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I’ve been attending the NRF Big Show for more than 15 years. One of my favorite things about the event is reconnecting with colleagues in the industry. At this year’s event, which just wrapped up Tuesday, I spoke with Kasey Lobaugh, Chief Innovation Officer of Retail and Distribution at Deloitte Consulting.

Kasey is supremely knowledgeable. He’s been with Deloitte for more than 20 years, working with retailers to drive strategic perspectives and organizational change. He consults with clients to consider the implications of the changing competitive landscape and changing consumer shopping behaviors. Finally, he focuses on broad business-based strategy that enables innovative customer experiences, operational scalability and provide return-on-investment.

Here’s a snapshot of our discussion.

Rob: We just came off a very strong holiday season. What are you seeing and hearing around holiday performance this year?

Kasey: It’s the strongest holiday we’ve had in some time. We see retail sales growing at about 4.9 percent which is really good. However, it’s not even. It’s not across the board. You have to look at it this way – The market is growing at five percent. If you’re growing at less than five percent, you’re losing share. Many people still celebrate one and two percent growth, but at the end of the day you’ve got to think about it in terms of the long term position – market share in retail. I see a lot of retailers taking the victory lap, but I’m not sure I’d be prepared to take a victory lap yet. It’s certainly good that the market is stronger but at the same time, five percent is the benchmark.

RG: So it’s a zero sum game. If you’re not winning, you’re losing. We just came out of a three- hour meeting with the NRF digital council, 75 of the brightest minds in digital commerce. What was your key takeaway?

KL: Well first of all, the energy was good. Sometimes when retail is not doing well, that’s not the case. Second thing is there’s a lot of talk around emerging technologies and how they might manifest themselves and man, this group had a lot of good insights about how we have to think about things like Blockchain. We also had a good conversation around voice and how we have to think about voice. Forrester shared some great data about voice adoption that gave us a good indication of adoption and also a filter for how real it is.

RG: What are you thinking about for 2018? What should retailers be thinking about?

KL: Well we have a research report coming out in March called the “Great Retail Bifurcation” and we’ll look at retail through the lens of income inequality, and how different income cohorts are different. What we’re finding is something that’s really surprising. That is, between 2007 and 2015, over 100 % of the top income gains went to the top 20%. That means than 80% of the population is either as good or worse off than they were before. When we take that over to retail, we see that, correspondingly, off-price is going well and luxury is doing well. So this idea that there’s a retail apocalypse actually isn’t true. Now, there is certainly weakness – we call it weakness in the middle – and our report tears into this idea that there’s strength at the ends of the spectrum but there’s a reason, and it has to do with the economics of the consumer and the pressure that they’re under, or the freedom that they’re under if they’re on the higher end of the spectrum.

RG: So coming out of that research, something I’m super passionate about which is a report that Salesforce and Deloitte are collaborating on around customer experience. I know lots of people say “wait, haven’t we talked about customer experience forever?” What’s different now? What’s prompted us to look at this again?

KL: It’s a great question – why is customer experience important now? If you talk to a retail CEO, they’d say there’s always been a battle for the customer. Customer experience has always mattered. If you’re not relevant in retail, you’re dead, so we’re constantly having to think about that. But the difference here is fragmentation in the industry, and when you think about competition you’ve got to think about it through that lens. There was a time if you were a big retailer you had to compete against the big retailer across the street, but today we’ve got thousands of competitors. Competition is happening in a very different way. And when you’ve got lots of options you’ve got to compete on every dimension. So experience has always been important, but there’s an acceleration in the advancement of it, and that’s what’s changed. And of course technology plays a huge role.

RG: We’re finding there’s no agreement as to who actually owns the customer. And we’re also seeing a reboot on how to manage the customer data across all the various touchpoints. There’s going to be an increase of 50% in the demand for data scientists over next few years as retailers try to harness the customer information. Can you talk about the focus on customer data and the need to turn it into intelligence?

KL: How do you compete in a fragmented environment? You actually have to fragment yourself. That’s hard to get your head around but sometimes we’ll talk about things like personalization that says, “I want to talk to you differently than I want to talk to somebody else.” We take that idea further to say the way I present my offering to you whether it’s service or product assortment – we have to get more precise in order be differentiated. In order to do that we have to have really good data that allows us to go granular about who our customers are, what their needs are and how they’re going to drive their purchasing behaviors. That becomes the blood of an organization, but then you have to build the operating model that allows you differentiate and leverage that data. And we believe that’s the next horizon around retail – harness the data, and not just data you have but the data that either the customer is willing to give you or data from the ecosystem that you have access to, and then create an operating model that lets you create unique offerings that lets you go after increasingly smaller and smaller sets of customers.