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CARRIE THARP: Hi.
I'm Carrie Tharp, and I lead Retail for Google Cloud,
driving our strategy, product roadmap, and go-to-market
for the industry.
Thank you for listening in.
I'm excited to talk about how we're supporting
the transformation of retail.
First, I want to start by recognizing everyone
joining into this session.
Many of you and your teams have been working tirelessly
to keep your customers and employees safe
while ensuring everyone has access to the products
and services they need.
We know it has been a trying couple of months
and appreciate everything that you
are doing to adapt to serve your customers during this crisis.
Thank you from all of us.
Prior of this pandemic, retail already
had a lot going on, keeping up with waves of change
in the last 20 years, first launching
e-commerce businesses, then shifting
to operate in a more omni way, and most recently,
trying to break them all to create
truly channel-less experiences, all
while customer preferences and expectations have continually
evolved.
The pace of disruption has been high in an industry
where, prior to COVID-19, revenue growth rates
were generally low.
And now, sizable revenue declines, or for some of you,
growth with margin pressures, have
created a new urgency for digital transformation plans
and creating a new retail playbook.
The pandemic has created volatility and uncertainty
for you and your customers.
In a recent survey by McKinsey, only 15% of people
felt optimistic about an economic recovery,
and 25% said they intend to spend less.
So understanding demand and consumer behaviors in real time
is now more important than ever.
Consumers have been forced to break their normal routines.
Necessity has led people to try new products and services that
can help them adapt.
In a recent Google survey, we saw that more than 50%
of shoppers had tried a new service for the first time,
more than 25% went online to purchase something they would
normally buy in-store, and more than 50%
said curbside pickup will be beneficial
even when your stores reopen.
So the critical question is, how much of this will stick?
Which of your operational metrics
will go back to the historical averages, and what shopper
behaviors will continue?
With routines impacted, consumers' old habit loops
have been broken, and they may have been
forming new ones right now.
The novelty of virtual happy hours may wear off,
but perhaps all that digital grocery shopping will stay.
As months of repeated behavior comes convenient or preferred,
we are now well into the time frame
it takes to form a new habit.
Research into behavior change after the 2014 Tube
strike in London found that, when
forced to explore alternative routes,
people found superior journeys.
And after the strike, people were
less likely to return to their pre-strike commute.
We want to make sure that you're positioned to capture growth
opportunities with these new journeys that are being created
in retail right now.
With change comes an opportunity to grow your share
and reposition with customers.
Google Trends and our surveys show some new patterns for you
to be thinking about in your updated playbook.
Consumers are trying to regain a sense of control
through safety measures.
This is step function change in recent months
that will likely sustain at some level.
What changes to your physical environment need to be made,
and how fast can you stand up new digital experiences?
Basics are still coming first, while nonessential luxury
and aspirational shopping remains slow.
As economic impact lingers, how do you digitally
engage consumers and leverage local inventory
and fulfillment to capture more demand?
Private and personalized promotion
also can take on new relevance.
Homebound consumers are leaning into digital and video
to help bring the outside into their homes.
As things return to normal, how will you
recapture traffic and engagement,
as trip dynamics have changed and may not recover?
And finally, e-commerce is now at the center of the journey.
The store isn't dead, and will always have a huge role,
but do your stores become a digital extension,
and is your store and eComm supply chain agile enough
for future uncertainty?
With these consumer trends in mind,
let's talk about priorities for creating
what is next in retail.
In addition to changing consumer dynamics,
the pandemic has created a new context for business continuity
plans.
The store has always been the heart of retail,
but now, no one is certain what the new normal will be,
including the exact role of the store.
Many of you have been tasked with pulling
your digital transformation plans forward two
to three years, as retail executives expect
a slow path back.
No one can predict exactly how things will evolve over
the next year, but comparisons to LY are out the window,
operational metrics have turned upside down,
and consumer behavior is in uncharted waters.
As you set your path forward, whether it's
recovery or holding onto the growth
you may have recently experienced,
I want to share with you a few of the top things we're
working on with our retail customers right now.
First is boosting online experience.
A recent survey of retail executives
revealed that respondents expect online penetration
to remain 6 to 13 basis points above pre-COVID levels.
Enabling e-commerce systems to handle the sustained increase
in demand, as well as rapidly adding scalable new omni
experiences, increasing one-to-one personalization,
and understanding digital signals
is a top priority on roadmaps, regardless of what product
category you're in.
Second is rethinking store operations.
Keeping employees and customers safe
requires new in-store capabilities.
Finding the right model for your brand and customers
will require some test and learn.
Short-term appointments, adjusting staffing,
creating new contactless engagement,
and more pickup and delivery options are all critical.
These new digital store experiences
do create more operational and optimization
needs to ensure that you can meet customer expectations
while managing your margin.
We are working with retailers right now
to help navigate this new complexity.
Third is ensuring organizational readiness.
Responding to this crisis is a massive organizational
undertaking.
As you shift into recovery mode, it
will require investment to develop and implement
new processes and tools.
We provide solutions to tackle work-from-home conditions,
and can implement training programs
to prepare store associates for new policy and procedures.
Fourth is resilient supply chain.
Gaps in the supply chain have certainly been exposed.
This has gone from a top topic to the topic of the day.
Inventory has been locked up in stores,
fulfillment centers are strained,
and there is lack of visibility and ability to react quickly.
We're working with customers to implement real-time analytics
capabilities to better predict demand and market
trends to help them capture local demand
and understand their real inventory
position at all times.
Lastly, reimagining customer interactions.
Changes in consumer behavior and expectations
that were already disrupting retail have accelerated.
Consumers are now experimenting with new technologies,
including video, augmented reality, social commerce,
and live events.
Necessity has gotten people over digital experience trial
barriers.
With this jump in people trying new digitally enabled services,
reducing friction in omni experiences
has now become make-or-break for everyone from grocery
to apparel retailers.
We're helping in-store and online, helping rapidly
launch new apps and experiences, enabling
better personalization, and creating new customer feedback
loops.
So let's talk a little bit more about solutions
to help you accelerate your go-forward plans.
Google Cloud can help you solve for what's
next in retail in three important ways.
First, our solutions can help you improve operations
in ways that drive capital efficiency,
as well as create cost reduction and operational improvement.
Second, we can help unlock value in your P&L
through data-driven decisions at the intersection of customer,
product, and supply chain data.
Finally, we can help you capture that digital and omnichannel
growth with modern and responsive systems
and new experiences.
These times of crisis are creating lasting brand
impressions with your customers.
No one wants to lose customers to operationally more
agile competitors, and cost reduction
will be key to fund innovation going forward.
We know it isn't easy to operate in a world
where both consumer behavior and supply chains are disrupted,
and entire teams have had to go remote.
Google Cloud has solutions that can connect your workforce
to drive real-time collaboration,
to use AI to provide customer service
or create operational chat bots to streamline store operations,
and solutions that can help optimize inventory
and logistics.
We can also help streamline your store infrastructure
and get you ready for compute at the edge with Anthos
and 5G offerings.
We can also help do all of these things
in weeks instead of months, with the cost savings, security,
and agility that come with our cloud offerings.
An example of a retailer who used our solutions
to improve customer service during the pandemic
is Albertsons.
Albertsons operates in over 2,000 locations in the US,
and they saw call volumes to their stores increase
five times versus the norm during COVID-19.
Questions like "do you have toilet paper" and "can you
deliver" took on a whole new urgency.
To help customers get faster responses,
Albertsons enlisted our Rapid Response Virtual Agent
that's part of our Contact Center AI offering
to manage surging inbound calls and to address
customers' basic questions.
With Contact Center AI, your virtual agent
can converse naturally with customers 24/7
and assist human agents on complex cases,
integrating with your existing infrastructure
while decreasing costs to serve and improving metrics
like net promoter score.
Next is becoming data-driven.
You've all heard it--
retail is in the detail, and the details are in the data.
Retail has been on a journey to make
customer-centric, data-driven decisions for years.
But the transition from reporting and insights
into real-time action can sometimes
be a challenge with legacy tech stacks and siloed data.
Google Cloud can jumpstart or accelerate
your agenda, whether it's creating one-to-one engagement
with AI or using more signals to create a better demand
forecast.
We can also migrate and modernize your data platforms
for all of your marketing, merchandising,
and supply chain needs.
Solutions such as Retail Common Services
can help you activate AI in real time,
and move from reactive to proactive
decision-making, leveraging data from all parts
of your business.
We will work with you to fully capture the value of your data
and take the hype out of AI to deliver real results you
can feel in the P&L.
Ulta Beauty is an example of a customer who
uses data and personalization to create
a differentiated digital experience.
While their stores were temporarily closed,
they leaned into their online channels
to stay connected with shoppers.
Their virtual Beauty Advisor tool, built on Google Cloud,
proved particularly useful, providing consumers
with tailored recommendations powered by customer and product
insights, as well as a high-quality virtual try-on
experience while the store-based beauty experience was not
an option.
And lastly, e-commerce and channel-less retail
are here to stay.
But now, it's all about how fast you can move.
Google Cloud can help you accelerate your shift
to digital by untangling legacy e-commerce systems,
introducing a containerized architecture that
provides for greater agility to deploy new services
and capabilities, and provides superior reliability
and scalability.
We can help you build a forward-looking architecture
that creates a flexible platform that
grows to meet your expanding transformation needs,
and tools like AppSheet, our no-code development platform
for web and mobile app experiences,
can take your rapid test-and-learn agenda
to the next level.
Enabling better discovery of your products
is also of utmost importance.
Google Cloud provides product discovery solutions,
such as Google Cloud Retail Search, which
is powered by Google's unique and leading query understanding
and contextual search capabilities.
Lastly, and very relevant in these recent months,
we also have a white glove e-commerce
service to help you get ready to manage peak capacity
needs, working shoulder-to-shoulder
with your war room teams to ensure a flawless peak.
These capacity management services
have helped many retailers during the spikes
caused by COVID-19.
Across all of these core solution areas,
we're also focused on bringing together the best of Google
for you through Google Cloud Platform.
The broader Google ecosystem can play a significant role
in helping retailers deliver a true channel-less experience.
With eight products that have over a billion users,
Google can augment the shopping journey,
helping consumers discover products and brands
while improving conversion and reducing friction.
Google Cloud can be your trusted technology partner,
creatively leveraging all of our consumer innovation
and broader offerings to help you
deliver on a new and unique journey for your brand.
So now, let's talk to a customer that
has been on a path of rapid digital transformation
with Google Cloud, and what they've
been able to achieve in just the last few years.
Lowe's grew from a single small-town hardware
store in North Carolina to become
one of the largest home improvement
retailers in the world.
Today, they serve 18 million customers a week,
and ended 2019 with $72 billion in sales.
To talk about their experience, I recently spoke to Neelima
Sharma, senior vice president of technology for e-commerce,
marketing and merchandising at Lowe's.
Hi, Neelima.
It's great to see you.
Thank you so much for joining us today.
NEELIMA SHARMA: Hey, Carrie.
It's good to see you again.
CARRIE THARP: Great.
I saw that you guys had a great quarter last quarter
at Lowe's, and digital was a big part of that success.
Can you tell us a little bit about your experience
and the response to the COVID-19 pandemic?
NEELIMA SHARMA: Our primary focus right now
is on the health and safety of our customers and associates,
and providing them a good experience however
customers choose to shop with us in this environment.
You know, the fundamental improvements
that we've made over the last 18 months or so on our technology
foundations have allowed us to be
able to create new capabilities and meet our customer needs,
both online and also in stores.
Customers increasingly turned to us in March for essential items
to keep their homes running.
There was a sharp uptick in sales on Lowes.com.
Many spikes exceeded Black Friday demand.
Pivoting to serve that demand requires agility and stability
of our people and our systems.
Investments in our online infrastructure
and our progress with our Google Cloud migration
greatly improved our site stability,
and allowed us to effectively handle that increased traffic.
Lowes.com sales were up 80% in the first quarter of 2020,
and we saw triple-digit growth in Lowes.com
in April and into May.
CARRIE THARP: Wow, that's really impressive.
I'm glad that you guys were able to meet all the demands
through this pandemic period.
I know you guys at Lowe's have made a concerted effort
over the past couple years to invest in digital.
Can you tell us a little bit about how
you went about this journey, and how to prioritize
where you invested?
NEELIMA SHARMA: Lowe's had historically
underinvested in technology.
And when Marvin Ellison became CEO,
he was candid about some fundamental things
that needed to be fixed.
He noted that all of the successful retail companies
have a successful technology footprint,
and that immediately set the ambition
for Lowe's to become a world-class technology leader.
We view technology as a backbone for delivering
a best-in-class, personalized, integrated experience.
Home improvement projects take time,
and a customer may start researching their project
online and complete their transaction in-store,
or they may start in-store and then move online,
or go back and forth.
So our focus is on making sure their journey is seamless,
no matter where they are on at any point in time.
CARRIE THARP: Great.
That's great to hear you're really
thinking about that customer journey at the center.
That's so critical to meet all the new demands
of customer expectations.
We're headed into yet another holiday season, where
omnichannel is expected to be more important than ever
before.
Can you talk a little bit about what
you're thinking of for readiness in this new retail reality?
NEELIMA SHARMA: Yeah, you know, actually,
over the last quarter our team has
been through a sustained peak of demand that amounted
to an extended holiday season.
It was like having a Black Friday for a whole quarter.
And they've responded tremendously
to these unprecedented circumstances,
changing in customer demand, all in the wild
of a multiyear technology transformation.
As the ongoing impacts of COVID point to the increasing
importance of omnichannel capabilities to home
improvement customers, the work completed
over the past few months has given us that confidence
that we are on the right path.
Whether it's Black Friday, whether it's
Cyber Monday, or just our busy spring season,
our goal is for the holidays to be a non-event.
Omnichannel is a tremendous growth opportunity,
and we're excited about our technology
vision and the progress we've made,
and we feel that we're well on our way
to build a channel-less retail experience for our customers.
CARRIE THARP: Thank you so much for sharing
your journey with us, Neelima.
I'm excited for the results you guys have seen
and what lies ahead, both as a customer and a partner.
I know there's lots more to come.
Thank you to your company, your associates, and your team
for helping support everyone through the pandemic.
NEELIMA SHARMA: Thank you so much, Carrie.
And really appreciate our partnership,
and looking forward to more work and amazing things together.
CARRIE THARP: So now that you've heard
a little bit about our solutions and directly from a customer,
I'd like to mention our partners.
To help deliver our solutions at scale,
we are growing our ecosystem of partners who have deep
expertise in retail and can help you get faster results with
integrated or out-of-the-box SaaS solutions.
Ultimately, our goal at Google Cloud
is to bring the best of Google to our customers,
and to be a trusted partner that helps you fulfill your business
goals.
For more information about our solutions
and to hear success stories from your peers,
attend our retail breakout sessions throughout Next OnAir.
Also, we'll be conducting regional digital events that
go deeper into your concerns in roundtable and webinar formats.
Lastly, we understand each enterprise's journey
is different.
So reach out to your Google Cloud sales representative
for a conversation on how we can help you solve
for what's next in retail.
Thank you for joining.
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