What it takes for retailers to be successful during the peak sales season- Enhancing omnichannel capabilities.
In today’s fast-paced world, the retail industry has undergone a massive transformation, driven by the adoption of new technologies and changing consumer preferences. One of the biggest challenges that retailers face is the preparation and execution of festive sales. With the surge in traffic and orders during these peak periods, retailers must ensure that their technology infrastructure is robust, reliable, and secure.
According to a recent report by Statista, in 2022, retail e-commerce sales were estimated to exceed 5.7 trillion U.S. dollars worldwide, and this figure is expected to reach new heights in the coming years. India’s e-commerce market is expected to reach US$ 111 billion by 2024 and US$ 200 billion by 2026 according to a report by IBEF.
In the context of festive sales, a report by Accenture states that during the festive season in India, online retailers experience a surge of up to 80% in traffic and sales compared to non-festive periods. This massive increase in demand puts a significant strain on retailers’ technology infrastructure, with up to 30% of festive sales lost due to technology failures, according to a report by Gartner.
In light of these statistics, it is crucial for retailers to have a robust and reliable technology infrastructure in place during festive sales. In this context, Lowe’s India is leveraging innovative technologies like AI and machine learning to enhance its technology preparedness and testing during festive sales.
Minu Sirsalewala, Executive Editor – Special Projects delves into Lowe’s India’s approach to festive sales, their technology infrastructure, and their efforts to balance innovation with reliability, all of which provide insights into the future of retail technology. In conversation with Mayur Purandar, VP – Enterprise Architecture, Lowe’s India.
Excerpts
Tell us a bit about festive sales and what makes it challenging for retailers?
Festive sales have grown to become immensely popular across the world, with millions of consumers anticipating and even holding off purchases to make the most of exciting deals. With retailers going omni-channel, these “peaks” as we call them, have gone from in-store shopping to becoming a multi-channel phenomenon. Brands face a huge surge of customers and skyrocketing order volumes, and this makes it crucial for them to deliver a superior experience to every one of them. In fact, retailers could generate more than 10% of their annual revenues in these few days. Now this means a lot of checks and balances needs to be put in place to ensure there are no gaps in any critical function – for instance, a sudden surge in online traffic leading to an outage or a single cyber incident has the potential to bring down a brand’s reputation, cause financial losses and affect customer trust.
At Lowe’s India, our engineers play a crucial role during peaks in the US market- we prepare months in advance to ensure three aspects: if our technology products are reliable, agile and auto-scalable, if our people are on the same page with the same knowledge, skills and training and finally, if we have the right processes to withstand the load and complexities of a peak.
What steps do you take to ensure your technology infrastructure is prepared for the surge in traffic? What goes in testing your systems and applications to ensure that they can handle the increased load?
Every year, we prepare for two peaks – Black Friday / Cyber Monday and our Spring season 100 days sales when home improvement retail sees most uptake. Months prior to the peaks, our entire technology infrastructure, applications, and systems undergo extensive testing to ensure it is adequately prepared to withstand the upswing in customers and orders. We ensure all our processes are tested at twice the load, at least 3-4 times and such as performance testing, endurance testing and most importantly, chaos testing which is to gauge how quickly we can recover and respond in case our data center goes down or an availability zone in our public cloud goes down and so on.
On peaks such as BF/CM, an entire war room is set up in the US and India where engineers collaborate and address issues real time. Over 600 people are directly involved across multiple offices who work like clockwork in the preparation of peaks- these include infrastructure, platforms, security, website, merchandising, supply chain and many other critical teams who collectively give our customers a flawless experience from search to order to fulfilment. They have to be functioning at 2x-3x of regular volumes. The other aspect is preparing ourselves to be dynamic and react to customer behaviors and market trends. For instance, our personalization and pricing engines have to be working real time to show customers the right promos, our inventory and supply chain need to be working to assess our capability to fulfil orders.
What measures does Lowe’s India have in place to prevent cyber-attacks or data breaches during festive sales? Does Lowe’s India have a contingency plan in place in case of any technology failures or disruptions during festive sales? If yes, can you elaborate on it.
Security is no longer a choice but an architectural mandate for any retailer, given the nature of consumer data that are collected and stored. For us at Lowe’s, it is critical that we provide consumers a safe and secure shopping experience irrespective of when and where they shop with us. However, owing to the sheer volume of orders and the surge in traffic during these peaks, we need to ensure our security is fail-proof and has absolutely no loopholes. We conduct rigorous penetration tests on all our software multiple times and patch vulnerabilities well in advance to negate all possibilities. Our infrastructure, platforms and security teams work round the clock to ensure there are no incidents.
How does Lowe’s India balance the need for innovation with the need for maintaining a stable and reliable technology infrastructure?
At Lowe’s, we believe in approaching innovation by identifying the business problems that need to be solved. We carefully evaluate new technologies and only adopt those that align with our business needs and can help solve the problems at hand. Our approach to learning is continuous and dynamic, with a blend of guided and informal learning programs for all our associates, including leadership experience training for managers and high-potential engineers. This ensures that our team is equipped to handle the latest technologies and can adapt quickly to the changing business needs.
To maintain a stable and reliable technology infrastructure, we focus on ensuring that our people, products, and processes work seamlessly. We invest in the skills and knowledge of our engineers, establish scalable and adaptable technology products, and test our processes repeatedly with multiple contingency plans. We recognize that even with the best resources, a team can fall apart during peak periods without the proper procedures to operate efficiently. Therefore, we conduct endurance and peak stress testing processes for months before peak periods to ensure that our infrastructure can handle the rush.
What role does AI and machine learning play in enhancing technology preparedness and testing during festive sales for Lowe’s India?
We are investing heavily in AI and ML technology for use cases such as search, personalization, pricing, promotional analytics, and demand forecasting. For instance, the company is building a pricing engine that uses AI and ML to determine the pricing elasticity of an item and the elasticity of locations where an item sells more than others. Lowe’s India is also working on demand forecasting to understand the demand of an item across 1700+ stores in the US. This helps to cut the purchase orders with vendors to be more profitable.
Taking it one step further, we are also ensuring that every technology product built, such as a pricing or demand management system, comes with AI-first. This means that the impact of any modification, such as modifying the price of an item in a particular region, is understood at several levels – including how much it will sell, its impact on low profitability, and other items.
We are using Augmented Reality (AR) and Virtual Reality (VR) to cater to the needs of our customers wherever and whenever they want. To give you an example, Lowe’s India has built an app called “Measure Your Space,” which allows customers to scan their entire room and compute how much paint they need for the space without needing to measure each wall or ceiling. Our teams are building visualizers that allow customers to see how their room would look after remodeling.
How does Lowe’s India plan to leverage emerging technologies such as virtual reality, augmented reality, or blockchain to enhance the customer experience during festive sales in the future?
We keep our customers at the heart of what we do and strive to offer a best-in-class omnichannel retail experience every day. Our in-house expertise and external partnerships enable us to harness the power of emerging technologies to better understand what our customers’ expectations will be, the concept of home, and the future of retail. With that knowledge, we are constantly striving to deliver meaningful change. For instance, we are building a future that leverages the rise of emerging technologies like LiDAR, computer vision, AI, and mixed reality hardware to help our customers understand their home’s space and use the data related to their homes whenever and wherever they need it.
Going a step further, we are also equipping our associates to better manage our stores, making sure they adapt, evolve, and meet our customers’ needs on a more personal level. Currently live in two stores, our first-of-its-kind digital twin represents a leap forward for home improvement. Our associates can not only visualize and interact with a Lowe’s store in 3D but can interact with nearly all of a store’s data in new ways, across a range of devices.
