Why retail companies struggle to understand consumer demands
Understanding demand is tough for any industry. More so for retail and consumer packaged goods (CPG) where the competition is fierce. Add to it legacy tools and practices that are no match for the complex challenges of today’s retail environment, and companies struggle to understand what customers really want.
However, new solutions and technologies hold tremendous promise. They can help companies make sense of demand signals, gain a deeper understanding of consumer needs, and act quickly to meet them.
A must to keep pace with demand and outpace uncertainty
Demand can be influenced by a wide range of factors, including pricing, consumer’s income, consumer confidence, trends, and competition.
And it can change quickly in the face of unexpected events. For example, a survey revealed that 85% of adults in the United States said inflation has changed their shopping behavior, causing them to buy at discount stores and switch to generic products. Trends like this bring uncertainty into retail and CPG businesses.
Uncertainty also comes from the fact that most retailers and CPG companies simply don’t have the capability to effectively use the demand signals available and quickly adapt them to their plans. Often, planning continues to be manual, with multiple iterations involving dozens of people. This means that even when companies finally get a handle on real-time demand signals, they are still unable to react quickly enough to avoid disappointing consumers.
An intelligent approach
How cloud-native technologies are allowing an intelligence-based approach to demand sensing
Many retailers and CPG companies are now leveraging cloud-native technologies and solutions to gather external data such as consumer trends, climate, customer feedback, and demographics from a wide range of sources and integrate it with internal ERP systems.
In addition to cloud, companies are using artificial intelligence (AI) and machine learning (ML) to generate insights so that decision-makers can respond in real time.
A retailer could get a continuous feed of online searches being done for a particular product in a specific location and adjust its inventory to make sure it has enough of that product at stores in that location.
A CPG company could continually monitor online reviews of its products and add new features that people are looking for.
A grocery chain could understand potential weather emergencies in various cities and make sure they are fully stocked up on essentials to meet a surge in demand ahead of impending storms.
All this, and more, are possible with emerging, cloud-based technologies.
An approach to better data integration
Though many retailers and CPG companies are already using AI and ML to help them create better forecasts and plans, they still struggle with the complex and time-consuming process of integrating external data with their internal systems to improve the accuracy of their predictions. In fact, in a survey, 63% of companies said the most common barrier to using external data was data preparation and integration.
Thankfully, innovative solutions from leading cloud providers like Google Cloud are enabling enterprises to get to business insights and outcomes faster, with less risk, complexity, and cost. Companies can kick-start their data on cloud journey easily using reference architecture patterns, packaged solution deployment content, and integration services these providers offer. By doing so, they can build intelligence into their ERP data collected daily and operationalize data back to their business processes.
At TCS, we have unlocked deep data insights and quickly delivered differentiating capabilities for our clients. By combining our outcome-based approach and deep industry knowledge with solutions such as the Google Cloud Cortex Framework, we have found that we could cut data integration time from the usual six to nine months to as little as six to eight weeks.
What this means is that product development teams can significantly reduce time to market and roll out products while demand for them is still high. By having the right products at the right time in the right places, companies can boost upselling by 30% to 40% while enhancing customer satisfaction and loyalty.
Over time, we believe new approaches like the Google Cloud Cortex Framework and its underlying solutions can have a dramatic impact on retail and CPG companies, enabling them to build a brighter, more profitable future for themselves.