Leveraging technology to expand the retail experience

NRF 2022: IBM CEO Arvind Krishna on AI, supply chain and digital transformation

IBM Chairman and CEO Arvind Krishna took part in a lively conversation at the intersection of tech and retail at NRF 2022: Retail’s Big Show, sharing insight not only on the industry, but also about acceleration and change at his own company.

Krishna was joined by Jon Fortt, co-anchor of CNBC’s “TechCheck,” for the wide-ranging keynote discussion in the SAP Theatre, touching on topics such as inventory optimization, personalization, blockchain, digital currencies, artificial intelligence, supply chain, 10 years of digital transformation taking place in two, and the use of clean energy at IBM facilities.

Fortt began with curiosity about recently released retail numbers for December that could cause “raised eyebrows,” noting that consumers had likely moved their buying to the month prior. Krishna said it’s hard to make sense of numbers for a single month or even two, with the way shoppers have been stocking up amid uncertainty.

Big Show 2022
NRF 2022: Retail's Big Show is happening Jan. 16 – 18 in New York City. View the event recap.

Rather than “just in time,” it’s now “just in case,” Krishna said. As such, a longer view is important — and technology can help. That includes being able to extract what the real demand will be, and whether the correct supply chain is in place to drive fulfillment to react to that demand, even as the demand continues to change.

Keeping up with the changing consumer

This month, the IBM Institute for Business Value and NRF released a consumer study that confirmed the need for retailers to become more agile in integrating digital and in-store experiences. Nearly two-thirds (72%) of respondents use the store as all or part of their primary purchase method, and 27 percent say hybrid shopping — mixing physical and digital channels — is their method of choice (36 percent among Gen Z). Omnichannel efforts are as important as ever, and those without the correct data systems in place will be disadvantaged, Krishna said.

Also of note in the customer journey: Rather than the customer being loyal to the store, Krishna said, there’s been a shift to whether the store is loyal to the customer, creating an experience the customer enjoys.

The relationship has become more bidirectional, he said. “When you walk in, your whole perspective is, ‘Am I being treated well?’”

Committing to sustainability

Krishna also addressed sustainability, which has gone from being a “checkmark” to a real topic of conversation. That same IBM/NRF study found that 62 percent of respondents would be willing to change their purchasing habits to reduce environmental impact, up from 57 percent two years prior. In addition, half of respondents say they’re willing to pay a premium for sustainability, an average premium of 70 percent. That’s double the premium of 2020.

More consumer trends

Explore a new report from IBM and NRF about consumers’ attitudes around hybrid shopping, sustainability, and purpose-driven brands.

In late 2020, IBM made a hard commitment to using clean energy, with a goal of reaching 100 percent clean energy usage by 2030, Krishna said. The company will be at 65 percent clean energy usage by 2025. It’s an important effort for both customers and employees, he said.

“That seems really hard for you,” Fortt said. “Because if you don’t build the power plants, there are limits to exactly what you can do about the energy you consume … . How do you do it?”

“I ask you the flip side,” Krishna said. “Should we keep building coal-fired power plants?”

When the company looked into it, about 30 percent of its energy usage wasn’t necessary, so that was a start. Rather than converting energy, IBM began with, “Let’s just be much better in our footprint,” Krishna said. “I’m hoping that as people begin to push our policy, if we say we only want to use clean, that it’s motivation for our partners to produce more clean energy.”

The reaction has been positive so far, with partners finding motivation to make it happen. And that, he said, “is kind of how industry works.”

At NRF 2022: Retail’s Big Show, IBM CEO Arvind Krishna discusses IBM's commitment to using 100% clean energy in IBM facilities by 2030.

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