There’s a divergence in the market right now with retail brands that are flourishing while others are posting steep losses. It’s also a market where companies are experimenting with new technologies to support consumers and improve the shopping experience while others seem to be reluctant to make investments in new platforms.
Analysts are calling it a time of transformation and transitioning for retailers.
And though a silver bullet to address various pain points felt across the retail ecosystem doesn’t exist — yet — there are multifunctional platforms that aim to service retailers during this time of transition. Here, Kerry Liu, chief executive officer of Rubikloud, a company that harnesses big data for the purpose of delivering consumer insights to retailers, discusses the state of the market and what strategies will fare best during this time of transition.
WWD: In your opinion, how do you think artificial intelligence will inform new retail business strategies?
Kerry Liu.: Machine learning will play a very large role in business decisions. We are at a point where machine learning is actually identifying the best business decisions — say for instance in dynamic pricing — and the human workforce is pulling the trigger on these decisions and carrying them out.
The predictive analysis of machine learning tells CRM managers what the best campaign is and they can then get creative with the details of those campaigns. The product, price and demographic of the campaign can all be decided by machine learning. Having this information allows retailers to better understand and serve their customers, which in turn will increase ROI.
Machine learning is among the most impactful technologies in retail given its potential to inform everything from in-store inventory levels to pricing. For example, the best digitally native brands are masters of customer loyalty, often adopting cutting-edge customer relationship management systems that are robust enough to tailor marketing messages and track activity across channels.
WWD: What gaps in the market sparked the development of Rubikloud’s various platforms?
K.L.: Retailers around the world have a lot of data on their customers, though no way to truly leverage it. Their cloud solutions didn’t work together with their legacy systems and this gap in the market is where Rubikloud and its products fit.
Looking back 20 or 30 years, companies invested in software and hardware that today is seen as legacy. During that time, space in the market opened up to support the implementation of software like AI and machine learning. This is because most retailers have the hardware to support today’s major software solutions, though the software that initially came along with that hardware is now less powerful than today’s alternatives.
This software first approach has led to elastic cloud providers seeking to upend enterprise verticals such as retail. There’s two trillion dollars of market cap between Google, Microsoft, IBM, Oracle, SAP and Amazon. Rubikloud is in the middle between that much space in market cap and the demand for modern software solutions.
We had to build solutions for retailers to port their data to one place, clean it and standardize across their digital and off-line channels. In the process, we realized that data could only be warehoused on a sophisticated modern cloud. Embedded machine learning, industry specific decision engines and elastic cloud compliant architectures will be at the forefront of all future enterprise software systems.
WWD: How have legacy contracts with established software providers affected retailers?
K.L.: It has effectively ball-and-chained them to financial and time investments. When you have millions of dollars tied up in legacy contracts, it’s natural to want to stick with those and make the most out of them. With the state of retail as it is now, it’s smarter to cut your losses and move forward with new and impactful software versus trying to make old solutions work. Retailers need to start working smarter as opposed to working harder.
Many of the legacy providers are pushing upgrades to very old products that aren’t engineered for today’s cloud and SaaS environments. The tech-savvy ceo’s and board members who understand that this is a critical investment in their survival are doing well. The ones who are still focused on zero-based accounting and aren’t investing in their tech infrastructure are faring poorly. There’s just too many sku’s, locations, pricing decisions and promotions now happening simultaneously for humans to be able to do it all with the old software.
In the Nineties, retailers would have to buy into established software providers, but due to the state of technology in that era, it required software and hardware to be purchased. It then required the hardware to be networked. Now fast-forward to 2017 and all the necessary hardware is established, it’s a software play at this point, which is where companies like Rubikloud come into play. Retailers shouldn’t be tied down to business decisions they made 20 to 30 years ago. These contracts hold back retailers because the amount of money required to maintain these legacy software and hardware solutions is detrimental to business growth if your revenue can’t sustainability support these legacy contracts.
WWD: There’s recurring discussion on modeling a fashion company after a tech organization — how can brands/retailers begin to implement the necessary changes to mirror this infrastructure?
K.L.: This is more case-by-case as some retailers have been around for decades, and others only a few years. Though at the end of the day, what matters most to customers is their shopping experience. You shouldn’t have to upend your business to implement technology into the shopping experience.
Fast fashion is in many ways a part of tech. Rapid prototyping and testing case adoption happens online and then designers and fashion houses can determine what part of the a collection should be marketed in Miami versus Milan, for example. The AI takes the guessing out of the experience and cuts down on cannibalization.
Implementing and investing in technology and prioritizing innovation are the keys to staying relevant to today’s digitally minded consumer.
WWD: Who is delivering premium consumer experiences at the moment? What can be gleaned from their strategies?
K.L.: One example of a company that is gaining success is Jet.com. They have received a premium valuation because of its unique place in the market. It has modern technology and team native to the internet, social selling and more.
A customer service experience is crucial, but isn’t to be overthought. Most customers want to buy from a company that is approachable, understanding and feels human.