The ‘need for speed’ in data and analytic capabilities has never been more mission critical for retailers as they accelerate strategies to drive top line revenue, gain deeper consumer insights and improve operational efficiencies.
New research from McKinsey showed a major increase in online spending by Australian consumers during the recent COVID-19 lockdown. Perhaps not surprising, given physical distancing measures, the increase in online shopping carts being filled was not limited to Millennials, Gen Xers also turned to online stores, with 75 percent making online purchases for non-food products. Of those Gen Xers shopping online, 40 percent said they shopped more during the COVID-19 pandemic.
This increase in online retail browsing and spending shows that Australian shoppers are receptive to accepting and using new digital platforms as part of the retail mix. As Australian retailers consider strategies for their post-pandemic economic reboot, changes in consumer behaviour accelerating ecommerce growth should be high on the agenda. As a direct result of COVID-19, KPMG also recommends that every retailer should increase their ecommerce capacity as part of their business continuity and crisis action plan.
When it comes to developing a sustainable retail strategy that is future proof, Australian retailers only need to look at how retail’s early adopters have embraced ecommerce. The one thing that Amazon has taught the industry is that new data types and advanced analytics are essential to understand and deliver what customers want, while also helping to contain operational costs.
Amazon leads ecommerce in retail because it has committed to understand customer behaviour at the deepest, most granular level. However, more importantly, Amazon can respond to customers in real time with machine learning and AI-infused intelligence, so it is able to adjust to the changing expectations of customers.
To get ahead, retailers need to spend more money on ecommerce than they ever have before. They need to invest in technologies like AI and the Internet of Things because it is important to their customers. Global retailers such as Walmart and Target are winning because they continue to invest in the data, technology and analytics capabilities that are required to support strategic growth and guide future business decisions. As a result, retailers who are already leveraging this type of technology are literally crushing their competitors.
Walmart is a prime example of a retailer that has embraced new technologies like the IoT and real time data analytics, which has resulted in better customer service and efficiencies throughout its stores. One way it has improved efficiencies is by monitoring the temperatures of its refrigeration boxes which keep dairy and meat products cool. Each store has as many as ten refrigeration units, and the temperature is monitored in real-time to understand the impact a change in conditions can have on the shelf life of fresh food.
As a result of introducing this real-time technology, Walmart has reduced waste and maintained freshness of its chilled food, which has resulted in significant savings.
The introduction of real time data analytics and the IoT has the potential to capture significant efficiency gains within the retail sector. By embedding sensors into machines and systems along the supply chain, in store disruption can be minimised, and unplanned downtime can be avoided.
While the pandemic was a truly unprecedented event for retailers that no one could have anticipated, we all remember the widely publicised ‘toilet paper wars’. Globally, supermarkets encountered a shortage of toilet paper as customers panic-bought before COVID-19 lockdowns came into effect. This unprecedented demand highlighted major supply chain vulnerabilities as retailers struggled to overcome major product shortages. If real-time data analytics had been used in that situation, stores would have noticed an increase in the amount of toilet paper being sold well before the shelves were emptied, and they could have reacted sooner.
As we look to the future, the connected consumer will increasingly demand highly personalised shopping experiences and retailers will need an intelligent data driven supply chain to keep up. The most successful businesses will also turn to the benefits of robotics and AI/machine learning to optimise their supply chain and improve operations, all to meet – and exceed – customer shopping expectations. Even now, retailers are already experimenting with robotic capabilities – for example, Walmart is using robots to help restock shelves and track inventory in an easier and more efficient way. The retail companies that will be most successful are those that can most effectively harness the data generated to refine and adapt their data and analytics strategy quickly to get ahead of consumer expectations.
Brent Biddulph is general manager for retail and consumer goods at Cloudera