Digital savvy consumers, new entrants and new business models are upending the traditional retail model, according to Gartner's 2018 CIO report. Retail growth (44 percent) is far outpacing digital strategies (15 percent) as a business priority for retailers responding to this growing threat. The analyst firm says that retailers must quickly tackle the issue, modernize technology and transform to secure their future.
After years of hesitating about IT spend, however, the tide is turning. Many retailers have already begun to increase their IT-related investments as a percentage of their total revenue, according to analyst firm Retail Systems Research (RSR). RSR's recent report highlights that 77 percent of retailers surveyed expect to increase their IT-related spend on cloud and outsourced services this year, for example. All too aware that to compete with the big techs, such as Amazon or Alibaba, they have to deliver an enhanced seamless user experience across all channels to better integrate the offline, online and mobile shopping experience.
Realizing the value of data, creating an omni-channel presence and providing differentiating customer experience can all be achieved through adoption of a sustainable cloud strategy and working with innovation partners. Companies such as Orange Business Services invest in a partner ecosystem so that retailers can run pilots on advanced technologies such as chatbots and artificial intelligence (AI) that can transform the retail experience.
Innovate to differentiate
Bringing digital experiences in store is fundamental in attracting customers, providing valuable in-store experiences and linking up the entire shopping journey across a retailer's channels. Many of these technologies, however, require serious compute and graphics processing power. "AI technologies, for example, are heavy on computing resources, so using the cloud pay-as-you-go model means retailers don't have to invest in building the big platforms themselves. Cutting-edge technologies can be added without the need for huge IT investment," says David Bignell, cloud transformation expert at Orange Business Services.
Exciting new technologies are coming, such as product recognition image processing, which enables a consumer to take a photo of the drapes in their home and match it against a catalog of products to find perfect product matches. In-store camera AI can analyze demographics and footfall to place merchandise in optimum locations, and checkouts can scan a trolley of items in one go, thanks to tiny radio frequency identification chips embedded in each item.
Innovation also comes by way of management platforms. Orange Silicon Valley, for example, has invested in Wynd, a cloud-hosted omni-channel management platform. Wynd has been created to manage all of a retailer's sales channels, unifying online and offline channels, including payment, ordering and loyalty schemes.
Cloud is now a critical enabler necessary for retailers looking to make the most of their IT budgets with competitive pressure and consumer preferences putting increased emphasis on innovation. "Having a cloud strategy with technology innovation at the heart provides retailers with a real differentiator to leverage the value of data and improve customer experience without having to focus on the technology itself," explains Bignell.
Making data work for the business
Agility is vital for retailers, yet legacy, in-house systems may slow down this objective. Ad hoc solutions make the picture more complex and harder to manage on a daily basis. All these result in the appearance of data silos.
"Cloud can simplify this infrastructure management process by externalizing it to the core providers," explains Bignell. "At the same time, it frees up internal teams to focus on value adding tasks: managing and using data for personalization of offers, cross-selling purposes and optimizing supply chain."
Cloud-based applications enable retailers to scale their services more rapidly and efficiently than is typically possible in a legacy environment. Retailers get better visibility of their business processes across the entire organization as more parts become connected into the cloud. Collaboration and integration with suppliers and value chain partners' data flows is also much easier in the cloud. Retailers can, for example, capture the real-time status of deliveries and digitize documents, speeding up the purchasing and logistics processes.
Retailers can also ensure stock control by capturing and exchanging real-time location data from smart shelves and warehouse systems to inventory management systems, to ensure the right products are available through the required channel outlet.
Building an omni-channel experience in a multi-cloud environment
In 2017, retail ecommerce sales worldwide hit $2.3 trillion, an increase of 25 percent on the previous year, according to research by eMarketer, and shows no signs of abating. In an increasingly competitive marketplace, retailers need to make sure their online presence delivers a high-end user experience for the customer across all devices and platforms.
These platforms need to be scalable to deal with retail peaks, such as the festive season, fast to deploy, adaptable to various modes of traffic, secure and always on. Platform.sh, for example, is a platform-as-a-service (PaaS) solution hosted in the Orange cloud, which has been designed as a real efficiency enabler. It simplifies the development and deployment of websites and e-commerce platforms to provide a superior end-user experience, while supporting DevOps projects.
An international cosmetics and beauty brand, for example, with over 40 million customers worldwide has moved to a scalable cloud platform to host its e-commerce sites. The company is using a Flexible Engine public cloud from Orange to host its development and test platforms and a Flexible Computing Premium shared cloud to host its pre-production and production. The benefits include optimization of hosting costs together with the IT infrastructure and the ability to host all its e-commerce sites developed internationally. Another retailer selling online and through its own department stores has adopted Orange infrastructure as a service to meet changing sales patterns and online sales demand. The retailer has delivered through cloud, greater scalability, improved customer experience and a route to digital transformation. These examples highlight the effective use of a multi-cloud strategy for optimized return in the retail space.
The cloud-centric future for retail
While there is no one-size-fits-all pattern to retail digitization, increasing use of cloud services and working with a transformation partner such as Orange should now be essential ingredients in all retailers' plans. In this way, retailers can increase efficiencies and acquire levers to grow, which can be key elements to prepare for the challenges to be faced in the digital economy.
Discover our solutions for retail, and read this blog on how voice search and omni-channel selling can save retail and this interview with Orange Silicon Valley retail expert on the importance of personalization for Generation Z.