The festive season is behind us, and retailers are turning their attention to the year ahead. While we can’t predict what this year will hold, it’s essential for retailers to reflect on changing consumer behaviours and the accelerated shift towards digital as they prepare for the next phase of our new hybrid retail reality.
According to McKinsey, since the start of 2020, more than 50 per cent of Australian consumers adopted new shopping behaviors, more than 30 per cent tried new brands, and more than 20 per cent discovered new retailers, stores, and websites. This change represents a distinct opportunity for retailers that move quickly and a risk for those that don’t.
Retailers who win this year will be the ones that have pushed for technology investments, innovated and built new channels, modernized stores, and improved warehousing and fulfillment operations. If you haven’t yet started preparing for 2022 by accelerating your move towards digital, the time is now or you will be left behind.
New Year, higher customer expectations
Shoppers expect to find what they are looking for with ease, with many searching retailers’ websites before visiting physical stores. As omnichannel consumer behaviors persist, and in many ways intensify — reflected by Google searches for the term “in stock” up 800% year on year – consumer expectations continue to evolve.
Recent research from Google Cloud found search abandonment (when consumers don’t make a purchase because they can’t easily find what they’re looking for) costs retailers more than $300B in the U.S. alone and leaves a lasting impact on brand loyalty. With 87% of Australian consumers reporting they view brands differently following an unsuccessful search, retailers who invest in technologies that enhance their eCommerce capabilities and allow shoppers to search for what they want faster will be at an advantage.
With stock availability and fast delivery most critical to online shoppers, the last two years have been difficult as global supply chains experienced chronic disruption, impacting all aspects of retail operations.
With this in mind, and to better serve customers at every point in the purchasing process, retailers must fortify their supply chains to build operational resilience and manage customer expectations. Whether it be searching for the perfect product online, getting it to their doorstep in time, or helping them find it on shelves nearby, retailers must prepare to exceed customer expectations and deliver on a great shopping experience, end-to-end.
Upping the ante to win customers
The line between digital and physical retail continues to blur. In 2021, we saw the highest retail spending in almost four decades as consumers changed how, when, and where they shopped. To address this, retailers are racing to become more digitally resilient.
Getting customer insights from data is critical for retail success. Building a robust data foundation that shows a single view of the customer across multiple channels can help retailers build a System of Insight and a foundational platform that anticipates shopper behavior, market trends and demand to offer personalisation and distinctive shopping experiences.
Investments into personalisation capabilities and omnichannel experiences can help retailers meet and exceed expectations, optimize customer experiences, and provide best-in-class services into 2022. Leveraging technologies like Product Discovery solutions for retail, retailers can not only deliver personalized recommendations at scale across channels but also enable their eCommerce platforms through google-quality search capabilities that significantly reduce search abandonment and improve conversion rate.
Another big area of innovation is supply chain optimization. With AI-powered technologies and data-driven insights, businesses can quickly spot supply chain issues and make real-time decisions about operations, such as shifting routes when a warehouse is full or avoiding bad weather. Putting your investments and resources into building a supply chain twin can be a great start to enable end-to-end visibility, alert-driven event management, analytics, and collaboration across teams.
Leveraging such technologies can give retailers real-time inventory visibility with a view on product availability and delivery, vastly improving retail execution.
Australian retailers doing it well
Australian companies have accelerated their digital transformation journey to better differentiate themselves in a highly competitive market. Local retailers leveraged cloud technologies to hone in on and transform customer offerings.
Hanes Australasia (home to some of Australia’s best-known apparel and lifestyle brands, including Bonds, Bras N Things, and Sheridan) recognised data as key to understanding consumer behavior and preferences, and to driving revenue from eCommerce investments. Hanes implemented cloud services to enhance its customer experience, enabling the business to collect detailed transaction data and providing a wealth of information that has been transformed into actionable insights.
JB Hi-Fi is a great example of how personalisation can be a powerful driver of success. The adoption of Recommendations AI enabled JB Hi-Fi to introduce a personalised online experience in line with the expert experience delivered to customers in-store. JB Hi-Fi significantly reduced its time consuming, legacy recommendation process, increased monthly average revenue from recommended products and the conversion rate for products offered on the JB Hi-Fi home page, and found the average transaction value (ATV) for products recommended increased
Cloud is the key
In 2022, retailers will continue to navigate what the ‘new normal’ looks like and how to manage the blurring of online and in-store customer interactions. As eCommerce continues to be the driving engine for growth, digital transformation remains central to retailers’ long term success.
The bottom line is that digitally transforming your business model and adopting cloud-based innovation platforms is no longer an option, it’s a race for survival. Having access to the right technology infrastructure, applications, and AI/ML platforms can not only help retailers manage costs, reduce risk, and drive growth, but also re-engage customers to form stronger connections.
Sameer Dhingra is director of retail and consumer for Google Cloud Japan and Asia Pacific.