The pandemic has accelerated the digital transformation across sectors and markets, and even players which had been reluctant in embracing technology earlier eventually had to embark on the digital journey to sustain their business.
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Retail was one of the sectors hit by the pandemic and digital became the solution to compensate to the lack of interaction in brick-and-mortar stores. Digital channels became the only channel of encounter between brands and consumers and each and every business had to adjust to ‘new’ ways of doing business.
Some businesses were already on the way to digitally transform and the pandemic has allowed them to speed up the process, some others had to start from scratch. what are the different stages businesses go through before setting up a fully functional digital strategy? How do they achieve the ‘omnichannel’ and seamless experience sought after for a long time?
Retail in Asia had the pleasure to interview Sameer Dhingra, Director, Retail & Consumer, Google Cloud, APAC. Google Cloud has been supporting retailers in their digital transformation providing infrastructures and services to successfully integrate their brick-and-mortar and digital assets and create a new customer experience that fits today’s demands.
RiA: We all agree that the pandemic has accelerated digital transformation across sectors. At which stage are retailers and what are the challenges in completing the process?
Sameer: You are right about the shift to digital getting accelerated. However, to better understand the stages of digital maturity amongst the retailers and their challenges, we recently released Google Cloud’s Retail Digital Pulse which looks at the technology adoption of retailers across four different stages of maturity with the aim of providing a framework to assist retailers in developing their digital roadmap for the future.
This research focuses across five dimensions –strategy, people, data, technology, and process to arrive at a Digital Pulse Index (DPI) which can then be used to assess where you are in your transformation journey and plan your technology roadmap. Our research tells us that the overall digital pulse of Asian retailers is low, with 55% at Stage 1 (Digital participants), 24% in Stage 2 (Digital Explorers), 17% in Stage 3 (Digital Aspirants) with only 2% of retailers that can be considered to be at Stage 4 (Digitally Resilient).
While this presents a huge opportunity for Asian retailers to build their digital strategies to become more resilient, the main challenge still remains with the lack of transformation roadmap coupled with having access to the right technologies in place. Organizational mindset, budgets and senior leadership commitment are other big challenges which we see in the retail industry.
RiA: What does the new customer journey look like based on your research?
Sameer: There has been a massive disruption and a shift in the consumer purchase journey accelerated by the pandemic by bringing about unprecedented behavioral change. It is now a proven fact that the path to purchase is no longer linear and has become harder to decipher.
Our latest research on consumer behavior & purchase journey highlights that shoppers go through cycles of ‘exploration’ and ‘evaluation’ in what we are calling the ‘messy middle’ before making a purchase. This is at the center of the consumer decision making- a complicated web of touchpoints & choices where decision making is influenced by cognitive biases deeply encoded in the consumer psychology.
RiA: ‘Omnichannel’ is now the norm, however, most retailers still have a long way to go. What are the key tools to put in place to enhance customer experience in a hyperconnected world?
Sameer: As I mentioned before, Majority ( 79%) of Asian retailers are at an early stage of digital maturity and will need to reimagine every step of the customer journey for an ‘omnichannel’ world. The purchase journey through exploration and evaluation phases at multiple touch points need to get digitally integrated and seamlessly connected across the retail ecosystem.
However, the start is always foundational with having a reliable, resilient e-commerce platform- a cloud native containerised architecture giving retailers the ability to provide the digital experiences which are essential to any omni-channel capability – product search, recommendations, personalisation, assortments, inventory visibility, pricing, rewards, in-store execution, last mile fulfillment, returns, and so on. In addition, having the tools to build a strong data foundation to get real time visibility across their ecosystem and a retail data model enabling the retailers to build a system of insight is the key to enhancing the customer experience.
RiA: What are the main trends to keep an eye on in terms of digital influence on retail?
Sameer: Consumers today are forming new habits, many of which are expected to stick thereby forever altering the retail ecosystem. For example, ongoing economic pressure is causing reduced consumer confidence leading to a more discerning consumer- one who cares more about what, where & how they spend. In addition, there are ongoing shifts in the way we live, work and shop leading to new ways of shopping based on our changed mobility. And finally, we are witnessing the emergence of a new ‘experience’ economy where customer experience and inspiration takes on a whole new meaning. As a result, brands & retailers are getting ready to be able to manage their category and product strategies, figure out new shopping platforms based on convenience & mobility and build their technology infrastructure & processes to be able to provide a digital first, proactive customer engagement with a unique & personalized customer experience.
We are seeing our customers embracing digital and leveraging technology to set up channel-less commerce capabilities to enable shoppers to interact with brands outside the traditional channels in addition to setting up functionalities around conversational / live commerce on their digital platforms. Reimagining the role of Stores, in-store execution, supply chain/ inventory optimisation are other big areas of digital influence that we are seeing with retailers. Last but not the least, there is a tremendous focus amongst retailers today to build capabilities to manage and harness their first party data to not only be able to provide personalized experiences for their customers but to also create a competitive advantage in the market.
It is clear that this unique market situation created by the pandemic today has renewed the focus on enabling consumers to shop when they want, how they want and where they want, while ensuring a seamless and personalized experience. This sounds simple but in fact for the majority of retailers, this needs a complete rethink of their business models, supply chains, consumer engagement frameworks and of course the technology roadmap & digital landscape.
RiA: In which way can Google Cloud support retailers in their digital transformation journey? Any recent partnership you can share with us?
Sameer: Google Cloud can help retailers in 3 main areas – strengthen omnichannel, build operational resilience and respond faster to changing customer needs. The first area is all about helping retailers capture the digital & omnichannel growth by boosting their online presence and building an agile, connected platform from stores to data center.
The second area of focus is to help retailers drive operational efficiencies – across the supply chain, in-store execution & transformation, shopper engagement, employee collaboration and sustainable operations. Last but not least, the third pillar focuses on enabling the retailers to build a strong data foundation and AI/ML capabilities. Google Cloud enables retailers of all sizes to leverage the best Google has to offer across the retail value chain — modern computing infrastructure, platform capabilities and industry solutions, along with expertise, to reinvent their business with data-powered innovation on their own terms.
A great example would be our strategic partnership with LVMH where they are leveraging Google Cloud to not only revamp their technology infrastructure but to also focus on AI & cloud based innovations to drive personalized customer experiences. LVMH will leverage Google Cloud’s cutting-edge cloud technology and world-class AI/ML tools to improve business operations by enhancing demand forecasting and inventory optimization in addition to developing new business use cases at scale across their value chain. It is also critical to build up a robust ecosystem of partners to empower retailers’ digital transformation journey. Google Cloud and Intel have been working together for nearly a decade introducing new products and helping customers build cloud solutions and move transformation forward.
RiA: Data management is a big challenge for companies. What is the strategy to adopt to make sure it could be used to inform the decision-making process?
Sameer: With the explosion of data, managing the same continues to be a challenge for all retailers. The key is to have access to the right information at the right time to enable a proactive decision making process. However, this requires investment into building a strong data foundation by modernizing your data warehouse, leveraging a big data platform like BigQuery, and having the capability to process & analyze streams of data in real time.
Making this data accessible with business intelligence platforms like Looker makes it easy to consume and makes the information available for wider adoption. Retailers can then use pre-built data models/ AI platforms like Vertex AI or custom build their analytics use cases to solve specific retail needs around insights. Retailers can use these strategies & tools to activate their retail data and build a system of insight to not only grow their business but also provide great customer experiences.
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RiA: Among the recent technologies, AI has been explored by retailers to enhance their marketing strategies. How do you see that evolving in terms of application to the retail world?
Sameer: Leveraging AI/ML is crucial to future retail strategies as its adoption can increase the speed of transformation by enabling faster decision making and execution. But adopting AI in a meaningful way is still challenging. One of our recent studies on use of AI/ML in retail shows that 60% of the retailers have more than 20 pilots in progress. However, only 45% of these pilots are converted to full implementation out of which only 40% or so are actually considered as high value cases.
In fact 75% of the value at stake is driven by about 10 key use cases. The challenges around data availability, technical talent and financial constraints remain. Hence, it is important for retailers to consider approaching AI through the lens of use cases that provide the most value and positive benefits.
Retail in Asia is investigating the topic and will share more insights. Stay tuned to learn more about how to become a digital resilient retailer!