single conversation that suggested otherwise.

Over the last few years the “window of applicability” has gotten even shorter. What I mean by this is that in years gone by, booths would be full of technology that might not see the light of day for 3+ years, a virtual eternity in the retail space. Over the last two years, most of what I’m seeing is in actual pilot locations or generally available or really close to GA. I think it shows a growing synergy between what retailers want and vendors desire to meet those needs and be an even stronger innovation partner.

At this point, two weeks post NRF there have been many great articles and webinars on key takeaways from NRF. Instead of trying to repeat that we decided to give you a quick hit into our key observations from the show. While there will undoubtedly be some overlap in other summaries you’ve read, hopefully you’ll find our observations additive.

Top NRF Takeaways:

  1. Image Recognition aka “The Year of the Camera” – One of the most visible technologies I observed at the show were cameras for image recognition. These were deployed in a variety of use cases including tracking customer journeys, product recognition, payment, shrink prevention, loyalty, etc. In concert with these applications was the use of AI and often edge computing supporting those use cases.
  2. OneView Commerce POS co-development deal with Kroger – This was a key development for a variety of reasons, one, being that OneView does not currently offer POS software for grocery though they have quite a few POS software accounts. Secondly, large companies tend to shy away from co-development deals. Third, is that Toshiba Global Commerce Solutions has been entrenched in that account for over 25 years as both a software and hardware provider. Kroger really liked the idea of microservices based architecture that OneView brought to the table and well as headless POS as Kroger wants to be able to have more control over the UI and the customer interface experience and the OneView offering afforded them that flexibility.
  3. IBM and HCL. While the announcement occurred a few weeks prior to NRF it important to include here that HCL is purchasing IBM WebSphere Ecommerce and the DemandTec assets along with other IBM software solutions. We did not have an IBM analyst session this year to ask questions. While speculative in nature, I suspect this deal is driven to allow IBM to invest more assets into AI, Blockchain and Linux where they see a lot more greenfield opportunity, while keeping focus on OMS and other core retail products.
  4. Microservices-based architecture continues to gain more and more traction. This is a follow on to the Kroger/OneView deal, but we hear about microservices importance more and more from CIOs. There was a large tier I specialty deal for POS right before Christmas that an incumbent lost out on because they didn’t have a microservices based architecture. We don’t think this is a fad, but a trend that will potentially become the next cloud movement.
  5. Continued importance of OMS – Many retailers are working on their second and third generation OMS implementations. In the several vendor conversations I had there continued to be a lot of interest in OMS offerings. We’ll be refreshing our OMS report this year and look forward to seeing the vendor progress on this front. Envista and Infor now offer OMS solutions targeting the lower Tier I market.
  6. HP in SMB Android partnership with PayPal – This is important for two key reasons. First, we continue to see traction with the Android OS for POS. While the PayPal play is certainly SMB focused, Android in SMB is gaining traction and beginning to make some up-market inroads. This will add to that momentum. Second, this will provide HP with another great source as a distribution partner in the SMB space. PayPal has broad distribution channels and thus has the potential to increase significant incremental volume for HP in the years to come.
  7. Amazon Go Influences Others – While Amazon Go wasn’t at the show with a booth (AWS was) the influence of Go clearly was present. There were multiple protypes of Go type offerings at the show floor and a short cab ride from Javits, but at most of the POS software/hardware booths I visited (NEC, TGCS, Fujitsu, NCR, Diebold) variants and proof of concepts around frictionless checkout offerings were on display. Unfortunately, I did not have the time to fully review all of them but look to do that as a post-NRF action item along with an Alibaba briefing that I’m excited about.
  8. Intel’s Open Retail Initiative – Intel had some neat partner technologies which included frictionless checkout and image recognition technologies at their booth and thanks to an analyst private breakfast on Tuesday morning I was able to spend over an hour there. For at least five years running, this is one of my NRF highlights. While the retail community collectively agrees on the opportunity around IoT, adoption has followed the traditional adoption curve. Impediments to adoption include industry agreed upon standards along with a communication hub and platform which can manage the information flow. While there are paid offerings out there to address that issue, Intel is offering to join and leverage solutions through the Open Retail Initiative, the industry’s first retail-focused IoT Open Source initiative at no cost. This is a price point that retailers love and could act to reduce a huge barrier to adoption. They have already inked partnerships with several technology partners with more to come. We see IoT as a great tool around developing customer personalization and intimacy and will continue to fuel the near decade long trend of BI and Analytics leading in IT Spend growth.
  9. SaaS/Cloud has fully come mainstream. No longer do vendors lead with inserting cloud into every other sentence. Cloud for most vendors is seen as table stakes and with most retailers, generally they have a cloud first appetite.
  10. Doddle Smart Returns – Doddle has developed a Self-Service Returns Kiosk, which allows for a space efficient way of handling in-store returns for multiple retailers into a high traffic retailer. It is a modular unit, it contains a Zebra tablet, a label printer, plus a variety of sensors, and is fully integrated into the Doddle platform. The unit can be fully branded for the retail customer. Doodle is currently deployed at Morrison’s, B&Q, Debenhams and at independent Doddle locations in malls.
  11. Microsoft’s announcements with Walgreens and Kroger are significant (and Albertsons a few days later) were significant in their battle with AWS. Among competitors Microsoft’s Azure and Google seem to be most aggressive in retail and this battle will only continue to grow.
  12. NCR Order Aggregator for Delivery Services. One of the biggest issues restaurants are facing right now is the problem of separate tablets and lack of integration of delivery services like Uber Eats, Delivery Dudes, GrubHub, etc. In most cases there is no integration with POS and order systems at the local restaurant causing chaos and dely. NCR’s Order Aggregator does this. In our discussion with hospitality CIO’s this is their number one ask of their POS provider and some have suggested the pain point is so severe they would replace their entire POS system to attain this.
  13.  The >$100b Divorce. The impact of Jeff and MacKenzie Bezos’ divorce is a big unknown in what it will mean for the management and strategic direction of Amazon. Amazon has such a huge influence on retail so while no one likes to talk about the dissolution of a marriage, we would be remiss to not mention it here.
  14. Finally, RetailROI’s SuperSaturday celebrated its 10th Anniversary with close to 270 in attendance and almost $400k raised for helping vulnerable children worldwide. The analyst day, held annually the Saturday before the expo opens was mixed with a view of where RetailROI has helped over 226,000 children in 24 counties, building 19 schools, 21 computer labs and many other projects, mixed in with some of the best technology and business presentations for all of the week.

Next up is ShopTalk. Look forward to seeing you there.