Jarek Matschey, Director Retail, VMware EMEA
The world of retail is changing rapidly. And not just the stores we buy from, but how we shop, when, how we pay for goods and the way in which those goods move through the supply chain. The impact of which has redefined the perception of customer experience and the standards retailers today are expected to reach and exceed.
Central to this tectonic shift is the use of multiple clouds to create, manage and transport applications and data and services, securely, easily and at speed. New research from Forrester reveals that CIOs expect the number of clouds – private, public and edge environments – they use to build, manage and run apps to increase 53% in the next three years, from 5.6 today to 8.7 in 2023. So, from individual shopper preferences hosted in private cloud, to delivery information used by drones on the Edge, how is operating in this multi-cloud world now central to the way the world shops – and how easy is it for retailers to adopt?
Data – removing the friction on the path to purchase
It starts with people. Today’s consumer is smart. They know the value of data, particularly their own, and are willing to share it as long as there is a clear value exchange. For retailers, when combined with their own data, this is creating a perfect storm.
The volume and frequency of information available today is the driving force behind the ability to deliver the right experience to customers and provide the right tools to employees, no matter where they work. It facilitates the ability for a product to be exactly where it should be, when it should be there, and with the right price. It is reducing inventory distortion and removing all the friction on the path to purchase.
But to bring this vision to life, the right technology must be in place.
The action and reaction to retail data
Retailers face a constant challenge because, in order to remain front of mind, they need to constantly offer new and engaging features to customers. Nowhere is this more evident that in the evolution of payments, which is simplifying the overall shopping experience. The standout example being AmazonGo, which allows people to visit a store, take what they need and then leave while the financial transaction automatically happens in the background.
But this type of exchange requires a lot of complex analytics and the right infrastructure, bandwidth and applications in order to deliver it. This is where multi cloud is playing such a key role in regard to speed of action and reaction to retail data. For example, we are working with a retail customer in Germany, who found that its customers that used its mobile app spent 50% more than occasional shoppers. But, in order to increase the number of users to its app, it needed to add new features – and quickly. Capitalising on the ability to seamlessly and securely use multiple clouds for different apps and services is the only way this was possible. But this example is indicative of a wider trend. A Harvard Business Review study found that omnichannel shoppers spend 4% more in-store and 10% more online than single channel users. The same study found that customers who research online before going in store spend, on average, 13% more than just online shoppers.
As customers we use all those tools available to improve our experience. It is the obligation of the retailers to provide the right information in order to make decisions and shopping easier.
Blending the best to beat the rest
Historically, retail is not an early adopter of technology. It tends to rely on proven methods with low risk. Multi cloud changes everything because it gives retailers flexibility and allows them to do things better or simpler for lower cost, especially a hybrid cloud environment where the lines between the private and public cloud blur due to the consistency of management and operations – and security. This is critical because retailers face unprecedented competition from Amazon and other online-only upstarts. The retailers that are surviving, and to some extent thriving, are the ones that are embracing the best of what cloud can offer to enhance their offer to make it something that is competitive.
UK retailing giants Sainsbury’s & Argos are good examples. Irrespective of the corporate rationale for the merger, it was a move facilitated by cloud because combining the operational requirements of both businesses would have been impossible on-premises. Through multi-cloud, they were able to blend the best of what they have in order to match and then exceed what online can do.
Retail leading the way in understanding buyer behaviour
One thing that retail is now doing better than anybody else, except for perhaps state governments, is profiling and understanding buyer behaviour and supplier transaction through to what’s driving people to purchase. The regulatory framework means that customers in some countries will not be able to take advantage of the most innovative, web-based offers until they’re made available locally. But not every retailer can afford to hire enough data scientists or invest in the hardware to deliver this. The fact that the same functionality can be achieved via multi cloud is making a big difference.
Carrefour is a good example. It was recently exhibiting at the Google stand at NRF showcasing how data informed a growing trend for people buying increasing amounts in smaller stores. By analysing purchase data, it was able to provide store managers tailored information on what to order for each specific region giving them ability to decide what they want and what they don’t.
It is this increasingly seamless connection between retailers and the supply chain that is fuelling the retail revolution. By tracking movement of goods and understanding how to manage this is a more cost-effective way retailers are experiencing a win-win situation of improving customer experience while cutting the bottom-line cost. And it’s not just the supply chain either. For example, a retailer in Germany moved its accounting to the cloud because it was only using its hardware around three days a month – approximately 10% of the time the full capacity of its data centres.
Better, quicker and slicker
Because more and more data is being hosted in the cloud, be it private cloud, public cloud, hybrid cloud or telco edge cloud, connectivity is becoming a critical part of the overall architecture. The advent of 5G is likely to see a rise in cloud uptake through a combination of better bandwidth, better connectivity and evolving device usage like personal assistants which, of course, will affect how people shop.
What is essential for retailers is the ability to easily embrace cloud to help build, run, manage and secure their vital, competitive-boosting app. VMware’s cloud foundation provides the platform to drive business value, create the best environment for developers and help IT effectively manage existing and new IT via any cloud for any application, on any device, with intrinsic security. And this common platform can deliver all apps—cloud-native apps in the public or private cloud or edge, hybrid apps, or on-premises traditional applications – with consistent management and operations. Providing this ease and flexibility then gives retailers the ability to focus on their business and the ability to move quickly as new trends emerge.
Whichever way you look, how we shop is changing. And behind almost every targeted goods offer, innovative delivery idea and slick and speedy website transaction, is multi cloud.
For more information on how VMware can assist your retail offering please visit our Retail solution site.