Outlooks on AI, Scalability at NRF 2024: Retail’s Big Show

This week’s NRF 2024: Retail’s Big Show in New York saw its fair share of chatter about AI and other technology at play within the industry as part of responding to ever-changing consumer needs. While the conference was peppered with celebrity appearances, including the likes of Drew Barrymore and Martha Stewart, there was also plenty to dish about technology’s role in making data more functional at scale across organizations.

Talking up their efforts in a fireside chat with Martine Reardon, CMO for the National Retail Federation (NRF), on product design innovation and accessibility, entrepreneur and actress Drew Barrymore discussed her collaboration with Shae Hong, CEO of Made By Gather, to develop the Beautiful brand of cookware and appliances.

“The way I live is about accessibility, affordability, and availability,” Barrymore said. Though she may live in the celebrity strata and wants to deliver aesthetically pleasing products, she said her work with Hong on Beautiful tries to appeal to consumers who must keep costs in mind. “If you can’t find that thing or run into that store now or easily get it on dot com -- I’m so cognizant of the way that people live with their paychecks and their decision-making and their prioritization of what it takes to live in this world.”

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Crunching Consumer Numbers

How consumers might spend in the coming year was the focus of a discussion moderated by Katherine Cullen, vice president of industry and consumer insights with the NRF. The session, held for reporters and analysts, on the consumer outlook for 2024 included Suzy Davidkhanian, vice president of content with Insider Intelligence; Jonathan Silver, CEO, Affinity Solutions; and Mark Mathews, executive director of research with the NRF.

Mathews said while the estimates for November retail sales were negative to just positive, “Our numbers came in at over 0.7% growth, month-over-month on a seasonally adjusted basis. So, a really, really robust number.” His further breakdown of the data showed December’s total retail sales grew 0.44%, month-over-month, he said. “Where we ended up was about 3.3% - 3.7% depending on how measure it for holiday sales.”

Growth between 3% and 4% for holiday 2023 might not sound profound, but Matthews explained that the prior year’s season included 3% inflation while this most recent holiday season saw no inflation. “So, 3% growth is almost equivalent to 7% growth last year,” he said, offering one way to interrupt results. “So, actually pretty robust.”

Silver said online shopping during the holidays was not only elevated around Cyber Monday but spread throughout the week. “Online sales, internet sales were up 25%, but the ratio of brick-and-mortar to online is still very much overwhelmingly brick-and-mortar,” he said. Silver also noted consumers tend to engage in a blend of online and offline shopping.

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Davidkhanian said there were a number of changes in e-tailing and physical retail that influenced the holiday season. “It feels like a long time ago, but it was 2023 when Amazon closed their stores down. Everybody knows they closed the Style [physical] store, which was a big deal,” she said. Amazon announced plans in 2022 to shutter its bookstores; closures eventually spread last year to other brick-and-mortar shops including some Amazon Go convenience stores. Shakeups in retailing also saw new players emerge in US digital space. “TikTok Shop in the US opened and a lot of CEOs changed hands, some bankruptcies, some renewed brands that came up,” Davidkhanian said. “All of that sort of lay the foundation of what was happening in 2023 that went into our holiday.”

New twists in technology seem to be brewing for the industry as well. AI in retail, often cited as a way to streamline operations and enhance efficiency, might be a way for retailers to reduce certain losses associated with product returns. “Using AI and a bunch of other tools to ensure that you are really giving the consumer what they need, and the right size at the right time, will really be something important in 2024,” she said.

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Digital Twins and Scalability

A separate discussion on PepsiCo’s use of digital twins with Jeremy Jarrett, CEO of Kinetic Vision, and Tarik Hammadou, senior developer relations manager with NVIDIA, was moderated by Karen Rhodes, distinguished technologist, US retail with Hewlett Packard Enterprise.

Jarrett said his company works with brands such as PepsiCo, assisting them with digital twins -- a means of testing or predicting the performance of a resource through the use of a virtual model. “Bringing in a new technology requires a lot of change that’s difficult to manage physically and with the IT infrastructure,” he said. Kinetic Vision helps brands such as PepsiCo optimize that process through digital technologies or to do virtual conditioning of new technologies such as artificial intelligence without interrupting flows on the work floor.

Jeremy Jarrett, Tarik Hammadou, and Karen Rhodes at NRF 2024. Photo by Joao-Pierre S. Ruth

Jarrett cited sci-fi thriller “Minority Report,” a Tom Cruise feature about predicting crime in a future filled with augmented reality and interactive sensors, to depict what may be in the works for retail. “There will be technologies like in ‘Minority Report’ where you’re using AR, VR to help augment the human workloads. Those are going to be a little further off.” There is also a lot of data flow and integration, he said, that happen behind the scenes that will prove these processes.

Communication augmentations, Jarrett said, will also prove to be important to retail and packaged goods. “Once those data integrations happen, now we’re going to be presenting very simple alerts for shift changes. We’re going to be presenting very simple information that a lot of people know,” he said, by putting the data into context that an associate, a leader, or a shift manager could follow.

Hammadou said while retail and consumer packaged goods are part of traditional industries, they could be transformed further with new technologies. “The question here is, ‘How can we revolutionize these industries by incorporating AI or enabling AI?’” he asked.

One of the key hurdles to clear, he said, is to address scalability. “Scalability is achieved by bringing three elements [together] and bridging the gap between IT, AI, and operations.” Another element is organization culture, Hammadou said, between IT teams and groups, AI teams, deep learning engineers, engineers building large language models, and operations. “How do you align your KPIs with technology and advanced AI?” he asked, highlighting the importance of efficiently translating KPIs to technology metrics. “Every single retailer around the world, consumer packaged goods, they need to map and strategically design and build technology to scale.”

Understanding technology, and the data that drives it, may be increasingly vital across entire organizations going forward. Fulfillment centers, especially in a distribution center, cannot regard technology as an opaque black box, Hammadou said because operating a fulfillment center is a dynamic process with change every week, every month, and every season. “That’s why the scalability of AI models is very important,” he said. “The design of your IT infrastructure needs to be built around how you are achieving that scalability.”