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Modern retail: machine learning, customer experience and legacy

As the retail landscape shifts in the wake of new technologies, experts in retail and tech explain how firms need to adapt to cater for modern consumers

Widescale technology adoption is causing disruption in many industries, and for retail it means an increase in what consumers expect from their shopping experience.

Consumers are now more in control of the shopping experience than they have ever been, forcing retailers to adapt to these demanding customers to get ahead of the competition in an omnichannel world.

“Technology is changing the way consumers interact with your brands,” Louise Hemming, industry manager technology at Google, told Salmon’s Commerce 2020 event.

Consumers are using technology in a “very different way” to interact with brands than they were just a year ago, said Hemming, and adding that technology is an enabler to understand customers properly and deliver the experience they expect.

“We hear lots of stories about redundancies, of restructures or store closures – it’s a very challenging time,” said Hemming. “Technology is the thing that allows a huge amount of opportunity.”

One of the most important roles for technology, not just from a retailer perspective but also in day-to-day life, is “removing friction”, said Hemming, which means retailers should focus more on what experience consumers are having when they navigate through “increasingly complex journeys”.

As the world becomes more omnichannel, these consumer journeys could be online, offline or through voice-activated devices. But customers do not see the distinction between channels, and they are less likely to stay loyal to brands, especially if they feel they have had a second-rate experience, said Hemming.

Using data collected about customer interactions, it is becoming easier for retailers to predict and adapt to what consumers want, she said.

Trends in consumer behaviour show that shoppers are becoming “more curious, more demanding and more impatient”, said Hemming. Consumers are increasingly shopping around, expecting next-day delivery and will abandon a purchase if they don’t think things are going their way, she added.

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Google has noticed an increased amount of searches beginning with “best”, where consumers are attempting to seek out good-quality products, often consulting other buyers in the process.

“People don’t just want any old thing in their house – they want the best that they can find,” said Hemming.

Google searches have also seen a two-times increase in the number of customers looking for same-day shipping, and a three-times increase in those searching for “open now”, highlighting the fact that consumers are shopping for convenience and expect the best possible service.

Technology enables retailers to understand consumers in a “much deeper and more effective way that you have done before”, said Hemming, and at the heart of that – at least for Google – is machine learning.

Google’s focus on machine learning to predict customer behaviour is not only important for its own business, but for ensuring it passes on accurate data. Businesses that use machine learning effectively will gain a competitive advantage in the future retail space, said Hemming.

“Customers expect us to know, and also retailers, to understand the context of their search, whether that’s where they are, what the weather is like or what mood they are in,” she said.

Many retailers have acted on a “replenish retailing” model, whereby their only responsibility was to re-stock stores based on what was sold, but now retail is a lot less simple, said Hemming, and many retailers “have not responded quickly enough to the online consumer”.

“That has changed massively and we will probably never go back to this again,” she said.

Invest in technology

Once retailers know their customers, they need to invest in technology to ensure their back-end systems, data collection and supply chain technologies can keep up with consumer demands, she said.

And whereas price was once a main competition point for retailers, other technology-driven factors are now creeping in, such as personalisation, convenience and speedy delivery.

As Eric Heller, CEO and founder of Marketplace Ignition, explained: “People care more about getting it now than they do about getting it cheap.”

Customers are becoming increasingly fickle, making it difficult for retailers to retain loyal consumers because of the huge amount of choice available, and older consumers will shop around to make sure they get exactly what they want, at the price they want, through the channel they want.

As Cindy Hoots, vice-president of IT at Unilever, put it: “Customer experience is going to be dictated by the last experience they had anywhere.”

But it can be difficult to deliver this experience because of underlying legacy systems that many retailers have, making it hard to deploy new digital technologies to meet customer demands.

“We are at a point where the rate of change externally is going much faster than within any of our companies,” said Hoots. “Within our organisations, we don’t necessarily have the right tools, the right skills and the right people to respond in the way the world is asking us to.”

Hoots suggested that retailers, and all firms looking to adopt digital, should consider how to make their teams more lean and agile, and breaking down some of the siloes that often exist in larger companies.

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