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Retail industry context

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This article establishes the market context assembled by Microsoft and other partners to inform the guidance in the retail industry scenario of the Cloud Adoption Framework.

Consumer experiences come first

Customer service has always been a differentiator in retail. Customers today have expectations that didn't exist a decade ago. They expect consistent information across different channels, such as mobile apps, websites, or interactions with in-store employees. Customers increasingly demand personalized engagement, like product recommendations or tailored discounts. Your customers also want different kinds of convenient ordering, delivery, and pickup options.

Intelligent operations are a requirement

Besides meeting customer expectations, you need to increase efficiency for your employees and processes. For example, they need to make data-driven decisions in areas with small margin for error like marketing, pricing, and assortment planning. When it comes to supply chains, retailers and consumer goods companies need to handle increasing complexity and cooperate with multiple parties around the world. They need full visibility to be able to match inventory levels to demand and prevent stock-outs or overstocks.

Harnessing technology and data

Data and cloud-based services will play an indispensable role for retailers and consumer goods companies. You can optimize operations and create stronger customer experiences. To stay competitive, you need to connect data silos for customer behavior across channels, finances, supply chain, and more.

To optimize operations and create stronger customer experiences, data and cloud-based services will play an indispensable role for retailers and consumer goods companies going forward. To stay competitive, they'll need to connect data silos related to customer behavior across channels, finances, supply chain, and more. New technologies such as cloud computing, advanced analytics, machine learning, IoT, and mixed reality create endless opportunities for retailers to improve what they're doing and reimagine the way they do business. Cloud-based capabilities can lay the foundation for you to survive in the short term and thrive in the future.

COVID-19 context

The COVID-19 pandemic has had an unprecedented impact on retailers on a global scale.

With brick-and-mortar stores either closed or limited, retailers see an increased demand for deliveries and returns by mail. In the United States, grocery stores saw an over 200 percent spike in online ordering in mid-March 2020 compared to the same period in 2019. This trend will likely continue. In the United States, 68 percent of shoppers expect to order essential goods online even after COVID-19 has subsided.

For stores that are open, flexible pick-up and check out options aren't only convenient, but crucial. There's an urgent demand for experiences that keep customers and employees safe, such as curbside pick-up, contact-less payment, and self-checkout. In a recent worldwide survey, 74 percent of respondents said they'll continue using contact-less payments after the pandemic has ended.

On the supply side, retailers face supply chain and shipping challenges from manufacturing constraints. In fact, 75 percent of United States companies experienced supply chain disruption because of the halt of production in China.

Finally, consumer preferences and purchasing patterns overall have become less predictable. During the COVID-19 pandemic, 15 percent of consumers started shopping at different stores. Retailers need to use data to find opportunities and mitigate risk.

If there's one thing to be learned following COVID-19, it's that agility is key. To navigate the current crisis and become more agile and resilient over time, technology and data will play an important role for retailers.

Sources

  • During COVID-19, disruption in the marketplace, whether driven by supply-chain challenges or by changes in shopping behaviors, have led 15 to 20 percent of consumers to switch stores. For more information, see US small-business recovery after the COVID-19 crisis.

  • 68 percent of United States shoppers expect to buy essential goods online after the health threats of COVID-19 have subsided. For more information, see COVID-19 has permanently changed shopping behavior.

  • 79 percent of worldwide respondents say they're using contactless payments, according to Mastercard consumer polling data. Online interviews of 17,000 consumers in 19 countries/regions worldwide conducted April 10-12, 2020.

  • 75 percent of United States companies' supply chain affected by China's production halt. For more information, see Cascading economic impacts of the COVID-19 outbreak in China.

  • During COVID-19, for grocery shopping there was a spike of 210.1 percent of online ordering during March 12, 20 to March 15, 2020 compared with the same period in 2019. For general merchandise retailers, they also experienced 50 percent more online orders on March 13, 2020. For more information, see Impact of COVID-19 on US brands and retailers.

Next steps

To learn more about how Azure supports retail organizations, see Azure for Retail.

These resources offer guidance in the cloud adoption scenario.