Taking Out Costs Through the Cloud

Cloud is the technology that can enable grocers and other retailers to pivot more quickly to their new reality – whatever it may be.

The retail industry is a complex, global web of interconnected brands, stores, and supply chains. Still, it is perhaps easier to understand if you boil down its operating procedures to one familiar concept: muscle memory.

Each year, retailers prepare for the typical holiday staffing surges, seasonal inventory adjustments, and year-over-year metric comparisons. Retail is, by nature, a world defined and powered by its predictable structure and routine, wherein brands act almost entirely based on what has worked or not worked in the past – muscle memory. That doesn’t mean the industry is immune to innovation – certainly not – but only that widespread innovation, affecting change requires a more seismic event.

Unfortunately, the health care pandemic has developed into much more than that. Over the past few months, the global supply chain has been on the receiving end of a complete disruption to the status quo. And at the heart of this disruption is a data disconnect. With some stores still closed across the country, and the vast majority of purchases from e-commerce, the in-store sales data that powers retailers’ buying and planning decisions have almost entirely disappeared. This data void is atrophying  the muscle memory and forcing retailers to navigate new challenges and consumer mandates such as social distancing.

Without that muscle memory, it’s no surprise that many retailers are struggling to solve these issues. Before the pandemic, retail’s biggest concerns, Black Friday or back-to-school season, were most often solved by simply throwing people at the problem. But with store operations limited and revenue streams cut off, retailers are forced to find another way forward – and the first place they should look is toward the cloud. Amid this perfect storm of retail disruption, shifting to the cloud could prepare retailers with the capabilities necessary to survive.

Full Speed Ahead

It’s easy to forget, but many brands didn’t go into the spring with ready-made curbside pick-up or online ordering capabilities. Back in April, retailers were scrambling to develop new ways to attract and sustain their customers, many working day and night to roll out those new strategies. Brendan Witcher of Forrester called it the Duct Tape strategy. Technology that typically takes months to deploy was hastily thrown together in days and weeks. But for too many retailers, the speed of the pandemic outpaced the rate of their innovation. In a recent webcast, Chris Brook-Carter of the RetailTrust talked about five years of innovation in five months. By the time they built their online ordering systems, revenue had likely trickled to zero for some retailers.

The pandemic is demanding that retailers respond to their environments as quickly as they change. By moving to the cloud, retailers can avoid the lengthy traditional implementation process and realize value within weeks. With the cloud, change management doesn’t have to be complicated – retailers can access all their capabilities on-demand and employ a technology partner to support the solutions they need in real-time without going on site. And in a pandemic, there’s no substitute for speed. Now is the time to apply the scale.

Less Can Be More

Retail is an industry that runs on incredibly challenging margins. Most brands simply do not have the luxury of being wrong over an extended period: The thin financial tightrope they walk demands that nearly every investment they make pays off. That tightrope has only become more precarious and the safety net that one may have been in place has shrunk or been altogether eliminated.

But by moving organizational and financial data to the cloud, brands can relieve themselves of some of the manual labor, such as data entry and process management, which tend to make those margins even more difficult. It’s hard to resist the urge to resolve this by patching up holes and challenging associates with longer hours and more responsibilities. But the reality is that’s not a sustainable solution, nor is it financially viable, even for retailers who may have the cash and resources to keep up. The cloud, on the other hand, enables retailers the intelligence to adjust on the fly, leaving team members free to focus on higher-value activities that return more value to the business.

Roll with The Punches

Perhaps the most significant value of cloud-based systems is the ease with which retailers can improve their decision-making and flexibility. With years of sales and inventory data accessible in seconds, it’s easier than ever for cloud-based artificial intelligence (AI) to identify patterns and anomalies in the data and produce superior rapid-response strategic recommendations. In this unprecedented time, retailers can quickly access relevant information from the last several months, filling the data void and dealing with forecast anomalies.

Consider the grocery industry: grocers are still selling well, but it’s through a completely different method than in previous years. Instead of stocking items in aisles, associates pull items right off the pallets to get them ready for curbside orders. With the mix of customer purchases so radically different, it has been imperative for grocers to adjust their inventory management processes quickly. If they can’t, they risk severe manual inefficiency that will negatively affect the bottom line. Cloud is the technology that can enable grocers and other retailers to pivot more quickly to their new reality – whatever it may be.

Into the Unknown

As retailers move forward, they must understand there’s a more efficient way to manage their businesses – and it starts with allowing cloud-based AI processes to control everything they don’t want to or can’t afford to. That will leave brands more space to breathe, bringing their wealth of knowledge back into play at the highest level, shifting from muscle memory to strength and agility.

-Jeff Warren, vice president of strategy and solution management, Oracle Retail