If there is one true constant in retail, it’s that the industry is always changing. That means making predictions on the trends that will shape retail over the next 12 months is an especially daunting task.
But NRF’s Susan Reda has always been up to it. “I’m always going to be a student of this industry. I read and read and read — more than I can imagine sometimes — but that’s how you immerse yourself in this industry,” Reda, NRF’s vice president of education strategy, says on this week’s episode of NRF’s Retail Gets Real podcast.
“I start thinking about predictions in earnest in August, and I have a file that I’m putting stuff in and starting to process what the future looks.”
Did you miss us in NYC? Take a look at our NRF 2023: Retail's Big Show event recap.
Each year, Reda puts on her prognosticator hat and shares her retail predictions for the year ahead. For 2023, retail is all about evolution and adaptation.
“There is nothing rote about retail. Yes, we open the doors every day, and we welcome customers in, [but] they’re never the same customers, the merchandise is always changing, our approach to business strategy is always changing,” she says. “I think that if you got too comfortable and you thought you knew what retail was all about, wow, did 2022 shake you up! It is not what you thought it was.”
The current retail transformation has a lot to do with a new generation of consumers. “The customer is changing. Gen Z made us rethink a whole lot of things. It’s really interesting that that demographic and the one that will follow them, Gen A, they want to put their own creativity and stamp on things,” she says. “They’re very interesting shoppers because they’re obviously digital natives and into their smartphones, but at the same time, they are very interested in analog experiences.”
Read Reda’s list of 2023 retail predictions here and listen to the full podcast to hear more of her observations on Gen A shoppers, why retailers are opening smaller concept stores, how two years of supply chain disruptions actually led to delivery innovations, the importance of Web3 for retailers — and, yes, retail in the metaverse.
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Episode transcript, edited for clarity
Bill Thorne: Welcome to Retail Gets Real, where we hear from retail's most fascinating leaders about the industry that impacts everyone everywhere, every day. I'm Bill Thorne from the National Retail Federation, and today we're thrilled to welcome one of our favorite guests for one of our favorite episodes. Susan Reda, vice president of education strategy for NRF, is here to share her annual retail predictions. We're going to hear from Susan about what to expect from the world of retail in 2023, from the metaverse to the store to the supply chain. Susan Reda, thank you for joining Retail Gets Real.
Susan Reda: Thank you, Bill. It’s good to be here and it’s good to be back. It’s been a while.
Bill Thorne: It has been a while, and there’s been a lot going on.
Susan Reda: Sure.
Bill Thorne: You know, that’s one thing that we always talk about, when we talk about retail, is change. It’s the only true constant in retail.
Susan Reda: Absolutely right.
Bill Thorne: You can make the predictions, and predictions come true, then you need more predictions because things are going to change.
Susan Reda: For sure. I've made a lot of predictions over the years. Some right, some wrong, whatever, you’ve got to go with it.
Bill Thorne: Yeah. If they were always right, then there would be something wrong. <laugh>
Susan Reda: Correct. <laugh>
Bill Thorne: All right. Let's get started. It's a new year and we're just coming off another fabulous Retail's Big Show to kickstart the year of retail. Here you are back to share your top trends to watch for the year. So, before we get into your predictions, how did it feel to be back at the Javits?
Susan Reda: It felt great to be at Javits. Of course, we were there last year. We didn't have quite the same amount of folks as we had this year. It was absolutely — it was exhausting and energizing. I mean that in a great way. The people were upbeat. It just felt so right and good to be there.
Bill Thorne: Yeah, I think that this is going to go on for a long time. Where we look back just from a couple years ago and you have to stop and really think of what you were looking at, as it relates to the future, you had no idea. Everybody talked about the new normal, what's the new normal?
Susan Reda: Yeah.
Bill Thorne: And it seems to me that the new normal is getting back to normal, honestly. I mean, it's really refreshing when you get with people, people that you know, that you're in person, you're finally back together. And maybe in a year or so, maybe next year, it won't be as startling, almost, as it was the last couple times that we've tried to do the Big Show. This year being just fabulous because it really was like stepping back in time.
Susan Reda: Yeah. As we planned, there was always that feeling in your gut of like, ‘Oh, please let this be the one that that comes back for real,’ because we thought that was the case last year. Then, omicron took our legs out, but boy did it feel right.
Bill Thorne: So, for those who don't know, you've been publishing an annual predictions article for many years. First back when we published STORES Magazine, and now on the NRF blog. How do you do it?
Susan Reda: You know, it's funny—
Bill Thorne: I don't see a crystal ball in front of you.
Susan Reda: No, no crystal ball. Even after, dare I say, the decades of retail that I've been a part of.
Bill Thorne: You started when you were six.
Susan Reda: Yeah that, you're so kind, but the truth is, I think I'm always going to be a student of this industry. I read and read and read, more than I can imagine sometimes. I often think, if my boss Martine knew how many newsletters pop in my inbox, she'd be like, ‘Susan, get it done.’ But that's how you immerse yourself in this industry and hear other people's point of view, agree, disagree, and build. I start thinking about predictions in earnest in August, and I have a file, like everybody else, that I'm putting stuff in the inbox and starting to process what the future looks like.
Bill Thorne: Our regular listeners, they know, I love to talk about the metaverse primarily because I'm still trying to figure it out and figure out primarily how it's going to have an impact on me, on the future, and particularly how it's going to impact retail. That was something that you had thoughts on. So let's go ahead and start with the metaverse.
Susan Reda: Yes, I described my feelings on metaverse in 2023 as a hard maybe and I say that because I think we've seen tremendous strides. We've seen a lot of retailers dabble in the metaverse, but there are generations, more than one, that are just confounded by what this means. My overall point of view is that we're kind of in that, we're at that point where we're figuring it all out. I do think we're in the hibernation period and that spring is coming, that metaverse will again blossom and that we'll see all the things that it can do. I, long-term, feel like this is going to be a part of our business going forward, but I'm still processing exactly how that's going to be. Looking at some of the things that have happened recently, Nike has now filed trademarks so that consumers can create and sell Nike shoes and apparel virtually. J.P. Morgan opened the first virtual bank, Samsung recreated their New York City flagship and they're launching new products. There's a lot going on there. It's not a fad, but we're still getting past some of the technology bumps and trying to get people to learn it's not a fad because so many young people have embraced this, but it's not going to replace physical retail.
Bill Thorne: Yeah.
Susan Reda: It's just another piece of how we engage with brands and retailers. It will be right for some and not right for others, but it's still a part of retail.
Bill Thorne: One of the things I would really like to do, and nobody's done it yet that I'm aware of, and it would take some time to do some research, but go back in time to what, 20, 25 years ago at the start of the internet and the worldwide web and listen to how people viewed that as it relates to retail. How it was going to impact retail.
Susan Reda: Yeah.
Bill Thorne: The first on the scene was Amazon selling books on the world wide web. I don't know that people really, they were like, ‘Well, that's interesting, but I don't know how that's going to really develop.’ Or even if it's a real thing. I mean, people are really going to buy online?
Susan Reda: Yeah.
Bill Thorne: I feel like we're at the same place with the metaverse, except that people having had that experience with the world wide web, they're not waiting. It's like, I don't know if it's going to work or not, but we're going to invest, we're going to get into it and we're going to be a part of it. If it doesn't, fine. If it does, we're out in front.
Susan Reda: Isn't that really the smart way to think about metaverse?
Bill Thorne: Absolutely.
Susan Reda: Because it allows you brand exposure, which is something that's super important. If keeping your brand in front of the consumer is a number one, then it allows you to engage differently with the customer. Again, this is something we want, we want to try out new ways to spark a sale, spark engagement, spark loyalty. Let's engage differently through the metaverse and then it will eventually give you a level of personalization—
Bill Thorne: Yeah.
Susan Reda: That we don't have in other areas of our business. So you have to keep experimenting, you have to keep trying. I think that we just came out of the gate, we came out really fast last year.
Bill Thorne: Right.
Susan Reda: Everything was metaverse and Meta, Facebook changed to Meta. Now we need to, we're just kind of watching it a little bit. It is that winter.
Bill Thorne: Yeah.
Susan Reda: But it will bloom.
Bill Thorne: Keeping with the tech of the future theme, you also write about Web3 and how it's impacting retailers. So what do you see happening there this year?
Susan Reda: It's funny, thinking about all of that you just said, Web3 is the latest iteration of world wide web, and quite honestly, it is a must for businesses.
Bill Thorne: Yeah.
Susan Reda: If you are dabbling in the metaverse, great, dabble, but you better know what's going on in Web3 because that is really important. That's the next game changer. I really believe that. It delivers a more immersive experience, and the consumer has slowly but surely wanted that. Every time we've seen improvements on apps and websites that give us a more immersive experience, we're energized by that, we're jazzed by that. Think about the first time you were able to rotate the product and it was like, ‘Woo! Look at that.’
Bill Thorne: Yes, truly.
Susan Reda: I think it's a more immersive interaction. I think Web3 is going to make things even more accessible to consumers. Assuming that with Web3, we're going to have access to stores in other countries. I believe that the consumer right now wants to get out, wants to get back into the mall, into the physical stores, but we can't all go to Italy to be in the Versace store. <laugh>
Bill Thorne: No.
Susan Reda: But using Web3, we'll be able to do that. We'll be able to walk through those doors. We'll be able to interact with associates there. We'll be able to make a purchase and then it will come to us. I mean, that kind of accessibility is tremendous and game changing. I think that's really important for us. Then I think, again, it's very efficient. Web3 will be almost as seamless, if not as seamless as any app. It's coming and businesses just have to be prepared. They absolutely have to be prepared.
Bill Thorne: It's interesting to me, again, this is a little back to metaverse, just a teeny little back to metaverse, which is, but what I'm thinking of — the Web3. Generationally, I think metaverse to me is like the Wild West. I'm trying to get my head around it and actually I've raised it with our interns at one meeting. The reaction to it was very interesting. They're all very intrigued by it. But even one of them said, ‘I think it's a bit dystopian.’
Susan Reda: Mm-hmm. <affirmative>
Bill Thorne: I found that very interesting. But how we're going to get beyond that to where people embrace it and feel okay with it. Web3 is like an extension of what we know.
Susan Reda: Yes.
Bill Thorne: It's like the flat-screen TV. It's like the pixels as opposed to the tubes. You're getting something that enhances something that you're already comfortable with. So generationally, it’s more easy to embrace because you understand what you're getting, why you're getting it and how you're getting it.
Susan Reda: Yeah. You know, what's interesting is, and I'm going to tip my hand to one of the other predictions here, which was to pay close attention to the Gen A, Generation Alpha as their big name is, or Gen A <laugh> for short. That's the generation that's really young right now, but coming up. Think about this, I actually know more than one family who have 8-, 9-, 10-year-old children for whom the toy they wanted this Christmas was Oculus.
Bill Thorne: Hmm.
Susan Reda: Oculus obviously being that virtual reality headset.
Bill Thorne: Yeah, yep.
Susan Reda: They want that because that's where they're playing online in virtual reality.
Bill Thorne: Yeah.
Susan Reda: If they're at 10, 11 years old using that device, how will that shape retail in the future?
Bill Thorne: Yeah.
Susan Reda: I dare say it's going to be really different and they're really comfortable with it. Again, like you, I have put on that headset and I've had that moment of like, ‘Woohoo, I'm not sure this is for me.’ But I still want to learn about it. When I see them not just playing, but thinking about the next step beyond playing, it's shopping, it's spending money in that environment.
Bill Thorne: Yeah. It's so funny that you mentioned that, Susan. Because I did notice you, I'm one of those people that still goes to Facebook, but a lot of people were posting.
Susan Reda: Yeah.
Bill Thorne: I saw a number of people posting at Christmastime of the kids wearing the Oculus. I'm like, seem awful young for that, but maybe not.
Susan Reda: Right? Obviously you don't need to have a headset to be part of virtual reality and you could use your PC to do it. That's a myth that is out there. Like, ‘Well, I can't do metaverse because I don't have ...’ No, you can, you can go check it out. But young people want that full experience. I always think of that commercial of the father playing tennis and then turns to his wife and his daughter and they're like, ‘Oh God, dad.’ You know, ‘Did you see that shot?’ <laugh>
Bill Thorne: <Laugh>
Susan Reda: I can't even imagine.
Bill Thorne: Well, I was talking to somebody the other day, I remember our first video game was Pong.
Susan Reda: Yes.
Bill Thorne: It was a Magnavox product that my dad got and how challenging that was. We had people come over just to play that. It's amazing. Anyway, so is it — ‘Yep. Bill's old.’ <laugh> Going back to the store.
Susan Reda: <Laugh> Bill and Susan are both old, but that's OK, because we're informed.
Bill Thorne: Yes. We're informed for sure. Going back to the store, you write about more retailers opening smaller footprint stores. Now, why do you think this is going to continue into 2023?
Susan Reda: I think it's retail evolving. I think it's the consumer wanting to come back to retail but having a lot on their plate. They're looking for different experiences. Smaller can be very smart in some ways because on the business side it's lower rents, it's fewer employees, it's less inventory on hand. Those things, of course we understand as business strategies that are good. But also, when I think about it, it gives them an opportunity to cater to a customer more specifically, to cater to an area of the country, a demographic. I'm getting at thinking of Bed Bath and Beyond, who years ago opened smaller stores near college campuses.
Bill Thorne: Mm-hmm.
Susan Reda: Stocked with all of the things that those students needed. But we're seeing it happen, just recently I read about Walmart opening smaller stores. They're calling it the General Store, I think, the General Store by Walmart. They're partnering with a company that does cabin retreats, they're called Getaway. They put these General Stores near the areas where these cabins are and people who need the essentials can go to the General Store. It's so nostalgic, but it's so fitting.
But we're also seeing smaller retailers who had big stores a la Petco, Sephora, partnering with, in the case of Petco, they're partnering with Lowe's, Sephora's partnering with Kohl's, to have a smaller footprint in those big stores and cater to a customer who is making a one-stop shop. ‘I've got to go to Kohl's, I'm going to do X, Y and Z. Sephora's here, bingo. I get to pick up the things I needed from Sephora.’ But the list goes on. Barnes and Noble is doing smaller stores and Target, of course, has been doing it for a while. DSW is trying it. We've seen Best Buy trying something new in the North Carolina area, where it's more like a small showroom and then they'll ship it to you. I just think there's a lot to be said for smaller. Macy's has the Market, Bloomie’s with this, the list just keeps growing, lot of energy around getting the consumer in and out quickly, giving her a more edited assortment because we've given them everything they can want online. Maybe it's more fun to visit a smaller store, closer to home and keep seeing new items.
Bill Thorne: We always heard, this was 2017 and the retail apocalypse blah, blah, blah, and it was blah blah blah. But at the same time, there was some truth to the fact that we've got too much square footage in terms of retail per customer, per shopper. It seems to me that everybody acknowledged that and then along came the pandemic and really gave retailers an opportunity to reassess their footprint, where they were, what they were doing and how they were doing it. To maybe downsize, to say, ‘we don't need that giant store, so we're going to go ahead, close that, but we're not leaving, we're not going to give up a market share. We're just going to open something smaller, something more efficient.’ That may have been a catalyst, but I think they were heading that way anyway. Walmart has tried the urban stores, they've tried markets, but it's really finding the sweet spot with the consumer and it's where they want to shop, when they want to shop, how they want to shop, what they want to buy, and the price that they want to pay. These retailers are going to find that.
Susan Reda: Yeah, I think you hit the nail on the head. It's about understanding who your consumer is and what they want, but they want options. This is one of those options and they're embracing it.
Bill Thorne: Yep. Another topic I know is on the minds of a lot of retailers and the consumer is supply chain and all the challenges that we've seen during the pandemic, after, as we were coming out of the pandemic, 2023, same problems.
Susan Reda: Well, it has been a challenging two years for the supply chain businesses, that whole realm. But I dare say we've gotten a whole lot better at handling challenges. So yes, there are more to come, but I think that they've learned to flex. I think that there's better technology to help us understand all aspects of transportation, logistics, inventory management, and it's always improving. I think that the sun will rise <laugh> for supply chain. I really do. I mean, looking ahead to 2023, we're still talking about cost containment. It's an important topic. Inflation hit us hard there. There was a softening of demand. There was all sorts of things that affected that supply chain. But we're also seeing, and this is something that excites me, because the supply chain took it on the chin with all of the geopolitical unrest, we're seeing some global supply chain rebalancing. There is talk of nearshoring, which seems to come up. You and I have heard it, every three or five—
Bill Thorne: I hadn't heard that in a while. When you said that, I was like, ‘Whoa.’
Susan Reda: <Laugh> We're coming back. But a lot of direct-to-consumer brands, that are now starting their businesses, are trying to start them close at home. So that will be an interesting trend to watch. If you can do things closer to home, maybe you can cut out some of the cost on the logistics side.
Bill Thorne: Sure.
Susan Reda: There could be silver linings. Is it more expensive to do things in the U.S.? Typically, yes. But is there a balancing there that we can get to? There's a lot of talk about that. We're continuing to see energy around robotics and drones. I have been talking about drones for 10 years now, and everybody looks at me and goes— <laugh>. But you know what, drones are going to happen. Our good friends at Walmart are using drones and they're expanding their footprint. How frigging cool is that when the drone appears and down comes the thing that you needed most? I find it absolutely mind boggling, fun and energizing at the same time. It's all good. Robotics are changing the way we operate, certainly in the DC, but can make a big difference in some of the in-store activities. Let's keep watching robotics. I think we're looking at more sustainable logistics. There's a focus there, there always is on how sustainability is going to impact the retail space. But it is so closely woven with the supply chain business, supply chain and sustainability are close partners. I think we'll see more progress there as well.
Bill Thorne: A couple of weeks ago I was out in Los Angeles to watch my Georgia Bulldogs win the national championship. Just had to throw that in there.
Susan Reda: Well done. <laugh>
Bill Thorne: Thank you. The one thing that I was excited about was not once, not twice, but probably half a dozen times I saw the little robot carrier cart things going down the street. It's like I've seen it at the Big Show. I've seen it displayed.
Susan Reda: Yes.
Bill Thorne: I've seen articles about it and news reports, but I've never seen it in action.
Susan Reda: Mm-hmm. <affirmative>
Bill Thorne: With my friends, I said, ‘Look and remember this. This is the future.’ It is now because I've been waiting to see that in reality on something other than a trial at a college campus.
Susan Reda: Right.
Bill Thorne: There it was on Sunset Boulevard, making its way down the street. It was unbelievable. My friends who'd never seen it before—
Susan Reda: That is cool.
Bill Thorne: Were just blown away. I mean you wouldn't believe the number of pictures that were taken of those things. It would be like we saw one, like we were never going to see another one again in the rest of our lives. Then we'd see another one, more pictures, by the fourth one it was like, ‘Oh, isn't that cute?’ <laugh>
Susan Reda: There it is again.
Bill Thorne: Yeah, exactly. <laugh> They're everywhere. All right. I know we're running out of time, but what excites you most about the future of this great industry known as retail?
Susan Reda: I think it's, the word you used when we started this discussion is endless change. There is nothing rote about retail. Yes, we open the doors every day and we welcome customers in. They're never the same customers. The merchandise is always changing. Our approach to business strategy is always changing. I think it's change. I think that if you got too comfortable and you thought you knew what retail was all about, wow did 2022 shake you up.
Bill Thorne: Yeah.
Susan Reda: It is not what you thought it was. The customer is changing. Gen Z has made us rethink a whole lot of things. I think it's really interesting that that demographic and the one that will follow them, Gen A, they want to put their own creativity and stamp on things. They're very interesting shoppers because obviously digital natives and Gen A.
Bill Thorne: Yeah.
Susan Reda: Gen A born into smartphones — they don't know life without smartphones. But at the same time, they are very interested in analog experiences. They may not buy lots of magazines, but they are interested in zines.
Bill Thorne: Oh yeah.
Susan Reda: So those magazines being something that's very specific to them. They acknowledge that social media, while they love it, they acknowledge that it presents mental health challenges for them.
Bill Thorne: Yeah.
Susan Reda: They're looking for ways to step back and you know what? We're seeing the return of a flip phone, this nostalgic other technology that we have moved past, but they didn't experience that. And so, they're kind of curious about it. It'll be really interesting to see where this next generation takes retail. I think it's going to be a hell of a ride. But I think again, it's just going to challenge us every step of the way to change and to rethink.
Bill Thorne: It's funny, you made me think of something. When I bought my first car, I did not get automatic transmission. I just got a stick. I brought it home and I showed my mom and dad, and my mother was just astounded. She goes, ‘Why in the world did you not get automatic transmission?’ I said, ‘Well, I like using the stick.’ She goes, ‘I cried the first time I got an automatic transmission car. It was just so revolutionary. I mean, it was just phenomenal. And now you want to drive a stick?’ So, I only say that because you know what was and what is, always goes back to what was and this fascination. I didn't know life before automatic transmissions, and I just thought it was fun to drive a stick. Flip phones, please.
Susan Reda: I know, but they're coming. Have you followed on the fashion side? Everything slash core, cottage core and I saw macrame core. Young people are doing macrame and knitting and making their own clothes.
Bill Thorne: <Laugh>
Susan Reda: And cutting up their t-shirts to stitch them together and making—
Bill Thorne: Is tie-dye back? Do you remember tie-dye?
Susan Reda: I, of course, remember tie-dye. <laugh> I hope it's not back.
Bill Thorne: <Laugh>
Susan Reda: Again, who knows.
Bill Thorne: We use to tie-dye everything. And then it's like, really? Now I see people in tie-dye, I think, that's really cool. Any who, as you know, we have a lot of listeners who are students and interested in retail and interested in a career in retail. You've been around retail for a few years. What is your best career advice?
Susan Reda: Oh boy. I think it's to just constantly be curious. Stay curious and keep asking questions about everything you see. No question is stupid. I've asked some that may be bordering on stupid, but you know what? I've always learned from it. I think be curious, be informed. Then, I throw in, be nice and be humble. Because people like nice people and the more humble you are, the more you learn.
Bill Thorne: We were talking about that last night at dinner. I went with my Foundation team and one of the things that, I don't know who said it, but they said people won't remember who you are, but they will always remember how you treated them, basically.
Susan Reda: Yep.
Bill Thorne: Unfortunately, Susan, we are out of time, but you can find Susan's full article outlining all of her predictions in her post, “10 retail predictions for 2023”, on nrf.com. Susan Reda, it’s always, always, always a pleasure talking with you.
Susan Reda: It's so fun for me, Bill. Thank you. This was really good.
Bill Thorne: And thank you all for joining us for another episode of Retail Gets Real. You can find more information about this episode at retailgetsreal.com. I'm Bill Thorne, this is Retail Gets Real. Thanks for listening and until next time.
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