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01/20/2023

NRF Recap: Neiman Marcus, Kroger take the stage

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Neiman Marcus Group CEO Geoffrey van Raemdonck discusses store experiences at the annual NRF show.
Neiman Marcus Group CEO Geoffrey van Raemdonck discusses store experiences at the annual NRF show.

From curated design concepts to artificial intelligence (AI), Neiman Marcus Group and Kroger Co. are are tapping innovation to remove friction from the shopping experience.

The retailers shared their insights during NRF 2023: Retail's Big Show. Here is a recap:

*Immersive product discovery. Twenty of Neiman Marcus’ largest brands contribute to 50% of the luxury retailer’s total revenue. However, in the fall the luxury retailer added 200 new brands to expose customers to new products.

To streamline the shopping experience but still drive “discovery” among new merchandise, Neiman Marcus is using “immersive product experience” designs at store level. This includes developing temporary curated store designs that revolve around themed product assortments and designers.

“Instead of featuring overwhelming ‘endless aisles’ of merchandise, these creative, new settings are designed to inspire and drive [customers’] consideration to purchase,” Geoffroy van Raemdonck explained at NRF’s session, “Revolutionizing Luxury Experiences: A Conversation with Neiman Marcus Group CEO, Geoffrey van Raemdonck.”

“We can represent [brands] at the level and the standard of integrity that they have, but also introduce them to a customer they don’t have today,” he explained. “The end [goal] is to drive profitability.”

The initiative dovetails into a $200 million investment that Neiman Marcus is making in its stores over three years. “Pre-COVID, there was too much debt and we couldn’t invest in our business,” he explained. “Now we can, and it is making a difference in our customer experiences and relationships.”

*Digital simulation and AI. Kroger Co., the nation’s largest supermarket retailer, is leveraging AI and digital twin store simulation solutions to learn how to improve the checkout experience — before making capital investments at store-level.

“A digital twin is an electronic representation of something real,” Wesley Rhodes, Kroger Co.’s VP of technology transformation and R&D, explained at the “Kroger Transforms the Customer Store Experience with Simulation, Edge and AI” session during NRF.

“We wanted to understand the time and labor needed for customers to get out of the store,” he said. “Ultimately, the goal is to optimize the front of our stores, reduce friction for our customers and create a faster checkout process.”

The first step in Kroger’s project was to digitally simulate its self- and cashier-assisted checkout processes. A CAD model of a store enabled Kroger to create a digital twin of the retailer’s front-end environment. Meanwhile, AI sensors at the physical store recorded customer foot traffic and shopping patterns. This data was used to create avatars that simulated customers shopping in Kroger’s digital environment. The digital twin was then synchronized in real-time with a physical store environment.

The digital twin created a baseline of metrics including queue times, and enabled Kroger to digitally test various checkout configurations, among other processes. For example, one test revealed that there is an 80-second average checkout time using the company’s current front-end configuration (four self-checkout devices and four assisted cash lanes).

Using the digital twin, Kroger tested the impact of eliminating one cashier lane and adding two new self-checkout stations. On average, this new configuration could reduce checkout time by 27 seconds, according to a company video.

“We learned that we could address the labor shortage during peak hours with one less cashier. The digital twin gave us the confidence to add changes in physical store and operations efficiently despite labor shortage,” the video reported.

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