Tuesday, April 16, 2024

Building resilience in retail

By Google Cloud Director Retail & Consumer Sameer Dhingra.

Google Cloud Director Retail & Consumer Sameer Dhingra.
Google Cloud Director Retail & Consumer Sameer Dhingra.

The retail sector has undergone dramatic changes over the past 18 months, and the pandemic exposed the sector’s vulnerabilities. To weather future uncertainties, companies must be agile and prioritise digital resilience.

Google Cloud’s recent Retail Digital Pulse looked at the digital maturity across Australian retail and found the segment to be steadily advancing towards becoming more digitally resilient. The business sentiment is, however, still mixed and the market shows there is a gap between those who have embraced the change, and those lagging behind. The need to find different ways to serve customers and build resilience into entire business models has shifted the conversation around digital transformation – and, therefore, accelerated its imperative.

Among Australian respondents, almost a quarter (23.3%) said investment in digitalisation was driven by the desire to reduce costs and improve profitability, with 17.5% wanting to improve customer experience to drive revenue and/or increase KPI scores. Building customer data platforms, enhancing capabilities around marketing optimisation and the ability to drive personalisation are some priority use cases for Australian retailers.

While challenges remain around budgets, inability to harness customer/operational data and lack of digital transformation roadmaps, more than half (58.3%) of respondents are looking to Cloud Services providers for help with digitalisation. Advancing to the next stage of resilience will require retailers to take a digital approach, and implement a plan that focuses on five key areas; strategy, technology, people, data and automation. Let’s dive into two of the most important areas.

Becoming a customer-centric, data-driven retailer

Retail customers are shopping differently. With sudden lockdowns creating uncertainty for retail businesses, transactions are being influenced digitally. This means that access to analytics and the ability to understand customer behaviour across channels is even more important than ever.

While most retailers understand the importance of data, they struggle with the common challenge of gaining insights from data due to siloed tools and systems and large amounts of unstructured data sets. Retailers need to become customer-centric and data-driven by using data to get a clearer picture of the customer journey, predict marketing and business outcomes, and create more personalised experiences for their customers.

With 39.8% of Australian respondents leveraging technology for product discovery and search, JB Hi-Fi is one example of how personalisation can be a powerful driver of success. Previously, JB Hi-Fi’s buying team would manually recommend products to visitors — a time-consuming process that meant recommendations of three or four associated products represented only a fraction of the more than 50,000 products available on its website.

After deploying Recommendations AI, JB Hi-Fi found the average transaction value (ATV) for products recommended increased, when compared to manual processes. Furthermore, monthly average revenue from recommended products increased when compared to manually curated products, and the conversion rate for products offered on the JB Hi-Fi home page also improved.

The adoption of Recommendations AI has also given JB Hi-Fi the ability to give its customers a more personalised online experience matching it to the personalised, expert experience delivered to customers in-store.

Build cloud innovation into your strategy

Cloud isn’t just about technology; it’s a fundamentally new paradigm that places human creativity and ingenuity at the heart of the modern retail enterprise. It’s also about culture, coinnovating, and sharing a vision for the future. Particularly for retailers, cloud isn’t limited to isolated IT projects. To realise its full potential, cloud has to transform the retail value chain.

The opportunities are endless for retailers. Changes in consumer behaviour and expectations that were already disrupting retail have accelerated during the pandemic. For example, adoption of digital shopping has been accelerated by three to five years in several scenarios as consumers have embraced new online experiences and retailers have been quick to introduce new innovation in this space. Shoppers are also experimenting with new technologies including video, AR, social commerce, live events, etc. It is unlikely that consumers, having enjoyed new ways to shop, will return to previously held shopping habits and therefore retailers need to accelerate experience development to take advantage of this, and create a pathway for innovation.

The road to ongoing resilience for retail is expected to be lengthy. To emerge successfully from this disruption, retailers have to both survive short term road bumps while also investing in their business to become more nimble, and resilient in the longer term. Prioritising digital transformation and technology driven strategy is now more important than ever.

About Sameer Dhingra

Sameer Dhingra is Director of Retail and Consumer for Google Cloud, JAPAC. He leads the Google Cloud strategy, product solutions and go-to-market across JAPAC. At the intersection of consumer, technology and retail, Sameer works with top retailers and brands, helping them to scale, drive technology innovation, and accelerate digital transformation.

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