The 2018 RILA Retail Supply Chain Conference was a great opportunity to hear what retail leaders are focused on, and excited about, as we chart the future of our evolving industry.

As we gathered in Phoenix, Ariz. for this year’s event, my JDA Software colleague Wayne Usie and I were privileged to be strategic advisors to the RILA Supply Chain Leaders Council, the bi-annual meeting of C-level and EVP-level supply chain officers.

We discussed a lot of the questions you’ve probably read about in headlines over the last year or so: How can we invest in innovative warehouse technologies while minimizing complexity and cost? How will we overcome trucking capacity issues and driver shortages? What are the cost and logistics challenges around same-day fulfillment? – and a lot more.

Challenges Ahead in 2018

That dialogue set the tone for the conference in some key ways. In the speaker sessions that followed, we heard how retailers are breaking down silos within organizations, how automation can bring higher levels of efficiency to distribution centers and how new innovations in machine learning and artificial intelligence could revolutionize the retail supply chain.

Here are some of the challenges we know are ahead for retailers in 2018:

  • Transportation challenges remain a major concern, with the mandate for electronic logging devices (ELD) in the United States and a burgeoning trucking shortage causing companies to seek out new opportunities in their transportation routes
  • Supply chain complexity is impacting many retailers as the market continues to reward agility and visibility – advantages that interconnected, non-siloed organizations have gained by investing in new technology
  • A decline in the accessible labor pool has companies exploring ways to invest in automation and robotics. Low unemployment and an aging population are likely to remain issues in 2018
  • Artificial intelligence and machine learning were also highly discussed – but many retailers are still trying to understand how to best leverage these innovations before they get fully on board for adoption.
  • Likewise, blockchain technology – the basis of cryptocurrencies like Bitcoin – was talked about, but it’s still in its infancy.

One of the most interesting presentations came from Doug Stephens, president and founder of Retail Prophet, whose stats underscored the impact Amazon is having on households’ online spending: In 2017, according to Stephens, 60 cents of every dollar spent in online went to Amazon, while 82 percent of households with income over $110,000 have an Amazon Prime membership.

As Amazon and other mega-marketplaces like Alibaba and continue to grow, Stephens predicted that by 2020 those marketplaces will account for 40 percent of all ecommerce.

The challenge for retailers, Stephens told us, is not getting people to buy things, but getting the things people buy delivered to them sooner – something that’s going to become more challenging as Amazon and other marketplace providers become omnipresent, thanks to digital assistants and internet-of-things connected devices.

For retailers who want to stay competitive, the message Stephens (and others) presented was clear: Focus on the customer journey, and find ways to be unique and surprising.

Building the New Customer Experience

The good news for retail is that brands are rising to this challenge, building immersive customer journey stories and deeper engagements. And they’re changing their supply chains to have less inventory at the point of distribution, focusing more on inspiration – more like showrooms.

Those environments can provide new opportunities for personalization and high-touch service. But retailers will also face the challenge of not just making those journeys result in sales, but making them repeatable. Conversion is no longer the key metric to measure; in the future, success will rely on how well stores drive customer experience as measured by new, customer-centric metrics like dwell time, product interaction and favorites scoring.

We all know that macro-disruptive forces and new technologies are driving rapid evolution in retail. Retailers are recognizing the impacts of these changes and making the changes in their supply chain that will give them a competitive edge.

That transformation is an ongoing process, and we can’t yet know just where the journey will take us. RILA’s Retail Supply Chain Conference 2018 showed us how winning retailers are shaping their digital transformations and creating new opportunities for success. It’s going to be an exciting year!