Retailers adopting digital tools to predict demand and flex fulfilment
How Google is helping traditional and digitally-native businesses alike survive in a new era of consumer expectations by Victoria Pavlova
With lockdown in the UK having ended just two months ago, and the spectre of COVID-19 still plaguing the high street, retailers are turning to digital solutions to respond to the change.
Experts agree that the shift in shopping habits brought about by the pandemic will dramatically accelerate the long-term adoption of ecommerce in the UK, with annual online sales now predicted to see an additional 8% rise from January estimates. Big-box stores as well as health and beauty retailers are also predicted to see a boost in the long run, according to research by retail consultancy Edge by Ascential, published in early August.
But the love isn’t being felt everywhere in equal measure. According to Alison Lomax, head of retail at Google UK, digitally native categories have benefited the most.
Conversely, the pandemic has spurred traditional retailers to increase their focus on digital, with online and O2O becoming an integral part of board-level planning.
“While we work with a spectrum of brands, from the newer D2C players to high street retailers, the biggest increase in demand has been perhaps on the traditional retailers’ end, where digital maturity has become the main topic of conversation at board level, Lomax told Retail Technology.
Anticipating new shopping patterns
Google has been working with retailers since the early days of lockdown to predict changing shopping patterns, adapt store networks to new requirements and create the virtual experiences made necessary by a surge of online shoppers.
"We’ve seen different patterns in terms of consumer behaviour and acceleration in certain areas, for example tech during Covid-19, athleisure wear and a number of new product categories which emerged virtually overnight, Lomax said.
One key area where the tech giant has seen peaking interest is predicting demand patterns.
"We created a tool called Rising Retail Categories that helps clients to really be able to see how the market is changing on a real-time basis, Lomax explained.
“Real-time insights are providing an opportunity for retailers to see what the demand is in real time and flex the supply. Particularly coming up to peak, that’s been a real acceleration an area of interest at board level."
According to Lomax, Google works with a variety of retailers to generate daily and hourly insights on regional customer demand patterns, allowing stores to manage their stock levels accordingly.
This has proven particularly valuable for stores, which have responded by flexing their fulfilment capacity. One creative solution has been using local stores as fulfilment centres. The approach, pioneered by global powerhouses like Alibaba as early as 2017, is now being employed by a number of UK retailers.
“One key development is that we’ve seen a lot of retailers rethink their stores as micro fulfilment centres – thinking about how can stores with a large footfall be used as a distribution channel, she said.
“Some companies have opted to switch between night and day. At night they’re micro fulfilment centres used for distribution, while during the daytime they function just as stores, but experiencing lower footfall than they would normally.”
Beyond he local level, Google has also been working with retailers to expand their international coverage. Google tools like the recently launched Market Finder have seen growing adoption among traditional players, said Lomax. The tool is intended to help retailers and businesses discover markets with a high demand for their services, based on search trends and website metadata
Digital experiences are key
But no amount of store optimisation can make up for the fact that Covid-19 has driven an overwhelming amount of sales online. Online sales jumped 9% year-on-year in July – from19.1% in 2019 to 28.1% this year, according to the ONS. Even though lockdown may be over, it appears that new shopping habits are here to stay.
On the online front, Google is working with retailers, as traditional and O2O businesses have rushed to adapt their online experiences.
"We strive to help retailers enhance shopping experiences in their own properties, be they apps, mobile or website, Lomax explained.
“There has been a marked increase in demand to work with them in these areas, covering anything from helping to recreate their mobile app or helping them with mobile UX or speed, which is critical to driving high conversions. Another big area of interest is checkout – so for omnichannel retailers it means really making sure that checkout is really seamlessly integrated within the user journey."
These experiences are particularly crucial in helping new demographics warm up to online. According to Lomax, retailers are seeing a shift in the number and the demographic make-up of online shoppers post-Covid.
Older consumer segments are now becoming comfortable with shopping online and more big-ticket items are being purchased partly or entirely through digital channels.
In fact, channel-agnostic shopping is one of the fastest-growing shopping trends highlighted by Lomax, alongside experiential stores and augmented reality product trial.
Lomax references brands like Charlotte Tillbury, which have already successfully implemented AR technology for virtual product try-ons. According to her, these types of digital experiences will be crucial, especially as the luxury sector attempts to spur demand in the challenging post-Covid era.
Ahead of the holiday season, Google is also working with retailers to recreate traditional experiences amid new constraints on budgets and people. Advertising has been one area to suffer significant losses during lockdown. But for retailers and brands on a budget, Google now provides a DIY option.
"Another key area is the disruption of production. Thinking about peak and the big ad moments, the question we’ve been trying to answer is how do retailers replicate those big, brand building moments and do it at a moment when it’s going to be much harder to create those ads – unless they’re all animations," Lomax explained.
"So we have a tool called Video Builder, which we’ve also enhanced over the past few months. It allows retailers to use any of the assets they have, be they premium assets or text to create some of those ads that they can then run through the peak period."