In many countries, 2020 promised to be a rather good year for the retail industry. Since the so-called ‘retail apocalypse’ started about a decade ago and forced retailers to cut costs to reinvent themselves and digitally transform, 2019 had seemed to be a year of transition.
2020 was expected to be a year of growth (not impressive growth but growth and with the traditional differences per region) and investment as new opportunities are on the horizon, and many retailers had managed to optimize efficiency across the board and were ready to move to the next level.
The data-driven road which retailers have started taking is essential to recovering, realize much-needed cost savings, protect customers and staff, and become future-proof.
Then the COVID-2019 pandemic hit. And on top of its human toll, it heavily impacted business across industries, with the retail sector being one of the most affected. Lockdowns and forced closure mean a loss of revenues that can’t be compensated by online sales, no matter how digitally evolved you are, because people buy less and differently as they’re impacted by all the measures taken in the context of the pandemic too, of course.
To know how heavily hit the retail industry is and will be, it suffices to follow the news with daily reports on closures, layoffs, bankruptcies, and declining retail volumes. Yet, it’s certainly not all doom and gloom. Several retail chains reported better results than expected.
What You Will Learn
Data-driven retail expands across all operations, functions and goals
The ability to have in store what people wanted, often accompanied by a shift in the product offering and in the ability to deliver goods in ways that met demands of consumers and health authorities (more online), was vital in this regard.
Obviously, the necessary reserves, support mechanisms, strength of the brand, and degree to which retailers already reinvented themselves helped as well. And it’s evident that not all retailers have these same capabilities or even offer the types of products that people want during a pandemic (or are allowed to go out for, remember ‘essential goods’). Retail is and remains a vast field. Still, often retailers with an optimized, data-driven approach, and the agility needed to adapt rapidly did better. And large retailers these days work with quite some big data as we’ll cover in an article on the strategy of one in particular with impressive numbers soon.
While lockdowns were – and still are – in place, retailers didn’t just have to cope with existing problems such as low margins. Now they also had to invest in means to provide a safe shopping environment by the time they could reopen stores. And all this while revenues dropped or even stopped, supply chains were interrupted, and many costs simply continued.
In many countries, by now, we have seen how retailers ensured this safe shopping environment for clients and staff alike. On top of investments in things like protective gear, cashier shields, and approaches to enable physical distancing and meet requirements from governments, technology often again proved to be essential, with data as the inevitable backbone.
This will be even more the case in the future for several reasons. Data-driven retail becomes ubiquitous on all levels, not just a customer-facing one. And to recover and future-proof themselves once this is all – hopefully – over, both in the short term and on the long run data will be essential.
One reason is that, unfortunately, what is often called a new normal is a new abnormal: even more uncertainty. You can’t tell if a new – periodical – lockdown as we now see happening in places across the globe will occur somewhere or not. Secondly, retailers will have to continuously optimize and manage costs, with cost reductions being a matter of survival for many. The data-driven road many retailers have started taking will be essential to realize these savings, protect customers and staff, and become future-proof.
Data-driven retail facilities: before, during and after COVID-19
The increasing focus on data and real-time insights, enabled by artificial intelligence (and in many cases the Internet of Things), of course isn’t new in retail.
It’s pretty much the enabler of most initiatives. Think about consumer-facing activities such as dynamic pricing, a more personalized experience, and marketing. But also about operations such as automated stock replenishment, leveraging replenishment algorithms.
The optimization of costs as such has also become a very data-driven activity, hand in hand with increased automation and the usage of robots and cobots in, among others, warehouses.
And that brings us to retail facilities and stores. Most mid-size and large retail companies already leverage data in several ways in their stores, among others, with increased adoption of in-store analytics. This enables them to, for instance, enhance store design and to derive a bunch of information based upon traffic counting, even leading to decisions on where to open/close stores, change opening hours, etc., in combination with other data.
Technologies aimed at making the shopping experience easier, safer, and more efficient, all likely will be focuses for forward-thinking businesses.
The increasing attention for in-store analytics and traffic counting started before COVID hit as well. And it’s a data-driven retail basis to realize multiple of the mentioned goals that can help retailers reopen/run business in a more safe and compliant way, continue cost optimization, and at the same time, look at other benefits while avoiding potential issues.
In 2019 we conducted an interview with Marine Petry from Schneider Electric on the launch of an EcoXpert channel partner specialization for retail facilities. Marine explained how an end-to-end data-driven view on retailers’ business and their stores/sites enables them to enhance operational efficiency, save costs, improve customer experience, reduce energy consumption, ensure business continuity and innovate in ample ways.
During the lockdown period in Europe, we caught up with Marine to see what Schneider Electric was doing to leverage data-driven retail technologies to help retailers cope with some of the challenges of COVID-19. She had just prepared training for partners to help retailers with multiple stores shift to remote maintenance, gain insights in the energy costs of sites, and dispose of operational insights, among others enabling store managers to focus on customers and staff.
Marine told us that Schneider Electric had prepared a range of solutions for different use cases in the scope of COVID-19 but also with other data-driven retail goals in mind. It’s clear that while investing for a safe shopping experience and environment, solutions that enable other opportunities and build upon the evolutions and goals that already existed make far more sense.
The person in charge of this exercise, George Das, walked us through different of those use cases and the goals they serve, both in a COVID-19 and future-proofing context. And, indeed, data and the Internet of Things, of course, are essential here as well.
By way of an example: counting the numbers of visitors/customers enables you to enforce social distancing but also helps you run your fire codes, better plan staffing, etc.
In a soon-to-be-published interview with George, we take a deeper dive into these use cases, their benefits, and the technologies/solutions, identifying smart data-driven retail solutions enable retailers to realize multiple goals at once.
From optimization to preparation and beyond – data analytics, AI and automation in retail
It is clear that the retail industry, which is particularly hit by the pandemic, will become even more data-driven now and that the recovery of the sector will mainly be data-driven too.
The acceleration of data-driven retail will happen across a vast range of areas and applications: from customer-facing priorities, logistics, and cost savings to operational and strategic decisions, including the preparation for potential scenarios in these tough times. And all this obviously with people – customers and staff – as always in the center to succeed.
Companies now need to be good at not just buying and selling products, but also at things like online fulfillment, home delivery, data analytics, AI, machine learning, and process automation. Given the current capability shortages and cash flow challenges, retailers should now be looking to refocus on the core retail fundamentals of buying and selling while partnering to deliver the other required skills. Many are looking to platform companies to help deliver some of those important capabilities. (Paul Martin, UK head of retail, KPMG)
In a blog that Marine wrote about the training program she made for multi-site retail data solutions for store managers, energy managers, regional facility operations managers, and external service providers and contractors, she points to retail research in the scope of COVID-19.
According to an estimation from the KPMG/Ipsos Retail Think Tank (RTT), in the UK alone, retailers will need to realize operating cost savings of around 30 percent. And it’s not just here that data, automation, and related technologies will play an increasing role. For retailers, it’s an additional challenge.
As Paul Martin, UK head of retail, KPMG puts it: “Companies now need to be good at not just buying and selling products, but also at things like online fulfillment, home delivery, data analytics, AI, machine learning and process automation.”
A focus on people, values, experiences, and efficiency will be more essential than ever. Yet, an accelerating data-driven retail transformation will have to support it with a vital role for integrated retail platforms.
Top image: Shutterstock – Copyright: TZIDO SUN