World events are accelerating change in the retail industry. As retailers operate through a pandemic, many are rethinking all aspects of their businesses to prepare for the new normal. Will consumers’ massive shift to online channels stick? If so, do existing investments in technology and IT infrastructure take into account what will be needed for retailers to successfully engage consumers?
Just as important, how can retailers identify cost efficiencies across their organizations while simultaneously doubling down on innovation?
No single source dependence
We’re seeing different sub-industries within retail deal with their own unique challenges. While fashion brands are determining how to move stale merchandise and get back to seasonal assortments, grocers are working to reinvent their supply chains for better demand forecasting and allocation.
Both are looking to diversify to avoid dependence on a single source, and all retailers with physical stores are focused on making shoppers feel safe coming back to stores.
As retailers work to recover revenue and attract new shoppers, they need to quickly drive costs out of the business. Cloud technologies will be the key enabler, whether that’s to reinvent legacy applications for new value, drive efficiencies into the supply chain, or enable differentiated customer experiences regardless of channel.
Cloud migration significantly cuts IT infrastructure costs for retailers, enabling them to reallocate those funds to experiments.
Pick up on insights
Retailers can then reinvest that newfound budget into new initiatives such as machine learning (ML) projects that identify, sometimes, counterintuitive insights about their business and shoppers that would otherwise remain undiscovered. This results not only in operational efficiencies, but also in uncovering new ways to delight shoppers based on new habits formed when restrictions were put in place due to the pandemic.
Because of the cloud’s agility, we’re seeing many projects that once took years to get done being accomplished in weeks, and those that took weeks now completed within days. For example, during the onset of COVID-19, AWS customers were able to set up call centers in less than two days for remote workers. That’s cloud agility in action.
In addition to important trends like working from home, here are just a few ways customers are innovating during these uncertain times as they accelerate the migration of core applications to the cloud:
Retailers are moving beyond traditional data analytics to apply machine learning to get previously unseen insights that help them respond to business trends in near real-time during the pandemic. Because our many of our ML services don’t require any machine learning experience, retailers are able to immediately train, test, learn, and deploy models quickly and experiment.
An industry that is benefiting from these insights is grocery. At the outset of the pandemic, grocers saw product shortages as consumers rushed to stock up on items like sanitizers and masks. As the supply chain begins to recalibrate, grocers now need better insights for SKU (stock keeping unit) rationalization, as well as demand forecasting and allocation.
Accelerated take up
Shoppers want as many contactless experiences as possible – from contactless mobile payments and cashier-less shopping to safe and easy curb-side pickup. Buy Online Pickup in Store (BOPIS) is rapidly moving toward a Buy Online, Pickup at Curb (BOPAC) model. For BOPAC to be successful, retailers must remove friction in the pickup experience.
Inside stores, retailers are using computer vision technology to better understand store traffic patterns and redesign store layouts to encourage social distancing. Being able to identify areas of shopper density enables retailers to redirect traffic patterns to adhere to social distancing guidelines without having store associates monitor and enforce distancing rules during their shifts to keep shoppers and associates safe.
As curbside pickup becomes an increasingly popular option for shoppers, stores are becoming micro-fulfillment centers. This creates new challenges and opportunities for retailers to adapt stores to help employees become more efficient in these shifting roles, including facilitating new tech-driven processes for multi-order picking.
It’s critical that retailers understand which stores have an item in stock and how many units are available in each location. When a retailer fails to understand inventory in real-time, the customer experience falls apart, placing customer trust and loyalty in jeopardy.
Computer vision and IoT sensors such as RFID are efficient ways for retailers to track what items are on store shelves at all times and what needs to be replenished so consumers are never disappointed with the click-and-collect experience.
Reinventing the retail store experience will take time. It will require looking at how computer vision, robotics, IoT, and other technologies can make stores safer and provide shoppers with a better experience.
It’s necessary for retailers to protect themselves from future unexpected events and disruptions by creating efficient ways to experiment and deploy new customer engagement approaches and internal operations.
- Tom Litchford is Head of Strategy at AWS Retail.