Opinion

Cloud as an Opportunity for Retailers

Retailers operate in a very competitive environment, and the sector as a whole faces considerable challenges. To ensure success in the years to come, developing and deploying agile IT solutions will be essential.

The numbers prove that the cloud is a growing part of retail. According to a study by Markets and Markets, the retail cloud market is expected to grow up to $28 billion by 2021.[1] Retailers can not only save considerable time and money by migrating data to the cloud, but they can also gain the technological flexibility to innovate. The sector is turning to the cloud because it allows retailers to deploy and develop services with speed and efficiency, and to manage a complex web of interconnected POS systems.

What is more, in 2017 Gartner found out that 76% of respondents in the retail sector identified their main solution priority as finding a good loyalty and customer service management tool, while 69% prioritized their e-commerce systems.[2]

 

How Retailers are Using the Cloud

The cloud empowers retailers to modernize their approach to IT solutions. They are using the power of cloud computing to improve their services and deliver a differentiated retail experience. For example, UK online retailer Ocado has a technology division that has created a cloud-based application using artificial intelligence to detect fraud. Running on the cloud allows AI to learn, grow and give Ocado the flexibility to introduce new features when they are needed.  How do retailers use the cloud to develop their business? You can find a few examples below:

 

Cloud Challenges in the Retail Industry

Retailers have specific concerns when it comes to digital transformation and migrating data to cloud service providers.

 

Cost

Retail margins are tight. While IT infrastructure is not the core business, there is a strong reliance on technology to allow the core business to operate effectively. Some companies may try to handle a lot of their IT infrastructure, retail technology and systems on their own. However, that consumes time and resources, requiring highly-trained staff, investment in technology infrastructure and the purchase or in-house development of specialized software.

 

Complexity of Switching

Every day, retailers try new technologies to enhance the customer experience and stay ahead of the competition. However, those with legacy systems often struggle to implement their ideas.

Retailers use new technologies to enhance the customer experience both in store and behind the scenes. UK food retailer Ocado created an entire automated packing plant to make shopping more efficient for customers.

New technology requires the connectivity of the cloud to function. These systems need a cloud solution that offers consistent performance across different locations, provides high availability and gives retailers the flexibility they need to innovate with new features for a constantly connected generation.

Traditional retailers with legacy systems have to compete with their “born in the cloud” rivals such as ASOS and Amazon, which have the freedom to adapt to and adopt new technologies.

 

Security and Regulations

Data security has always been a big issue for retailers, but with the introduction of GDPR there is now the risk of massive fines for any business that suffers a data breach. Do current systems “talk” to each other and comply with regulations in all locations? Are data stored securely? A breach can have a significant financial impact and a negative influence on an organization’s reputation.

Retailers also need to consider physical security. Who hosts the data and where?  What access control procedures are in place? As retailers manage so much personal and financial data, superior information security is a necessity when selecting a cloud service provider. Retailers need a cloud solution that not only fits their unique needs, but also adheres to the requirements of multiple regional regulations.

Flexibility

Flexible IT solutions that grow with business needs are essential tools for modern retailers. Cloud technology gives them this flexibility. Cloud providers can increase resources for retailers, helping them to launch new services and promotions while decreasing resource use during less busy periods. These services are flexible enough to deal with varying demands on servers throughout the day and to manage high demand periods such as Black Friday or Christmas.

 

Cultural Change

Gartner’s 2018 CIO survey states that CEOs were more likely to see the need for cultural change if they already had a digital initiative underway. Mark Raskino, VP and Gartner Fellow, says: “The most important types of cultural change that CEOs intend to make include making the culture more proactive, collaborative, innovative, empowered and customer-centric. They also highly rate a move to a more digital and tech-centric culture”.

The Boston Consulting Group studied 40 businesses that had been through digital transformation. It concluded that 90% of those that reported a “breakthrough or strong financial performance” had focused on cultural change. Only 17% of those that said they neglected the cultural aspect of digital transformation saw similar success.

The data migration process to the cloud is not something that many people are familiar with. It is not a simple matter of flicking a switch and watching the data move between systems. It is a process that has three distinct stages, which we will explore in the next section.

There are lots of benefits for retailers in moving their business to the cloud. These include the cost reduction, flexibility, scalability and agility that cloud platforms provide, improvements to availability and the reduced complexity that comes with working in partnership with cloud service specialists are further benefits.

However, migrating to the cloud is a complex process. The entire executive team should support such a move, since it will take time and patience to analyze, plan and execute the migration. Retailers must be sure that they choose the best provider to support them through this process and manage the service for the years to come.

If you are interested in cloud services and want to discover how cloud technology can help retailers create new customer value and connect apps, data and services in new ways, read Comarch’s new white paper, entitled “Cloud Technology: an Opportunity for Retailers” https://www.comarch.com/trade-and-services/resources/cloud-technology-for-retailers/

[1] https://www.marketsandmarkets.com/PressReleases/retail-cloud.asp

[2] Gartner 2018 CIO Agenda: Retail Industry Insights

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