Exclusive Q&A: EY Shares Insights on Personalization, Uncertainty, Sustainability and the Last Mile

Retail Leader sat down with Tony Ward, EY’s U.S. consumer and retail principal, at NRF 2023 to talk about the state of retail in the year ahead.
Tony Ward
  • Retail Leader sat down with Tony Ward, U.S. consumer and retail principal at Ernst & Young. 
  • Ward shared thoughts on the state of the retail industry, including on hot topics like sustainability, the supply chain and personalization. 
  • The conversation took place at NRF 2023: Retail’s Big Show in New York City, which this year saw more than 1,000 exhibitors. 

Retail Leader (RL): NRF feels back in a big way this year with a lot of excitement across sectors of the industry. What are you seeing at the show? 

Tony Ward: I love seeing the enthusiasm. I love seeing the number of people, but the stories are very similar from all the different vendors and providers here. Huge amounts around AI (artificial intelligence), and the use of AI across the enterprise. Huge amounts around personalization — how to use data, how to personalize it, how to make it more effective and efficient. I think the enablement of the employees in the storefront as well as throughout the enterprise, whether it's the back office, through customer service, through the supply chain … enabling the employees to be more interactive and be more effective and efficient.

RL: You mention personalization, and we’re seeing a lot of that here at NRF. Retailers are trying to take in data about customers to personalize both their e-commerce and brick-and-mortar experiences for consumers. What trends are you seeing in the industry related to personalization? 

Ward: I think it's taking it to the next level. One of the things about personalization is to know what [consumers] historically bought and be able to tie that to them as an individual, tying it to some kind of loyalty program so they can create some stickiness. More importantly, taking that data and enriching it and trying to figure out what potentially they could buy based upon an understanding a little bit about their hobbies, their habits, their lifestyle, their family, their friends and all the other pieces. You don't get that through a normal loyalty program, but if you can take that data and enrich it through other parties — third parties for first-party data or second-party data —  then you can see a broader perspective. 

You can take that information, and instead of selling them the same stuff again and again, you can offer them new. Grow the basket. Whether it's an individual basket from a retailer perspective or from a big brand’s perspective, grow it on a distributor's side. 

RL: The reality is there’s a lot of excitement at NRF this year, but also a lot of caution around uncertainty. We’re hearing repeated concerns about things like economic uncertainty and supply chain issues. Where do you see these issues going the rest of the year and beyond? 
Ward: There's still a tremendous amount of economic uncertainty, but people are spending money across all the different categories. Not only high-value goods, but with fashion, retail, discount goods, groceries — they're still spending money. But you have to get your fair share. In order to get your fair share, you have to differentiate yourself from your competitors. 

Instead of just trying to spend more and more money to go blow it out there on every kind of market in the world, it all comes back to data. Using that data to segment your buyers, try to figure out what channels they're buying through, what kind of media they want to see and what offers they want to see —  more creative, targeted marketing. And all that comes back to using that data to create segmentation, create a more personalized experience in order to create a better marketing plan and then go use that in a more directed fashion. It saves money. It's more directed and gets to the consumers in a more experience-led fashion. It’s using an agile marketing approach. 

RL: And what about supply chain concerns? 

Ward: The supply chain is not getting fixed anytime soon. There are still issues with companies dealing with China, China labor laws and all the things that are going on overseas. Prices are going to continue to go up. Labor in the U.S. is continuing to rise — it's finally starting to steady. It’s still more than companies are used to paying for, so you've got to be more efficient and optimized than ever. Companies are taking a little bit more of a spin around, “Okay, if I've got to optimize my supply chain, I really should optimize my inventory, my working capital.” 

In order to do that, you’ve got to know where it's all at. So they look at putting in end-to-end visibility tools across the enterprise so that way they can understand where their inventory is. 

RL: We’re also seeing an increased focus on sustainability, which has been a trend for several years now. A lot of brands and retailers are talking about it as a differentiating factor, especially targeted toward the purpose-driven consumer.  There’s also a feeling that sustainable practices ultimately could cut costs in the long term as well. How important is sustainability right now and looking forward? 

Ward: It’s on their mind. They're trying to figure out how to do it without costing more. That's the challenge that they have. What companies are starting to do is use end-to-end visibility in order to create more optimal supply chains to take costs out and then using those funds to tie back into ESG (environmental, social and governance).

I know some clients are saying, “If you order your product today,  we can have it delivered tomorrow.” That's what we've always done. But if you don't need it tomorrow, then I can optimize better at getting it to you in two days, three days or four and it's more ESG-mindful. That's because you're not forcing a driver to go from the store to your house and back to the store. 

RL: We’re also seeing a lot of discussion and solutions around the last mile of delivery this year. 

Ward: I think the biggest trend that we're seeing is that people are less worried about last mile in speed and more about efficiency and cost. Because retailers and companies can't afford to just focus on speed anymore, they have to look at the bottom line. They have to look at what it means. They also have to look at the reverse part of it and make sure that it’s cost-effective as well. 

It was free returns for everybody. A lot of your retail and brands are now saying, “we'll do returns, but you're going to have to pay for it.” 

Questions and responses have been lightly edited by Retail Leader for clarity purposes.