Coronavirus Crisis: How Google Cloud Is Helping Retailers

Source:-crn.com

Google Cloud has ramped up capabilities for its grocery and mass merchandising customers to Black Friday and Cyber Monday levels as they face unparalleled demand for groceries and other essentials amid the coronavirus (COVID-19) pandemic.

Customers including Target are seeing an “unprecedented” period of demand that rivals the biggest holiday shopping days of the year, according to Carrie Tharp, Google Cloud’s vice president of retail and consumer.

“We’ve had to turn on the Black Friday/Cyber Monday protocol to support those traffic demands and surges so that they can handle whether people are hoarding and pulling forward their buying or just kind of changing their consumption behavior,” said Tharp, who served as chief digital and marketing officer at Dallas luxury retailer Neiman Marcus Group before joining Google Cloud last August. “What we’ve really focused on…is ensuring that we get all of our capabilities that can be used in short order — whether you were a customer previously or not — to the forefront for retailers to make sure they’re supporting their employees and their customers in this time.”

In a “normal” retail year, Google Cloud’s special Black Friday/Cyber Monday program helps customers with capacity planning and management to prevent outages or customer experience disruptions when the traditional start of the busy holiday shopping season begins on Thanksgiving or the day after. Google Cloud engineers typically work shoulder to shoulder with retail customers’ IT teams to ensure their e-commerce systems have the scalability and reliability they need in that peak season, according to Tharp.

“We basically took that program and turned it on for this period of time for the grocers and the mass merchants who are really seeing rapid acceleration in their online traffic and lots of new customer acquisition,” Tharp said. “A lot of our grocers are having hundreds of thousands of new customer acquisitions of people who didn’t previously shop with them or perhaps ate out more predominantly, and so we’re making sure that all of their systems are able to bear those traffic surges they’re seeing now.”

Retail is one of six industries that Google Cloud has been targeting with industry-specific solutions since Thomas Kurian assumed CEO responsibilities last year. Its retail customers are tapping its vertical retail solutions focused on accelerating omni-channel sales and using data to help drive business and operational improvements, according to Tharp.

“We’ve taken the best of our tools that we have and are using all of our account resources, our customer engineers, our professional services, to do a lot of these rapid development, rapid migrations as needed,” Tharp said. “Things like our Contact Center AI have become very important, where we’re able to do rapid stand-ups of virtual agents to help some of these partners with pretty basic (customer) questions that are just overwhelming their call centers and their stores about what are your hours, do you have certain products in supply, trying to use the buy online, pick up at curbside (options).”

Google Cloud had to support Canadian supermarket chain Loblaws with extra capacity because the number of its consumers using its express grocery pickup tool has rapidly accelerated.

Helping Non-Essential Retailers

The surge for some retailers comes as other non-essential chains have seen a rapid decline in demand and been forced to temporarily shutter their non-essential businesses, and while some consumers are curtailing spending on discretionary items amid the shelter-in-place/stay-at-home edicts and the economic fallout of widespread job layoffs and furloughs due to the coronavirus.

“Holistically, across both sets of retailers, we’ve very much focused on generally what I call demand forecasting,” Tharp said, noting a focus on basic predictive analytics. “We’re living in a very uncertain time. We’re helping a lot of our customers use public data sources like some of the public reporting of coronavirus cases and different shelter-in-place orders to create behavioral models to try to understand where should they be shifting inventory, how should they be thinking about replenishment.”

Sixty-one percent of brick-and-mortar retail U.S. stores – 259,851 locations with combined store and online sales of $168 billion in April 2019 – currently are closed due to the coronavirus pandemic, according to GlobalData, a data analytics and consulting company. The figures exclude gasoline, foodservice, and auto sales establishments. GlobalData expects retail sales to decline 31.4 percent this month from April 2019.

“Online isn’t making up for all of the demand that they would typically experience in-store, so there we’re very much focused on helping them with cost management, managing the ramp-down of certain services that they’re not using as much, because cloud allows for a much more flexible cost baseline for those retailers to be operating on,” Tharp said.

Retailers may have to deal with potentially changed shopping dynamics when stores are allowed to reopen and consumer spending returns to more normal levels. Prior to the coronavirus pandemic, the over-stored industry already had been seeing retailers reducing their physical footprints as consumers were shifting more of their spending online.

The coronavirus pandemic likely will spur record store closures this year and potential retail consolidation, and retail bankruptcies are likely to spike, according to research analyst Ken Perkins of Retail Metrics. Neiman Marcus Group is preparing to file for bankruptcy protection as early as this week, and Lord & Taylor and J.C. Penney also are exploring bankruptcies, according to published reports.

“Every day there seems to be a stream of temporary store closure extensions, employee furloughs, executive salary reductions, tapping of revolving credit facilities, capital expenditure cuts, share buyback and dividend postponements or cancellations, rent forbearance or refusals to pay, guidance withdrawals and scrapping of new store openings,” Perkins said in a recent retail report. “Sadly, if store closures persist for some time, many are likely to become permanent, while a spate of bankruptcy filings from weaker players is not out of the realm of possibility.”

Google Cloud already is helping its retail customers predict what their store reopening ramp-ups could look like, according to Tharp. For the retailers that are quite busy right now, that includes how to keep that supply chain running efficiently, Tharp said. And for retailers that have ramped down, it includes when and how does business start picking back up and how they can ensure they’re prepared.

“The coronavirus crisis created a new version of crisis for retail,” Tharp said. “Typically, as a retail executive, you have scenarios that plan for sections of a country being shut down or certain nodes being shut down, perhaps from a natural disaster, and you could really adjust…around it. This dynamic has really created a different world, where essentially all of your stores are shut down, and you may not be able to operate some warehouses. It’s created a renewed focus on business continuity, and cloud capabilities are an example of a big part of that conversation. Rather than being worried about accessing IT resources and business resources on-premise, having a partner like Google who can really handle those things seamlessly (allows you to) be focused on your customer experience.”

Google Cloud’s first pillar of its retail strategy — helping retailers accelerate digital and omni-channel revenue growth and be less store-dependent, if needed – speaks to the need for retailers to consider store footprint adjustments, according to Tharp.

“We see all of that being very important coming out of this (coronavirus) crisis,” she said. “We also have a lot of capabilities to help rapidly reduce costs. As retailers are in a liquidity crisis…they’ll be looking through their entire P&L (profit and loss statement) and trying to understand where they can drive cost out so they can continue to focus on their core value proposition with the customer. That’s where migration to the cloud, rethinking your martech (marketing technology) stack…can help reduce costs, and things like our contact center capability…can help improve the efficiency and cost baseline there. We expect, coming out of the crisis, a lot of deep, more accelerated conversations on these capabilities that were relevant before but are now much more urgent to help shore up the retail P&L coming out of a very difficult period.”