Retailers have been told for years that they need to embrace new technologies, trends and imperatives such as online shopping, mobile apps and omnichannel. Retailers adopted many of these technologies in an effort to grow and stabilize their business. However, they soon realized that there were more options available.
The pandemic, rising social movements, and harsher weather followed. These disruptions were not all bad for retailers, but some retailers were better prepared than others. This revealed a universal truth: adaptability is the key to survival and growth.
The retail environment today presents both new and existing challenges to specialty and department store merchants. 88% of purchases were made in a physical store. It’s now closer to 59% with the rest done online or via other omni-channels.
It can feel like ABP is the mantra of all times: Always be pivoting.
The key question isn’t how to maintain momentum and agility, but how to do this without draining your workforce, inventory, or profits. Now, the pivot is a fact. It is what you do that matters.
It is important to adapt quickly and have the right technology in place that allows for seamless scaling.
They must be able leverage real-time insight and improve customer experiences quickly, online and offline (not to mention the growing hybridization of AR and VR). To create engaging customer and associate experiences, they need to modernize their stores. They must improve operations to allow rapid scaling from full operations to digital-only offerings.
Google Cloud has three essential innovations to help retailers reach these goals: Demand forecasting that uses the power of data analysis and artificial intelligence; enhanced product Discovery to increase conversion across channels; and tools to help create the modern shop experience.
These are just a few of the ways that we can help you pivot.
Pivot point 1 – Harnessing AI and data for demand forecasting using Vertex AI
When it comes to building organizational flexibility, one of the biggest challenges retailers face is managing inventory and the supply chains.
The pandemic has created a global supply chain crisis that is causing unprecedented demand and logistical problems. This crisis has made it more difficult for retailers to assess demand and availability. Even in normal times, inventory mismanagement can lead to a trillion-dollar problem according IHL Group. This is because it costs $634 billion each year in lost sales, and overstocks cost $472 billion in lost revenue due to markdowns.
Optimizing your supply chain can also lead to higher profits. McKinsey estimates that a 10%-20% improvement in the accuracy of retail supply chain forecasting will result in a 5% decrease in inventory costs and a 2 to 3% increase revenue.
Some of the problems associated with demand forecasting are:
- Low accuracy can lead to excessive inventory and missed sales. This puts pressure on fragile supply chains.
- Real drivers of product demand cannot be included because it is difficult to model large datasets using traditional methods.
- Poor accuracy in new product launches, and products with low or intermittent demand.
- Complex models can be difficult to understand and lead to poor product allocations and low returns on investments on promotions.
- Different departments may use different methods which can lead to miscommunications and costly reconciliation mistakes.
AI-based demand forecasting techniques are possible. VertexAI Forecast helps retailers maintain greater inventory flexibility through the incorporation of machine learning into existing systems. Vertex AI and machine learning-based forecasting models such as Vertex AI can process large amounts of disparate data and drive analytics to automatically adjust for new information.
These machine learning models allow retailers to not only use historical sales data but also to access close-to-real-time data like marketing campaigns and web actions such as a customer clicking on the “add to Cart” button on a site, local weather forecasts, etc.
Pivot point 2 – Enhanced product discovery via AI-powered search, and recommendations
Customers will look elsewhere if they can’t find the product they need online or in-store. This is a simple but powerful statement that has profound implications.
The research by The Harris Poll, and Google Cloud found that 95% of search results received by consumers were not relevant to their searches over a period of six months. A majority of search results that are not relevant to their search query have been rejected by 85% of consumers. 74% said they would avoid websites they had encountered problems with in the past.
Search abandonment is a problem that causes retailers to lose over $300 billion annually. This happens when a customer searches for a product but doesn’t find it on the retailer’s site. Our product discovery services will help you find the right products for the right customers at the right time. These solutions include:
- Vision Product Search is like bringing an augmented reality experience from Google Lens into a retailer’s mobile app. Shoppers and associates in retail stores can search for similar products by using images they have taken or found online. They will receive a ranking list of similar items.
- RecommendationsAI allows retailers to make highly customized recommendations across multiple channels.
- RetailSearch provides Google-quality results for a retailer’s website and mobile apps.
Google Cloud powers all three. It leverages Google’s advanced understanding and intent of user contexts and intents, using technology to provide seamless shopping experiences for every customer. These combined capabilities allow retailers to reduce abandonment of searches and increase conversions across all their digital properties.
Pivot point #3: Building a modern store
The store is no longer a place to browse and buy. Stores must be flexible and able to adapt to changing conditions. Modern stores must offer multiple functions: mini-fulfillment and returns centers, recommendation engines, shopping destinations, fun places to work and many more.
As retail businesses had to embrace Omnichannel, so too are stores becoming omnichannel centres on their own. They combine the digital and physical in one location. Retailers can make use of physical stores to provide superior customer experiences. This will require greater collaboration and cooperation among stores, digital, as well as tech infrastructure teams. It builds on their agile work together.
It’s all about making our physical spaces more digitally compatible. Google Cloud is a way to help physical locations upgrade their infrastructure and modernize customer-facing and internal applications.
It’s like a new OS being released for your phone. Although it’s the same box, the user experience can be quite different. You can now extend this idea to a digitally enabled shop. The team can create new experiences by simply updating the store’s display, interfaces and tools. This could be for sales displays or fulfillment, as well as employee engagement.
This approach can result in simplified customer experiences and better store associates. Cloud solutions can be used to automate ordering, replenishment and fulfillment for omnichannel orders.
Customers can use similar tools to find personalized products online. This allows them to browse, explore and even create a customized shopping experience.
Technology can maximize the impact of store associates. It can provide them with expertise that drives value-added service and productivity. This will also help to reduce overhead costs. Customers should have frictionless checkout and be able make secure, reliable transactions.
Google Cloud can help retailers transform
Modern tools are essential for retailers to be able to pivot and adapt to changing consumer demands. Every company can become a tech company, we believe. Every decision is data driven. Every store can be both digital and physical simultaneously. Every worker is a tech worker.
Google Cloud helps retailers solve the most difficult problems. Our unique capabilities include the ability to manage large amounts of unstructured information and advanced capabilities in AI/ML. Our solutions and products help retailers to focus on the most important things, such as improving operations and capturing digital and multichannel revenue.