There is no doubt Covid has caused huge shifts in retail and ecommerce consumer demographics, but will these changes be permanent and what role does cloud technology play to help businesses adapt quickly?
Last week vendor management platform Validify convened a special session for senior industry figures titled ‘Location, Location Location’ to talk about the changes in the wake of the pandemic and its impact on retail.
Hosted by Validify CEO and co-founder Fergal O Mullane, ‘Location, Location, Location’ explored many of these topics and more in an interactive session of presentations, Q&As, panel sessions exploring which trends will become entrenched as markets emerge, gradually, from lockdown.
A seismic shift to delivery
Giving opening remarks in the session, Richard Newsome, Chief Technology Officer - Corporate at Sainsbury's gave an overview of the challenges the brand has faced since the outbreak of the pandemic with the supermarket chain experiencing online order volumes akin to the festive period in past years.
“It’s been a seismic acceleration in digital sales, particularly our grocery channel. There was a massive increase in demand and capacity for home delivery, Click and Collect and SmartShop, which has been voted ‘Tech Initiative of the Year’ by The Grocer,” Richard Newsome said.
Richard Newsome also described how Sainsbury’s temporarily closed its convenience stores in areas with dense office capacity and focused on beefing up its delivery service. This has seen an acceleration of its rapid delivery service, Chop Chop, as well as piloting partnerships with Uber Eats and Deliveroo.
A map from CACI was used to demonstrate in stark terms how lockdown caused what he called “almost the evacuation of large parts of Central London, Canary Wharf and transport hubs”. The group went on to discuss how retailers who have focused their energies on commuter and office-based communities could see their future prospects challenged if – as is expected – there is no comprehensive return to pre-Covid ways of working and shopping. “Convenience in all guises is hugely important to our customers,”
Richard Newsome concluded, adding that local, neighbourhood stores will be one of the cornerstones of their strategy going forward.
Location, location, location
Expanding on some of these trends, Kyle Monk, Director of Insight at the British Retail Consortium told participants about the marked changes in shopper behaviour he has witnessed based on their research findings.
Monk noted that, pre-Covid, non-food sales were split roughly 70-30% between in-store and online shopping, with food sales much lower at around seven to eight percent online sales. That figure has seen dramatic growth to 30% since lockdown, with non-food growing month on month to just over 40% in the latter part of 2020 (from a spike of 70% at the height of lockdown).
“Some have said we’ve seen five years’ of digital infrastructure improvements in essentially five months. This applies for both grocery and other categories as well. Even in clothing which is a messy user journey, 50% of sales are made online as of October,” he said.
Kyle Monk also noted from the research, chiming with Richard Newsome’s observations, that there has been a disparity in recovery for different location types, with retail parks in particular “briefly returning to positive territory” while agreeing that it is office-based locations that continue to suffer the most. “Remote working will be a huge factor in how retailers plan their portfolios. Essentially, the return to work and how it’s managed will dictate how city centres perform in the coming months and how this will affect how retailers deploy and how shoppers shop,” he said.
Optimising businesses in ‘the WFH era’
After the presentations, a panel session chaired by Propeller Group founder and chairman, Martin Loat, which featured Richard Newsome, CTO of Sainsbury's Corporate, Graham Wilson, Head of Business Development at Sofology, Simon Bennett, EMEA CTO at Rackspace Technology and Steve Gurney, EMEA Retail Lead at AWS (Amazon Web Services) also explored some of the seismic changes we have witnessed since the start of the year.
“The move towards staff working from home and organisations having to rapidly adapt to support this new way of working has happened at unprecedented pace and caused a lot of organisational and technical challenges for those organisations,” said Rackspace’s Simon Bennett.
AWS’s Steve Gurney noted the challenge now for retailers is to find a way of taking their well-established strategies for delivering the all-important retail experience offline, and taking them online: “The first part of the pandemic was a reaction to all those changing customer experience and how you support that as a business. But then we saw our retail customers moving into focusing on how they can better optimise business for this new way of working, while also optimising cost across the business,” he said.
The evolution of customer experience
During lockdown, the companies that have fared best have not sought to simply translate sales tactics from off- to online, but have instead focused on taking an innovative approach to delivering new experience formats to remote shoppers.
Sofology spoke in the session about how they have trialled a combination of technology and a new approach to customer interaction to great success. Using video technology platform, Go InStore, Sofology gave its customers a virtual showroom experience, using in-store Sofologists to guide them personally round the product ranges in a live retail environment which they branded SofologyLive.
“Historically, ninety per cent of all customers who purchase a sofa actually go and sit on one before they buy, so closing your estate potentially leaves a big gap,” admitted the company’s business development head, Graham Wilson. “How we inspire customers in a digital world in a way that is really personal was incredibly important for us during lockdown.”
Wilson described how Sofology’s approach was to partner with Go InStore to creative innovative, live video consultancies that were complementary to a suite of videos that in-store consultants posted on the web: “Authentic short videos around how squishy is the sofa or how big is the sofa and the various different features. It’s quite cool when a customer speaks to the same person who was appearing in the video on the website. It creates that instant rapport and trust,” he said.
Remarkably, this approach that meant customers could speak with a real person at the end of a video call using Go InStore’s platform led to 40% more engagement with customers than conventional website visits.
Investment behind the scenes
During the session, Lisa Roberts, Head of Costa Channel Solutions at Costa Coffee spoke about her experience in a previous role with Argos and noted: “I’ve been highly involved in fast-track delivery and they are all about hub and spoke, using multiple stores to fulfil the supply chain. With closing all those stores,” she asked, “has Sainsbury’s had to amend the supply chain back end?”
Richard Newsome replied that “We have a lot of work going on across our supply chain, but fast track delivery remains a key part of the Argos proposition, and is enormously valued by our customers.”
The speed with which many retailers like Sofology and Sainsbury’s have transferred to online-dominant business models belies the sheer amount of work that has had to go into creating robust, responsive systems that don’t let customers down.
“It’s very rare for us to have customer activity without an AWS partner being involved, such as one that does end-to-end like our cloud partner Rackspace,” Steve Gurney stated. “We’ve got a number of customers already using AI and ML to make data-driven decisions but for a large number, 2021 will be the first time they use that technology in a meaningful way to deliver significant change, but we see a huge amount of interest there for that.”
“The pace of change and the move to cloud native applications will absolutely accelerate,” added Simon Bennett, “so people can ebb and flow their applications and services in line with the changing nature of demand. That will allow retailers to be able to react very, very quickly.”
The Covid pandemic has been a crucible of sorts for the retail sector, delivering data that many would be hard-pressed to recreate in only a theoretical environment and allowing insight into new ways of accessing customers that were only considered experimental before. It’s been a remarkable last few months and the technological trends and changes in consumer behaviour brought about by lockdown look here to stay.