Workday Podcast: NRF 2024 Recap

Jeremiah Barba: Even though the holiday decorations have come down at Macy's and Bloomingdale's, the mood is still festive here in chilly New York City as retail leaders from around the world converge for NRF Retail's Big Show at the Javits Convention Center. Welcome to this special edition of the Workday podcast. I'm your host, Jeremiah Barba, on-site here at Javits, and I'm excited to share some of the buzz from NRF 2024. A little bit later, I'm going to talk to one of Workday's retail leaders, so stay tuned for that. But first, let's take a few minutes to talk about the key themes of the week.

Retailers continue to look for better insights, and this is leading to more and more companies creating all-in-one solutions. One example I heard about this week is FDX, FedEx's new comprehensive commerce platform. And it's designed to help retailers bridge the gap between physical and digital. Second, innovation and an obsessive focus on the consumer is essential for survival. Innovation can't stop, but brands can't forget what builds trust with customers. Levi's president Michelle Gass shared that, for them, even as they have many opportunities to grow and expand through their family of brands, which includes Dockers and Beyond Yoga, she knows that they must keep their focus on the consumer and on the quality of the product, since that has made them the world's number one brand in jeans.

And third, and I'm sure you won't be shocked to hear this topic as a key theme, but with the power of AI increasing by the day, the future is really closer than we think. And in a conversation with Walmart President and CEO John Furner, Salesforce CEO Marc Benioff made a key point that, when you simplify things, technology in itself is not good or bad. It's how we use it. And the same can be said about AI. As Benioff said, "If AI is not making us better, then we've lost the plot."

But enough from me. I sat down with Jen Johnson, senior director of retail and hospitality industry marketing at Workday, to hear about her time here at NRF and what she thinks retailers will be focused on as they head into this year. So let's go over and hear from Jen now.

Jen, thank you so much for taking time at the end of the week to sit down and talk with me a little bit. First off, what have been some of your highlights of the week?

Jen Johnson: Sure, thanks. So for those that don't know, NRF is the Super Bowl of events for retailers. The exciting thing about being here is you're able to meet with anybody who's anybody in retail, getting the opportunity to meet with analysts, with partners, with prospects, with customers, as well as the opportunity to see what some of the innovations are in the retail space. And then just hearing what some of the challenges are that Workday can help to address for retail is really exciting.

Barba: That's great. So what is top of mind for retailers right now? I know it's a fast-changing industry. There are a lot of things that come at them quickly. What are they focused on right now?

Johnson: So I'd say there's probably four main areas that retailers are really focused on and struggling with this year. One of them is around disconnected and siloed systems and the data and insights that they are trying to derive from these systems. The ecosystem within retail is really large and vast, right? There's a lot of front-office operational systems that are very point-solutioned systems that they're using in purchasing to solve really critical business needs, and we see that these systems are very different based on the sub-industry or the type of customers that they're servicing. So getting those operational systems to interoperate with some of your back-office systems has really been a struggle. So it's really hard for retailers to make informed decisions, have that insight in real-time, and then be able to actually drive business outcomes.

The second thing that we've heard a lot about is around labor, the challenges that are impacting labor, both from a compliance standpoint and the ever-changing regulations that are different by region or geography, but also around optimizing and managing that labor and being sure that they're able to meet consumer demands. So scheduling and time tracking as well as managing compliance regulations have all been very top-of-mind.

The third thing I would say is around the evolution of the industry itself. There's a lot of convergence going on in this industry. There is customers that were primarily just retailers that are now introducing healthcare aspects or introducing food service aspects. So we're seeing a huge convergence in the industry overall. And customers and prospects in this industry are really struggling with these changing models, and how do they drive operational efficiencies and effectiveness as well as execute on these models? And that is both from a financial and planning standpoint, but also from a labor and workforce standpoint.

The fourth piece I would say is around cost. Profit margins in these industries are really tight, and retailers are always having to think about ways to drive new innovation, drive new offerings to their customers that can help increase profitability, as well as really control those margins and pull those levers where they can control those margins specifically around their labor. Retailers have very little control over their supply chain, so what they source their products at and what a customer may be willing to buy that product for. So we really see them really doubling down on their labor and that high-controllable spend that they have and figuring out ways that they can optimize that.

Barba: Very interesting. There's always so much change happening in retail, and retailers really have to innovate quickly to survive. So is there anything that has really shifted heading into 2024 besides what would typically be at the front of retailers' minds? Or is it pretty much the same? What's it looking like heading into this year?

Johnson: I think that technology and innovation is going to play an even greater role in the retail space. And retailers are obviously struggling with competing for share of wallet, new competitive threats in the market, and then the changing demographics and just the change of the consumer expectations. So how retailers are thinking about this business, how they're able to provide the products to the customers at the time that they're willing and able to spend on those products. So I think just the innovation around technology and how retailers are using technology to both solve the problem with the consumer, but solve the problem with the workforce, is really what's going to be changing this year.

Barba: Always a focus on how technology can make a difference, and doesn't look like that's changing anytime soon. Another one that I've heard for a few years and is still very important, but I wanted to ask you about frontline workers. The first impression when you go into a store, incredibly important aspect of the relationship to the customer, what is important for retailers to be thinking about in terms of frontline workers today? Is that similar? Has it changed? What are retailers thinking about when it comes to that first impression?

Johnson: What we see retailers focusing on today in regards to the frontline workforce is enhancing that engagement and experience that that frontline worker has through both their mobile device applications as well as the training and skilling that they are getting to continue to evolve that customer experience, and then also being able to allow those workers to have a say in when they work and how they work, allowing them to have a say on their availability and their preferences for the shifts that they're going to be working, as well as matching that to the demand that the consumers are driving and that the business needs. That's kind of where we see the frontline workforce focus this year.

Barba: We heard from P.F. Chang's, a Workday customer, earlier this week about how they're exploring the power of AI for scheduling. So let's talk a little bit about AI and, in particular, how it can be used for scheduling in the frontline workforce and how that could play out.

Johnson: So the theme here at NRF this year has definitely been around AI and machine learning. And a lot of vendors and partners like to talk about it from a technology perspective. What we really find valuable here at Workday is talking about the use cases that it drives, especially for our retail organizations. When it pertains to scheduling, we recently released to early adopters, and P.F. Chang's actually has implemented our labor demand forecasting tool, which is driven by AI and machine learning. And what it really does is allows the retailer to take a look at where their demand is coming from and aligning that with an optimized schedule to meet the demand of the consumer. And it's not only aligning with the demand of the consumer, but it's aligning with outside demands as well. So bringing in traffic data or weather data or other third-party data that could potentially impact your foot traffic in the store, and then optimizing that demand to generate an optimized schedule that meets the needs of the business as well as the needs of the consumer and the employee is really where we're seeing AI and ML come to life in retail.

Barba: That's great. It was interesting to hear about how it makes such a difference for both the employee and the company, so much upside of potential there. So as we head toward the end here, anything else that's been a key theme that you've heard this week that we might not have covered so far?

Johnson: So I talked a little bit about this at the beginning, but compliance is really a major theme that we're hearing this year. And it's not one that's super exciting, or we're not talking about new innovation and new technology, but there’s so many compliance regulations when it comes to retail and hospitality organizations, and it's not just around labor. It's around your supply chain and your inventory and your merchandise. It is around your food products if you're in a restaurant. And this is really something that retailers are struggling with. And again, I think this brings us back to the data piece and where you can have all of this information about the expiration dates on your food or compliance regulations that may be changing based on predictive scheduling in some of the different states here in the US. Or as retailers are looking to expand globally, there's different compliance and labor regulations from a global perspective.

And one thing that we heard a customer say this week is that the last thing you want is your store operations manager to be in charge of compliance. If these retailers and hospitality organizations are not compliant, there are a lot of fines and penalties and challenges that they will experience because of that. And not having a technology system that can help you mitigate that risk and remain compliant is a really big problem for retail and hospitality organizations. So I would say that's one thing that's more top of mind this year than I've heard in the past. And I think it's just the evolving and changing environment that we are in, both from a global perspective but also from an industry perspective. And investing in the right technology to help these organizations stay ahead of that compliance and mitigate those penalties and those risks is really top of mind.

Barba: Wonderful. Jen, thanks again for coming by here at the end of NRF 2024. It's been great to hear what you've learned, and excited to see how this year will play out for retailers.

Johnson: Thanks for having me.

Barba: That's a wrap on my time at NRF 2024 Retail's Big Show. I hope you enjoyed this special edition of the Workday podcast. Be sure to follow us wherever you're listening today. And remember, you can find our entire catalog at workday.com/podcasts. I'm your host, Jeremiah Barba, and I hope you have a great workday.