For retailers, competing in an increasingly technology-focused world, success can only come from an IT platform that supports agility. Paul Nothard and Jarek Matschey explain.
Retail has proved to be one of the most dynamic, creative and innovative industries. The past couple of months have proved this once again. With many stores closed, retailers have been forced to ramp up digital channels; operational staff have had to work remotely; collection and home delivery services are now vital.
Covid-19 may dampen revenues, but it has not killed the creativity. If anything, lockdown is accelerating innovation.
If there is one thing that the retail sector is used to, it is change. Change has been the constant for the last 120 years.
Change is great, but it can be unsettling. It means some large retailers, once seen as institutions, fall by the wayside – and those job losses are real. Our high streets certainly look different. But new arrivals continue to emerge, seemingly from nowhere. Shopping is still Europe’s favourite pastime.
For retailers, dealing with the fickle whims of consumers, the challenge is being able to spot these shifts – and then to react quickly. Covid-19 requires they react even faster. In the last few weeks, we’ve seen retailers switch from cash to mobile payments, create dynamic online queuing systems, and flex staff into new roles.
In an increasingly technology-focused world, retailers can only do this if they have an IT platform that supports agility in the data center, on online platforms, and in store.
Empower the workforce, deliver exceptional customer experience
Of course, retailers know this. The customer is always right, but agility is king. A recent Forrester Consulting study found that 83 percent of retail executives believe that improving their app portfolios will enhance their customer experience—and, in turn, increase overall revenues. More than eight in ten retail tech executives said implementing an agile software development methodology is “very” or “extremely” important to their companies. Seventy-eight percent of executives said putting DevOps in place is “very” or “extremely” important.
The important point in this for retailers is that the infrastructure on which they run their operations has to be agile enough to support this; for retailers to be able to launch new products or services for customers or enhance their experience, often at speed. And that is achievable with a software-enabled digital foundation, driving the ability to create, run, manage, connect and intrinsically protect any apps, across any cloud, and deliver to any device, simply and at speed.
Taking modern apps to the edge
IT will not find additional funding by promising to keep the lights on. In retail, more than almost any other industry, funding goes directly to where it can best deliver new business.
In simple terms, retailers want two things: to attract new customers, and for existing customers to increase the size of their basket. Retailers want any advantage that can drive sale conversions.
Increasingly, that advantage will be generated locally. Customer data can be collected locally and acted upon locally. Being able to manage all platforms, be it in the data center, in store, cloud or edge, helps ensure a convenient, frictionless experience for shoppers.
For instance, there are trials underway to look at the behaviour of shoppers around individual shelves or product zones. Location data is blended with facially derived data (revealing the shopper’s emotion), then tested against bespoke prompts sent into a Bluetooth beacon. Again, the prompts can be incredibly bespoke: a discount code relevant to that one customer based on previous shopping data.
Retailers know there is no better manager of the customer experience than the local store manager. Machine learning or artificial intelligence techniques can analyse store data in real time, but the data locality and gravity can impede this.
Additionally, some retailers are looking to address the market need of social distancing by removing check-outs from stores. Shoppers will walk out of the store with their basket of goods and be charged automatically. All the applications needed to make this practical, at scale and in real time, must work seamlessly. There is little room for error.
Increasingly, a number of retailers are bringing the data center to the store, to the edge. The heavy processing and ML modelling continue to be done at the central data center, but the data collection and actionable insight takes place locally. This could involve changes to promotions, product merchandising or shelf restocking.
Gartner predicts the number of IoT devices in retail and wholesale will increase from 290m to 440m by the end of 2020. Clearly this will create a huge amount of new data.
Scale up to meet sales peaks
Black Friday, Cyber Monday, Mother’s Day… there is no shortage of seasonal prompts to drive consumers instore and online. Retail is a business of peaks. Slow Tuesday mornings, packed Saturday afternoons, and not even mentioning Black Swan events.
This requires an IT infrastructure that can scale up to meet peaks, and then quickly slim down. Retailers, like other businesses, want to pay only for what they use. Under-utilized infrastructure is not ideal.
This is possible through cloud. But the cloud is not a panacea. The reality is a hybrid approach, with a mix of on-premise, private cloud and public cloud services. The challenge is to manage this mix in a way that is consistent and straightforward, ideally on a common platform.
Data security
Retailers already hold a huge amount of personal data. These amounts will grow exponentially as instore surveillance increases and RFID technology makes it possible to tag everything. Retailers will know who you are, where you are, what you buy (and therefore what your circumstances might be) and a good deal of financial data.
To date, customers have been happy to hand over this data on the understanding they’ll get something in return – personalised offers/recommendations and discounts. This promise needs to be upheld. The more data handed over, the better the shopping experience should be.
It also needs to be secure. If sensitive data were to leak out, or it was revealed that a retailer was lax in its data security, the reputational cost would be seismic.
Device management
Retailers want happy customers, but they also need engaged staff. Recruitment and retention are competitive; retailers want to create an environment for staff that is modern, enjoyable and productive.
Like many of us, retail employees want a workplace environment that resembles their home life. They want mobility, information at their fingertips, apps that are responsive and relevant. The best retailers will offer this. They support thousands of manned devices used by both employees or customers, such as handheld scanners, interactive kiosks, and control centres. The solution helps onboarding through standardized processes, monitoring, and management of the IoT landscape.
Retailers need to manage a huge number of devices and applications, and they need to do so securely. Retail can be seasonal. Retailers want to be able to onboard new recruits efficiently, and then sign them off cleanly once the contract is over. They cannot allow data to walk out of the door.
For more information on VMware retail solutions, please visit: https://www.vmware.com/solutions/industry/retail-it-services.html
About the authors: Paul Nothard is a VMware SDDC Architect; Jarek Matschey is the Retail Industry Director EMEA, VMware. Contact them on [email protected] and [email protected].
