AWS Retail Series: How COVID-19 has accelerated a new digitized normal for retailers

World events are accelerating change in the retail industry. As retailers operate through a global pandemic, many are rethinking all aspects of their businesses in order to prepare for the ‘new normal.’ Will consumers’ massive shift to online channels ‘stick’? If so, do existing investments in technology and IT infrastructure take into account what will be needed for retailers to successfully engage consumers? And, just as important, how can retailers identify cost efficiencies across their organizations while simultaneously doubling down on innovation?

These are just a few of the many topics the AWS Retail team has been discussing with our customers as we navigate together toward the “new normal” in the wake of COVID-19. We’re seeing different sub-industries within retail deal with their own unique challenges. While fashion brands are determining how to move stale merchandise and get back to seasonal assortments, grocers are working to reinvent their supply chains for better demand forecasting and allocation. Both are looking to diversify to avoid dependence on a single source, and all retailers with physical stores are focused on making shoppers feel safe coming back to stores.

As retailers work to recover revenue and attract new shoppers, they need to quickly drive costs out of the business. Cloud technologies will be the key enabler for companies here, whether that’s to reinvent legacy applications for new value, drive efficiencies into the supply chain, or enable differentiated customer experiences regardless of channel. Cloud migration significantly cuts IT infrastructure costs for retailers, enabling them to reallocate those funds to experiments. Retailers can then reinvest that newfound budget into new initiatives such as machine learning (ML) projects that identify sometimes counterintuitive insights about their business and shoppers that would otherwise remain undiscovered. This results not only in operational efficiencies, but also in uncovering new ways to delight shoppers based on new habits formed when restrictions were put in place due to the pandemic. Because of the cloud’s agility, we’re seeing many projects that once took years to get done being accomplished in just weeks, and those that took weeks now completed within days. For example, during the onset of COVID-19, our retail customers were able to set up call centers in less than two days for remote workers. That’s cloud agility in action.

In addition to important trends like working from home, here are just a few ways our customers are innovating during these uncertain times as they accelerate the migration of core applications to the cloud:

1. Using ML to identify counterintuitive insights that can deliver significant business impact.

Retailers are moving beyond traditional data analytics to apply ML to get counterintuitive and previously unseen insights that help them respond to business trends in near real time during the pandemic. Because our many of our ML services don’t require any machine learning experience, retailers are able to immediately train, test, learn, and deploy models quickly and experiment. An industry that is benefiting from these insights is grocery. At the outset of the pandemic, grocers nationwide saw product shortages as consumers rushed to stock up on items like paper towels, toilet paper, and sanitizers. As the supply chain begins to recalibrate, grocers now need better insights for SKU rationalization, as well as demand forecasting and allocation.

2. Accelerating digital transformation across the entire organization.

As stores begin to reopen, shoppers want as many contactless experiences as possible – from contactless mobile payments and cashier-less shopping to safe and easy curb-side pickup. Buy Online Pickup in Store (BOPIS) is rapidly moving toward a Buy Online, Pickup at Curb (BOPAC) model. In order for BOPAC to be successful, retailers must remove friction in the pickup experience. For example, when Prime members in Seattle arrive at an Amazon Fresh building to pick up their online grocery orders, AWS technology identifies their car and parking spot, alerting an associate to load the order without the member ever having to call the store or leave their car.

Inside stores, retailers are using computer vision technology to better understand store traffic patterns and redesign store layouts to naturally encourage social distancing. Being able to identify areas of shopper density enables retailers to redirect traffic patterns to adhere to social distancing guidelines without having store associates monitor and enforce distancing rules during their shifts to keep shoppers and associates safe.

3. Managing in-store inventory in new ways.

As curbside pickup becomes an increasingly popular option for shoppers, stores are becoming micro-fulfillment centers. This creates new challenges and opportunities for retailers to adapt stores to help employees become more efficient in these shifting roles, including facilitating new tech-driven processes for multi-order picking. It’s also critical that retailers understand which stores have an item in stock and how many units are available in each location. When a retailer fails to understand inventory in real time, the customer experience falls apart, placing customer trust and loyalty in jeopardy. Computer vision and IoT sensors such as RFID are efficient ways for retailers to track what items are on store shelves at all times and what needs to be replenished so consumers are never disappointed with the click-and-collect experience.

Reinventing the retail store experience will take time. It will require looking at how computer vision, robotics, IoT, and other technologies can make stores safer and provide shoppers with a better experience. Change won’t happen overnight, but it’s necessary for retailers to protect themselves from future unexpected events and disruptions by creating efficient ways to experiment and deploy new customer engagement approaches and internal operations. In the coming months, we’ll use this blog as a place to continue the conversation and share learnings from our experiences with retailers, partners, and conversations with experts in the field. We’re all in this together, and my team is committed to helping this resilient community reinvent and reimagine the future of retail.

To learn more, please reach out to your account manager or visit aws.amazon.com/retail.