What’s in Line for Google Cloud’s Europe Customers in Regards to the E.U.-U.S. Data Transfer Framework

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Last week, the European Commission and U.S. Government agreed on a new E.U.-U.S. data transfer framework. Earlier today, Google shared that it welcomes these efforts by the U.S. government to enhance privacy protections for E.U. data and facilitate trusted transatlantic data flows. For our Google Cloud customers, we intend to make the protections offered by this new framework available once it is implemented.
Last year, we reaffirmed our commitment to E.U. businesses after the European Data Protection Board (EDPB) issued its Recommendations on Supplementary Measures, following Europe’s top court ruling invalidating the E.U.-U.S. Privacy Shield Framework and upholding the E.U. Standard Contractual Clauses (SCCs).
Since then, we’ve continued to help our customers meet stringent data protection requirements by offering industry-leading technical controls, contractual commitments, and risk assessment resources. We’ve also continued our advocacy to create more legal certainty around transatlantic data flows.
Today, we would like to provide an update to our customers on this work.
A customer-controlled cloud
Google Cloud1 continues to be a leading provider of technical and security controls to help meet customers’ data protection requirements, as well as their increasing data sovereignty expectations.
We are committed to building our Cloud on Europe’s terms, including by offering customer-managed encryption and data localization for a growing list of key products and collaborating with local partners to provide the highest levels of sovereignty, all while enabling the next wave of growth and transformation for Europe’s businesses and organizations.
Google Cloud Platform
We recently announced the general availability of Assured Workloads for the E.U. This product helps Google Cloud Platform (GCP) customers protect their data by allowing them to:
- Store their data in their choice of E.U. Google Cloud region(s)
- Ensure that only E.U. persons – located in the E.U. – have access to the data and provide customer support
- Deploy cryptographic control for data access, including customer-managed encryption keys
Cloud External Key Manager (EKM) enables customers to encrypt data in a variety of services with keys that are stored and managed in a third-party key management system deployed outside of Google’s infrastructure. Google Cloud continues to be the only cloud provider to enable customers to store and manage encryption keys for cloud-resident data outside the provider’s infrastructure with customer’s control over decryption based on specific justifications, including government access requests.
Key Access Justifications greatly advances the control that GCP customers have over their data by giving customers a justification every time their externally hosted keys have to be used to decrypt data. Signed Access Approval (SAA) adds a layer of extra assurance that requires explicit customer consent for any administrative access to customer data or configurations.
Google Cloud’s Confidential Computing portfolio is a breakthrough technology that allows customers to encrypt their most sensitive data in the cloud while in-use. Ubiquitous Data Encryption further extends data protection by providing cryptographic protection for this data at-rest, in-transit, and in-use. The keys used to encrypt customer data outside of GCP using Cloud EKM are securely shared with applications operating within Confidential environments.
Google Workspace
Our Google Workspace (including Workspace for Education) customers can choose to store their covered data in Europe. Additionally, with Client-Side Encryption, we offer customers direct control of encryption keys and the identity service they choose to access those keys. With Client-Side Encryption, customer data is indecipherable to Google, while users can continue to take advantage of Google’s native web-based collaboration, access content on mobile devices, and share encrypted files externally. Client-Side Encryption is currently available in Public Beta for Google Drive, Docs, Sheets, and Slides, and we plan to extend it to Gmail, Calendar and Meet. Additionally, customers can also benefit by choosing third party solutions that offer similar encryption capabilities with select Google Workspace services.
Legal Basis for International Data Transfers
We updated our data processing terms for GCP and Google Workspace and Cloud Identity to reflect various modules of the new E.U. Standard Contractual Clauses (SCCs) approved by the European Commission on June 4, 2021, as well as separate U.K. SCCs.
Google Cloud plans to adopt the new E.U.-U.S. data transfer framework and offer it as a transfer solution to our cloud customers, as further detailed in our data processing terms.
Advocacy and Additional Helpful Resources
We have adopted the Trusted Cloud Principles with industry peers to demonstrate our commitments to protect the rights of our Google Cloud customers. We will continue to support the ongoing work of the Organisation for Economic Co-operation and Development on government access to data and the negotiation of CLOUD Act Agreements — including between the U.S. and E.U. — as vehicles for surveillance reform.
We will continue to publish additional materials on our Cloud Privacy Resource Center, such as our whitepaper on safeguards for international data transfers with Google Cloud.
Millions of organizations with users in Europe rely on our cloud services to run their businesses every day, and we remain steadfastly committed to helping them meet their regulatory requirements by maintaining a diverse set of compliance tools.
Google Cloud: Google Workspace (including Google Workspace for Education) and Google Cloud Platform (GCP)
Confidential Computing at Google Cloud

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This blog includes content from Episode One “Confidentially Speaking” of our Cloud Security Podcast, hosted by Anton Chuvakin (Head of Solutions Strategy) and Timothy Peacock (Product Manager). You should listen to the whole conversation for more insights and deeper context.LEARN MORECloud Security Podcast – Confidentially SpeakingListen to the Cloud Security Podcast with guest Nelly Porter, Group Product Manager @ Google.
We all deal with a lot of sensitive data and today, enterprises must entrust all of this sensitive data to their cloud providers. With on-premises systems, companies used to have a very clear idea about who could access data and who was responsible for protecting that data. Now, data lives in many different places—on-premises, at the edge, or in the cloud.
You may already know that Google Cloud provides encryption for data when it is in transit or at rest by default, but did you also know we also allow you to encrypt data in use—while it’s being processed?
In this podcast episode, Product Manager Nelly Porter gave us a peek under the hood of confidential computing at Google Cloud.
What is confidential computing?
Google Cloud’s Confidential Computing started with a dream to find a way to protect data when it’s being used. We developed breakthrough technology to encrypt data when it is in use, leveraging Confidential VMs and GKE Nodes to keep code and other data encrypted when it’s being processed in memory. The idea is to ensure encrypted data stays private while being processed, reducing exposure.
During the episode, Nelly Porter explained that Google Cloud’s approach is based on hardware and CPU capability. Confidential Computing is built on the newest generation of AMD CPU processors, which have a Secure Encrypted Virtualization extension that enables the hardware to generate encryption keys that are ephemeral and associated with a single VM. Basically, they are never stored anywhere else and are not extractable—the software will never have access to those keys.
“You can do whatever you need to do, but you will be in a cryptographically isolated space that no other strangers passing by can see.”
Memory controllers use the keys to quickly decrypt cache lines when you need to execute an instruction and then immediately encrypts them again. In the CPU itself, data is decrypted but it remains encrypted in memory.
Confidential computing aims to mitigate gaps in data security
Nelly also shed some light on why confidential computing will continue to play a central role in the future of cloud computing. She pointed out that one of the biggest gaps companies are looking to cover is securing data when it is in use.
Data that is encrypted on-premises or in cloud storage, but the biggest risk for companies is when they start working with that data. For instance, imagine you encrypted your data on-premises and only you hold the keys. You upload that data into Cloud Storage buckets—simple, safe, and secure.
But now, you want to train machine learning models based on that data. When you upload it into your environment, it’s no longer protected. Specifically, data in reserved memory is not encrypted.We’re trying to ensure that your data is always protected in whatever state it exists, so fewer people have the opportunity to make mistakes or maliciously expose your data.
Top takeaways about confidential computing
Throughout the conversation, Nelly also shared interesting points about the development and direction of confidential computing at Google Cloud.
Here were our favorite takeaways from the podcast:
We worked hard to make Google Cloud’s approach simple.
We’ve invested a lot of time and effort into investigating the possibilities (and limitations) of confidential computing to avoid introducing residual risks to our approach. For instance, the early introduction of hardware capable of confidential computing in the industry required IT teams to have the resources to rewrite or refactor their app, severely limiting their ability to adopt it within their organizations.
With Confidential Computing, teams can encrypt data in use without making any code changes in their applications. All Google Cloud workloads can run as Confidential VMs, enabled with a single checkbox, making the transition to confidential computing completely simple and seamless.
“A lot of customers understand the values of confidential computing, but simply cannot support re-writing the entire application. It’s why Google Cloud, in particular, decided to take a different approach and use models that were incredibly easy to implement, ensuring that our customers would not have those barriers to cross.”
Confidential computing is for more than just fintech.
There is, of course, a compelling use case for confidential computing at highly-regulated companies in financial, government, life sciences, and public sectors. However, Nelly shared that her team didn’t anticipate that even verticals without significant regulation or compliance requirements would be so interested in this technology, mostly to pre-empt privacy concerns.
Many companies see confidential computing as a way to create cryptographic isolation in the public cloud, allowing them to further ease any user or client concerns about what they are doing to protect sensitive data. For instance, during COVID-19, there was an increase in small research organizations that wanted to collaborate across large datasets of sensitive data.
“Prior to confidential computing, it wasn’t possible to collaborate because you needed the ability to share very sensitive data sets among multiple parties while ensuring none of them will have access to this data, but the results will benefit all of them—and us.”
An open community, working together will be key for the future.
Nelly also shared that there are plans to extend memory protections beyond just CPUs to cover GPUs, TPUs, and FPGAs. Google Cloud is working with multiple industry vendors and companies to develop confidential computing solutions that will cover specific requirements and use cases.
Confidential computing will not be achieved by a single organization – it will require many people to come together. We are a member of the Confidential Computing Consortium, which aims to solve security for data in use and includes other vendors like Red Hat, Intel, IBM, and Microsoft.
“Google alone would not be able to accomplish confidential computing. We need to ensure that all vendors, GPU, CPU, and all of them follow suit. Part of that trust model is that it’s third parties’ keys and hardware that we’re exposing to a customer.”
There are no magic bullets when it comes to security.
Confidential computing is still an emerging, very new technology and unsurprisingly, there are a lot of questions about what it does and how it works. It’s important to remember that there is no such thing as the one-tool-fits-all-threats security solution. Instead, Nelly notes that confidential computing is yet another tool that can be added to your security arsenal.
“No solution will ever be the magic bullet that will make everyone happy and secure, guaranteed. But confidential computing is an addition to our toolbox of defense against gaps we have to take super seriously and invest in solving.”
Did you enjoy this blog post? To listen to the full conversation, head over to Episode One “Confidentially Speaking” of our Cloud Security Podcast, hosted by Anton Chuvakin (Head of Solutions Strategy) and Timothy Peacock (Product Manager).
We also recommend checking out other episodes of the Cloud Security Podcast by Google for more interesting stories and insights about security in the cloud, from the cloud, and of course, what we’re doing at Google Cloud.
The Ultimate Guide to VPC Service Controls: Strengthening Your Security Posture

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While cloud security skeptics might believe that data in the cloud is just one access configuration mistake away from a breach, the reality is that a well-designed set of defense in depth controls can help minimize the risk of configuration mistakes and other security issues. Our Virtual Private Cloud (VPC) Service Controls can play a vital role in creating an additional layer of security while also making it easier to manage your data in a way that most cloud services can’t do today.
Organizations across industries and business models use cloud services for activities such as processing their data, performing analytics, and deploying systems. VPC Service Controls can empower an organization when deciding how users and data can cross the perimeter of the supported cloud services, if at all. While VPC Service Controls are designed to help stop attackers, they can also enable contextual trusted data sharing (similar to how Zero Trust allows contextual access).
What are VPC Service Controls
VPC Service Controls help administrators define a security perimeter around Google-managed services, which can control communication to and between those services. The Service Controls isolate your Google Cloud resources from unauthorized networks, including the internet. For example, this can help you keep a clear separation between services that are allowed to run in production and services that are not.
VPC Service Controls can help you prevent mistakes that lead to costly data breaches because they control access to your data at a granular level. They add context-aware access controls on these services, and can help you achieve your organization’s Zero Trust access goals.

Example of the fine-grained policies based on access context that can be implemented with VPC Service Controls.
Like wearing two layers of clothing made from different fabrics to protect you from winter weather, VPC Service Controls may appear similar to Identity and Access Management (IAM) but they come from a different approach to implementing security. IAM enables granular identity based access control; VPC Service Controls create a security perimeter that protects your cloud resources and sets up private connectivity to Google Cloud’s APIs and services. While it’s recommended to use both, VPC Service Controls have an added bonus: They can support blocking data theft during a breach.
The additional layer of security that VPC Service Controls offer customers is challenging to achieve with on-premise systems or even with other cloud providers. You can think of it as an firewall for APIs that also adds a logical security control around three paths that data can take:
- From the public internet to your resources
- Inside your VPC and the cloud service perimeter
- For service-to-service communication (for example, denying access to someone who wants to load data to BigQuery or exfiltrate data from a BigQuery instance.)
How VPC Service Controls can help stop attackers
VPC Service Controls are used to enforce a security perimeter. They can help isolate resources of multi-tenant Google Cloud services, which can help reduce the risk of data exfiltration or a data breach.
For example, a bank that migrated financial data processing to Google Cloud can use VPC Service Controls to isolate their processing pipeline from public access (or any unauthorized access) by defining a trusted service perimeter.
How VPC Service Controls can enable trusted sharing
VPC Service Controls are used to securely share data across service perimeters with full control over what resource can connect to other resources, or outside the perimeter. This can help mitigate data exfiltration risks stemming from stolen identities, IAM policy misconfigurations, some insider threats, and compromised virtual machines.
Returning to our bank example, that same bank using VPC Service Controls may securely share or access data across Service Perimeters and Organizations. They may allow access to specific partners and for specific operations.

Example of allowing an authorized device plus authorized access.
How VPC Service Controls support Zero Trust access
VPC Service Controls deliver Zero Trust access to multi-tenant Google Cloud services. Clients can restrict access to authorized IPs, client context, user identity, and device parameters while connecting to multi-tenant services from the internet and other services.
A bank can use moving its services to the public cloud as an opportunity to abandon outdated access management approaches and adopt Zero Trust access. VPC Service Controls let them create granular access control policies in Access Context Manager based on attributes such as user location and IP address. For example, it would allow an analyst to only access Big Query from a corporate device on the corporate network during business hours. These policies can help ensure the appropriate security controls are in place when granting access to cloud resources from the Internet.
Next steps with VPC
Check out these pages to learn more about VPC Service Controls for your sensitive cloud deployments, especially for regulated workloads. This blog is the third in our Best Kept Security Secrets series, which includes how to tap into the power of Organization Policy Service and how Cloud EKM can help resolve the cloud trust paradox.
Latest News: Secure Digital Infrastructure Services with Apigee Advanced API Security for Google Cloud

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Organizations in every region and industry are developing APIs to enable easier and more standardized delivery of services and data for digital experiences. This increasing shift to digital experiences has grown API usage and traffic volumes. However, as malicious API attacks also have grown, API security has become an important battleground over business risk.
To help customers more easily address their growing API security needs, Google Cloud is announcing today the Preview of Advanced API Security, a comprehensive set of API security capabilities built on Apigee, our API management platform. Advanced API Security enables organizations to more easily detect security threats. Here’s a closer look at the two key functionality included in this launch: identifying API misconfigurations and detecting bots.
Identify API misconfigurations
Misconfigured APIs are one of the leading reasons for API security incidents. In 2017, Gartner® predicted that by 2022 API abuses will be the most frequent attack vector resulting in data breaches for enterprise web applications. Today, our customers tell us application API security is one of their top concerns, which is supported by an independent study from 2021 by Fugue and Sonatype. The report found that misconfigurations are the number one cause of data breaches, and that “too many cloud APIs and interfaces to adequately govern” are frequently the main point of attack in cyberattacks.
While identifying and resolving API misconfigurations is a top priority for many organizations, the configuration management process can be time consuming and require considerable resources.
Advanced API Security can make it easier for API teams to identify API proxies that do not conform to security standards. To help identify APIs that are misconfigured or experiencing abuse, Advanced API Security regularly assesses managed APIs and provides API teams with a recommended action when configuration issues are detected.

Advanced API Security identifies misconfigured API proxies, including the missing CORS policy.
APIs form an integral part of the digital connective tissue that make modern medicine run smoothly for patients and healthcare staff. One common healthcare API use case occurs when a healthcare organization inputs a patient’s medical coverage information into a system that works with insurance companies. Almost instantly, that system determines the patient’s coverage for a specific medication or procedure, a process which is enabled by APIs. Because of the often-sensitive personal healthcare data being transmitted, it is important that the required authentication and authorization policies are implemented so that only authorized users, such as an insurance company, can access the API.
Advanced API Security can detect if those required policies have not been applied, an alert which can help reduce the surface area of API security risks. By leveraging Advanced API Security, API teams at healthcare organizations can more easily detect misconfiguration issues and can reduce security risks to sensitive information.
Detect Bots
Because of the increasing volume of API traffic, there is also an increase in cybercrime in the form of API bot attacks—the automated software programs deployed over the Internet for malicious purposes like identity theft.
Advanced API Security uses pre-configured rules to help provide API teams an easier way to identify malicious bots within API traffic. Each rule represents a different type of unusual traffic from a single IP address. If an API traffic pattern meets any of the rules, Advanced API Security reports it as a bot.
Additionally, Advanced API Security can speed up the process of identifying data breaches by identifying bots that successfully resulted in the HTTP 200 OK success status response code.

Financial services APIs are frequently the target of malicious bot attacks due to the high-value data that is processed. A bank that has adopted open banking standards by making APIs accessible to customers and partners can use Advanced API Security to make it easier to analyze traffic patterns and identify the sources of malicious traffic. You may experience this when your bank allows you to access your data with a third-party application. While a malicious hacker could try to use a bot to access this information, Advanced API Security can help the bank’s API team to identify and stop malicious bot activity in API traffic.
API Security at Equinix
Equinix powers the world’s digital leaders, bringing together and interconnecting infrastructure to fast-track digital advantage. Operating a global network of more than 240 data centers with a 99.999% or greater uptime, Equinix simplifies global interconnections for organizations, saving customers time and effort with the Apigee API management platform.
“A key enabler of our success is Google’s Apigee, delivering digital infrastructure services securely and quickly to our customers and partners,” said Yun Freund, senior vice president of Platform at Equinix. “Security is a key pillar to our API-first strategy and Apigee has been instrumental in enabling our customers to securely bridge the connections they need for their businesses to easily identify potential security risks and mitigate threats in a timely fashion. As our API traffic has grown, so has the amount of time and effort required to secure our APIs. Having a bundled solution in one managed platform gives us a differentiated high-performing solution.”
Getting started
To learn more, check out the documentation or contact us to request access to get started with Advanced API Security.
To learn more about API security best practices, please register to attend our Cloud OnAir webcast on Thursday, July 28th, 2:00 pm PT.
Your Cloud Defense Enhanced: Google Introduces End-to-End TDIR in Chronicle Security Operations

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As cloud adoption continues to grow, so too does the number of cloud-born security threats. However, cloud environments can present significant opportunities to improve security with the right tools and processes in place.
When it comes to effective threat detection, investigation and response (TDIR) in the cloud, modern solutions must ensure that the entire security operations workflow — from data analysis through detection to response — are working in tandem to deliver the insights, context, and processes needed for cyber defenders to respond to threats with speed and precision.
At Google Cloud, we believe that modern security operations should rely less on customer engineering and more on packaged outcomes delivered by solution providers. With this in mind, we are excited to announce today at our annual Security Summit that Chronicle Security Operations now provides turnkey TDIR for Google Cloud. By integrating with our cloud-focused Security Command Center Premium (SCC) and Google Cloud telemetry, Chronicle can collect and analyze data from Google Cloud, detect and investigate threats, and automate responses to mitigate risks.
In our recent State of Cloud Threat Detection and Response Survey, 71% of respondents said that “entire classes of threats are eliminated by migrating to the cloud,” and 82% stated that “the cloud affords the ability to process more data, including on-prem data, which can improve detection across the board.”
To take advantage of all that the cloud can do for security, organizations should to do more than “lift and shift” their existing security tools and processes to the cloud. The cloud presents a different attack surface, often across several cloud services and data repositories, and each can have different attack tactics, potential misconfigurations, and context.
This update to Chronicle helps enable teams to:
- Detect with confidence. Out-of-the-box detection rule sets developed by Google threat researchers surface cloud attack vectors and provide high fidelity, contextualized alerts that quickly give insight into potential threats in your Google Cloud environment.
- Investigate with full context. Visualize threat storylines, complete with cloud-specific context that is correlated with additional data and context from across your environment for fast and efficient investigations.
- Respond with speed and precision. Streamline workflows and automate response actions with prebuilt playbooks and best practices designed specifically for Google Cloud. Chronicle SOAR’s case management and team collaboration help ensure fast and timely response.
- Simplify data ingestion. Chronicle automatically ingests, normalizes and contextualizes cloud telemetry from a variety of Google Cloud services (such as Cloud Asset Inventory, Google Kubernetes Engine, Google Compute Engine, cloud audit logs, and Cloud DLP), reducing the need for complex and time-consuming engineering.
Putting Google Cloud TDIR to work
Let’s take a closer look at how our end-to-end cloud TDIR workflow manages a potential Google Cloud attack.
Setting up cloud TDIR in Chronicle only takes a few clicks. Security Command Center’s built-in threat detection identifies attacks against Google Cloud resources. These findings, as well as audit, NAT, DNS, and firewall logs, are ingested into Chronicle to provide additional insight and context into Google Cloud threats.

Chronicle now provides detection rules for Google Cloud threats. These rules correlate SCC findings with Chronicle’s advanced detection engine to reveal the broad scope of malicious activity, giving you visibility and more contextual information into what’s going on in your environment. In our example, Chronicle alerts on suspicious activity that can indicate an attempt to exfiltrate data from BigQuery.

The new Chronicle Alert Graph surfaces key details of primary alerts you’re investigating in seconds. Combining cloud alerts and telemetry and correlating that with vital context from other sources (such as user data, endpoint data, and threat intelligence,) you can explore the visual representation of an alert’s relationship to other alerts and entities, dig into the potential attack paths, get quick summaries of implicated security artifacts, and pivot into your Google Cloud Console to do a deeper dive into potentially-impacted resources.
In our example, we can see a BigQuery exfiltration event associated with a customer and that it’s associated with a particular service account tied to a Google Cloud org. Alert context below tells us more about what’s been impacted. It shows us that cloud credentials in the form of encryption keys and email addresses were associated with the event.

Chronicle case management automatically groups any related alerts into threat-centric cases, uniting the information that matters and making it simple for you to see and understand the scope of the event.
In our example, Chronicle groups these alerts together based on common source address and username, and the case wall provides the summary of the alerts and actions that are taking place across the entire case.

Chronicle playbooks, designed specifically for Google Cloud, automate your desired response processes. In our example, when an alert was generated a playbook automatically ran through predefined steps that gathered data, enrichment, and took automated remediation steps to prevent this service account and instance from continuing.

Ready to detect with confidence, investigate with broad context, respond with speed and precision, and simplify data ingestion? Chronicle Security Operations is your go-to for turnkey, end-to-end threat detection, investigation, and response on Google Cloud.
Tune in to our Security Summit session to learn more and see a demo of the new Google Cloud TDIR capabilities.
Connected Data is the Lifeblood of Today’s Retailers: IDC’s 2022 Research

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For a look ahead at the trends that will animate the retail industry this year, let’s take a look back at the 2022 National Retail Federation (NRF) “Big Show” in NYC.
Attendees at January’s event were treated to tangible examples of how retail challenges are being solved today, including new solutions to help them parse customer expectations and buying patterns, adapt stores into omni-channel experience hubs, and improve data visibility and actionability.
NRF 2022 also took the “omni-channel everything” theme of last year’s show to the logical next level: Enabling the best hybrid experiences. The message came through loud and clear of the importance of integration and interoperability in this new hybrid world – making everything work well together.
The need for modern digital infrastructure to enable this blending of physical and digital retail smoothly is paramount. To that end, technology vendors demonstrated how digital transformation initiatives, such as contactless and real time IoT and mobile applications, need to be built on cloud, edge, and secure connectivity to allow retailers to achieve the modern seamless hybrid retail that today’s consumer wants.
Other prominent themes and technologies highlighted at NRF included: extending engagement in the metaverse, sustainability, physical and digital security, and the agility and adaptability imperative.
The Metaverse and Hybrid (Omni-channel) Experiences
Today, the metaverse is an extension of our lives, enhanced by technology, which exists as a series of virtual worlds. In the future, the metaverse will be an interconnected, endless world where digital and physical lives fully converge. Imagine waiting for an appointment at a real booth on the NRF show floor while your avatar roams a fully fleshed-out digital NRF, meeting other virtual attendees, stopping for coffee at the digital Starbucks, and paying for a coffee that an in-the-flesh Starbucks employee brings to them. Digital and physical selves merge seamlessly in the metaverse, as the worlds draw closer together.
In the metaverse, brands have a digital presence, too. Nike filed seven trademarks late last year, including those for “Nike,” “Just Do It,” and its swoosh logo, and posted openings for virtual designer roles, indicating its intent to make and sell virtual branded sneakers and apparel. It subsequently purchased RTFKT Studios, a company that already makes and sells NFTs and digital sneakers. (In one collaboration with teenage artist FEWOCiOUS, the company sold 600 pair/NFTs of sneakers in just six minutes to the tune of more than $3.1 million.)
The metaverse also opens possibilities for gathering data about consumers and product demand. Imagine a sneaker drop in the virtual world. Certain styles of new kicks sell like gangbusters, giving the brand insight into what might sell IRL, intelligence that leads to trend-right production and less inventory headed for markdown or landfills. The metaverse can be a vehicle for more sustainable operations.
The metaverse further bridges the narrowing gap between digital worlds and physical worlds. Most consumers aren’t outfitting an avatar, but they are moving between online and offline and expect retailers to accommodate those hybrid omni-channel journeys seamlessly. Those demands have accelerated around last-mile delivery and experiences such as buying online and picking up in store (BOPIS) or at curbside, shopping in store and returning merchandise online, adding items to a BOPIS purchase when at the store, or communicating a substitution to the third-party grocery delivery service
Hybrid experiences open opportunities to please the consumer in new ways, but they also add expense and complexity. The need to meet this demand while enabling profitability was a major theme behind many of the technologies discussed at NRF. These included artificial intelligence (AI) for recommending the right product, return logistics software for defining and guiding product-specific reverse logistics workflows, order orchestration and fulfillment applications for omni-channel shopping, and last-mile delivery visibility for optimizing customer experience, to name a few. Also on display were task management applications help to improve and optimize in-store employee engagement, as well as touch-free applications to allow for faster payments and customer self-service checkout. RFID continues to improve inventory accuracy and inventory locating on the shelf, throughout the store, and the supply chain.
Sustainability
NRF 2022 saw a strong focus on sustainability. An NRF/IBV study released at the show highlighted the significant embrace of sustainable shopping by consumers. According to the survey, 62% of shoppers are “willing to change their purchasing habits to reduce environmental impacts.” About half indicated a willingness to pay a premium – on average a 70% premium – for sustainable products and brands.
Retailers are working to improve sustainability and reduce carbon footprint across operations by using sustainable sourcing through the supply chain, the store, and even returns. Tech vendors unveiled a variety of solutions enabled by cloud/edge, AI, computer vision, and IoT/RFID to allow retailers to effectively measure and record their environmental efforts, with the goal of reducing their impact.
Several cloud and digital infrastructure providers showcased sustainability clouds and other technology aimed at asset management with the goal of reducing energy consumption, water usage, waste. Examples included using IoT sensors to reduce water usage, optimizing re-use of store assets, and dashboards that allow retailers to accurately monitor and measure carbon output. However, such sustainability solutions can be most successful when running on the next-generation digital infrastructure that helps retailers better compete and differentiate in today’s omni-channel world.
Physical and Digital Security
According to a 2021 NRF survey, 57% of U.S. retailers reported the pandemic led to an increase in organized retail crime, while 50% reported an increase in shoplifting. When IDC’s Future Enterprise Resiliency & Spending Survey, Wave 10 (November 2021) asked retailers which digital infrastructure investments would provide the greatest strategic advantage in 2022, their #1 response was “cybersecurity and recovery investments.”
A wide range of technology vendors acknowledged retailer concerns with regards to security, fraud, and loss prevention:
- Networking, connectivity, and edge vendors highlighted multilayer security solutions that promise to protect data from a range of IoT applications that utilize customer and associate data. Many offer security consulting services to address varied threats including ransomware, retail crime, and loss prevention.
- Security and e-commerce security vendors showcased solutions to prevent fraud and abuse in e-commerce applications as well as omni-channel applications such as BOPIS and curbside pickup, using AI-based analysis for identifying “bad”/risky customers and mitigating risk.
- Cloud vendors highlighted how retail clouds provide consistent, reliable identity management and data security.
- POS/payments/store technology vendors emphasized their ability to handle payments securely from any platform with multifactor tokenization, improved identity techniques such as biometrics and voice authentication, as well as AI-enabled and computer vision solutions for loss prevention at checkout and at the door.
The Agility and Adaptability Imperative
On display at the show were multiple flavors of the digital infrastructure technology that retailers need to achieve agile, personalized, data-driven, integrated seamless operations across the many channels of today’s retail landscape. The emphasis was apt. More than half of retailers plan to boost investment in business agility and operational agility over the next 12 months, according to IDC’s Future Enterprise Resiliency & Spending Survey, Wave 10 (November 2021).
Technology vendors highlighted their connectivity investments to enable business and operational agility and their technology investments for better ease of integration, scalability, and the ability to more easily swap out or mix and match applications with integrated platforms, open systems, hybrid cloud, and retail industry clouds.
Vendors also showed off infrastructure to better harness data while enabling its visibility, maximizing its value, and providing the data-driven personalization essential for competitive advantage and differentiation. Highlights included fast, secure connectivity, 5G and Wifi-6, and edge- and cloud-enabled data and AI platforms to generate real-time insights – all designed to enable today’s omni-channel retail.
Advice for the technology buyer
Retailers should consider these key themes from NRF 2022 when making technology investment decisions for 2022 and beyond. To avoid lagging behind those retailers already moving toward thriving into the future, take action to:
- Enable the seamless, contactless omni-channel approach that today’s consumers want and expect.
- Replace legacy infrastructure that was not built to handle the modern retail environment that requires the agility and adaptability to seamlessly connect rapidly increasing volumes of data securely and more quickly than ever.
Whether sustainability, adaptability, the metaverse, or security are top concerns, addressing business needs holistically and strategically should be job #1.
Continue the conversation by downloading our Transforming retail and CPG markets whitepaper today.
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