Exclusive Q&A: Adapting to customers key to post-COVID-19 success

To quickly react to the unpredictability of the “new normal,” retailers need a deep understanding of shifting customer shopping habits and product preferences.

Chain Store Age recently interviewed Tom Litchford, head of worldwide retail at Amazon Web Services (AWS), about how consumers have changed since the outbreak of the COVID-19 pandemic and how retailers can leverage advanced technology to stay competitive in this challenging time.

How has the customer journey changed as a result of the pandemic, and how are retailers responding?
With health and safety top of mind for consumers, in addition to financial concerns, we’re seeing shoppers become more risk-averse and discretionary than they have been in the past. This mindset shift has resulted in a lot of retail traffic moving online to limit face-to-face interactions. When they do go to the stores – whether it’s for in-store shopping or to pick up an online order, shoppers expect new, contactless experiences.

“These changes in how a customer shops and what they expect from the journey has been a forcing function for retailers to double down on innovation and find new ways to meet the shopper where they are. The innovation we’re seeing across all retail segments is truly remarkable. One great example is the evolution of Buy Online, Pickup in Store (BOPIS) to a Buy Online, Pick up at Curb (BOPAC) model, where customers can limit their interactions with store employees. The key is to make these new experiences frictionless for the customer. 

For some retailers – particularly in the grocery industry – this might be the first time a customer is using this type of service and retailers need to provide an experience that makes them want to keep shopping with them.

What should retailers do to maximize supply chain flexibility in the face of sudden demand surges?
“It’s important to recognize that COVID-19 didn’t create problems in the supply chain – it uncovered and accelerated them. To address issues in the supply chain, retailers are looking at cloud services designed to help them quickly adapt to shifting demand surges and allocation issues, like we saw with paper goods early in the pandemic and continue to see with exercise equipment, for example, as more consumers are working out at home.

We are also working with regional grocery stores in the U.S. with use cases to reduce perishable food waste from over-forecasting while maintaining customer in-stock rates. Fashion and apparel retailers are also looking for more transparency in their supply chains. 

With manufacturing plants having shut down during the pandemic, fashion retailers are determining how to move stale merchandise and get back to seasonal assortments by looking for innovative things they can do with the inventory they have in their stores. And, as stores continue to look for ways to enforce social distancing, they will need to carefully forecast the next season’s orders given they may have less floor space to display items.
 
How can retailers prepare for a rapidly approaching holiday season that is still unpredictable?
Nearly every facet of retail has been disrupted by the pandemic – buying patterns have changed, holiday spending is unpredictable, people are spending less time in stores, and retailers are anticipating carrier capacity challenges. To compound the uncertainty, peak season is coming faster. Rather than e-commerce spiking between Black Friday and Cyber Monday, we anticipate more of a ‘table-top’ spike – a long, sustained rate of shopping now through the end of the year.

An earlier start to the season also means spreading holiday pricing and promotions over longer periods of time. This is where having a deep understanding of customers is critical. Holidays are also a time when call centers see an uptick in volume. With many employees still working remotely, now is the time to plan how to deliver holiday customer service, including inquiries about exchanges and returns. 

For many, that may mean moving from centralized contact centers to virtual contact centers that are staffed remotely by employees working from home. Successfully completing that transition requires that agents have access to the same functionality at home as they would in the office to quickly access customer records, query different parts of the organization, and collaborate on cases.

What do you think the biggest retail technology trend of 2021 will be?
I think 2021 will be a recovery and rebuilding year for retailers. They will need to continue addressing the impact of the current crisis while working to protect themselves from future unexpected events and disruptions. 

Cloud technologies will be a key enabler for retailers in 2021. Whether a retailer needs to reinvent legacy applications for new value, drive efficiencies into the supply chain, or enable differentiated customer experiences, they should be accelerating cloud migration and IT modernization, artificial intelligence and machine learning efforts, and digital transformation. 

Cloud migration significantly cuts IT costs for retailers. We’re seeing retailers save an average of 30-50%. This allows them to reallocate those funds to experiment with offerings that address new shopping behaviors formed during the pandemic and improve the supply chain. 

For example, savings from moving workloads to the cloud can be reallocated to machine learning projects that identify some counterintuitive insights about a retailer’s business and shoppers. The ability to rapidly ‘sense and respond’ to customer and inventory demands will help retailers adjust their store and digital execution efforts more efficiently and profitably as they recover from the crisis.