In a challenging and ever-changing environment, retailers must embrace the cloud to take the data-driven approach necessary to understanding the needs of customers
Our article of the week series highlights key themes and content from the 2023 Cloud for Business report. This week’s article looks at how retailers can adopt a data-driven approach and utilise cloud-based technology to help enhance their customer understanding.
Retail is the beating heart of the UK economy, directly responsible for 5% of GDP and nearly a tenth of all employment, according to the ONS. Indirectly, its impact is even greater. As a principal touchpoint for consumer spending, however, it feels the peaks and troughs of economic activity the sharpest. This has been accentuated by a shift to ecommerce, which had grown gradually over two decades and then drastically accelerated when Covid-19 restrictions pushed online shopping to over 30% of retail sales.
Although the Bank of England now predicts a recession in 2023 to be shallower and shorter than previously expected, this particular economic downturn is unique in that retailers are feeling the impact on both their sales and their cost base. Typically, unemployment increases in a recession and a surplus of available talent enables companies to better control their salary bills. But this time, with unemployment at record lows and inflation high, retailers are under pressure to pay their staff and suppliers more while their customers are spending less during the cost-of-living crisis.
The pandemic and Brexit also magnified flaws in the just-in-time supply chains that have become prevalent in recent years. While this model enables companies to be lean and agile during normal times, when supply or demand is majorly affected they can quickly find themselves unable to keep up with customer orders, affecting loyalty. In a study by Edit and Kin + Carta, just 6% of consumers claimed loyalty to any ecommerce brand, making it the worst-performing sector. Retailers are often guilty of conflating customer habits with customer loyalty. Rather than just repeat behaviour, the true factors of a customer’s loyalty are likely to be convenience, cost and inclusivity.
“We’ve seen consumer expectations shift drastically over the last few years, from demands for seamless ecommerce platforms and sustainable produce and packaging to how they discover, purchase and pay for goods,” says Andre Azevedo, CEO of Ancoris, which helps companies innovate and transform through the use of Google Cloud. “The reality of retail is that it’s so affected by external factors. But consumers are in fact still spending – albeit in a more targeted way – and there are plenty of ways retailers can remain competitive. The answer is in the data.”
The power of a single customer view
As a key enabler of an AI and data driven retail strategy, the Cloud is crucial. The route to brand loyalty in the retail sphere remains startlingly simple – deliver to customers the products they want, at the time they want them, through an easy process of buying and (if necessary) returning. But achieving that in an increasingly omnichannel environment is far from simple, and altogether impossible without the ability to centralise, organise and analyse data.
Customer centricity requires a holistic understanding of the customer, which can only come from a single view of all relevant data, enabling retailers to make better and more informed decisions throughout the entire life cycle of getting a product to a consumer. That single-customer view not only enables an understanding of what they want today, but also predicts and helps influence what they are likely to buy in the future. Such a nuanced and evolving understanding of customers relies heavily on the right data. “That’s where cloud technology comes into play,” says Azevedo. “You need a secure, robust place to store, organise and apply machine learning and AI models to your data, and visualise it in a way that enables decision-making. The cloud is a key enabler for implementing these transformative processes.”
Cloud technology and digital platforms are intrinsically linked as they can be built and improved quickly, as well as scale virtually without limits. Cloud technology is now incredibly mature and includes lots of best practices and out of the box solutions that customers can leverage to accelerate adoption, build their IP on top, and ultimately deliver frictionless digital experiences for their consumers.
Retail for the future
The technology is only one piece of the puzzle, however. It’s only when customers can apply cloud technology to build industry-specific solutions that they see true transformative impact. Ancoris leverages Google Cloud suite of technologies combined with industry expertise and capabilities to build bespoke solutions that solve specific retail use cases, such as increasing personalisation, building the modern store, capturing omnichannel revenue and driving sustainable operations.
“Retailers can and absolutely will thrive in the future, including physical stores, but only by providing an experience that customers really want. They have to use data and AI to build out a single view of the customer to predict what is going to be most valuable to their customers. Only by doing that can they really meet the needs of consumers wherever they are in the omnichannel journey. Industry focused solutions will bring best-in-class technology to companies to differentiate them by focusing on experience and bringing their brand promise to life in the most compelling way.”
M247 thoughts:
For retailers, taking a customer-centric approach to business strategy is becoming less a ‘nice to have’ and more an absolute must, especially if they want to remain competitive. Customers have more choices than ever before, and their purchasing experiences are fast becoming the primary differentiator when it comes to choosing – or losing – a brand.
The premise of this article is that customers want a frictionless brand experience, whether that’s finding the right product within seconds of beginning a search, making a purchase in as few actions as possible, or being able to contact customer service teams whenever and however it fits in with their lifestyle. Whether or not this is true of all consumers, it can certainly be said that data is the key to unlocking this type of omnichannel experience.
But businesses need to avoid the trap of thinking more data is better. Great customer experiences rely not just on data, but on good data.
In order to deliver the best customer-centric experiences, businesses need to do more than simply collect data about the people who are buying from them. They need to collect relevant data, manage it effectively, eliminate data silos, connect and enrich relevant programs, platforms and applications, and then deliver actionable insights to the people who need and can act on them.
The right cloud solutions, supporting the right automation, analytics and AI tools, can undoubtedly help to streamline the customer journey, but the onus is on businesses to ensure they are collecting the right data from the right sources – to not only ensure those tools are working effectively, but protect customer privacy and nurture that all-important trust.
To download your complete copy of 2023 Cloud for Business report and read more articles like this, click here
