Using the cloud for integration turns marginal into massive gains for retailers

By Graham Woods, Managing Director of W3Partnership.

No-one talks about retail in terms of online and offline anymore. The word omnichannel entered and left our parlance with equal speed. Retailers are now focussed on providing customers with the choice, experience and delivery they want, when they want it – regardless of the channel on which any part of the customer journey takes place.

This is the only way they can possibly compete and thrive. Retail is a fiercely competitive industry, and one that’s fragility is compounded by external factors – such as property rental price increases, flash sales and how flush consumers are feeling.

With the exception of Amazon, it’s hard to see where one retailer is going to emerge as an out and out market leader. For those operating in the top tier and below, both on and offline, small changes to the way they operate are what will make the difference to their survival.

Retailers as technology businesses

A retailer’s ability to communicate with its customers and offer exceptional level of service is still the final frontier for its ultimate success, but it’s impossible to hide from the fact that retailers are now completely under-pinned by, and informed by, technology.

A consumer’s experience in-store – how they pay, the digital screens that capture their attention, the QR codes they scan, the offers that appear on their mobiles, and their online shopping – the user experience, the 360 degree images and videos, the speed of transactions, the chatbots, are all instances of technology being deployed to make marginal gains.

Undoubtedly the level of service provided by the store assistant towards the end of the customer journey is key to closing a sale, but it’s the influence of technology at other stages of the interaction that have nurtured the customer to that point.

In theory, almost every investment a retailer makes is aimed at improving the customer experience. But according to Brian Solis, a principal analyst at Altimeter Group, businesses are not measuring the impact of the technology they’re implementing or using that to inform decisions about future investments. “Only 35 percent of companies undergoing digital transformations have studied customer evolution as a result of technology’s impact on their shopping behaviours….companies seems to be implementing technology without considering why”, he has been quoted as saying.

The power of the sum of the parts

In addition, there’s an also an argument to say that retailers do not consider enough how one piece of technology can improve and enhance another. That’s where integration can turn those marginal gains into something far more substantial.

Every single implementation brings with it its own data about customer behaviour; inventory, supply chain efficiency, delivery, returns etc. In isolation, all will deliver insight that can help retailers to make better decisions. But those decisions are still being made in silos – offline v online, front office v back office, etc.

Having a 360 degree view of customers and knowing what to do with that information is key. How about a scenario where promotions being run in store using AI are having a huge impact on conversions, but the inventory management system is showing that return levels are much higher than normal on these purchases. Does the cost of managing the increased number of returns still warrant the investment in the promotion? 

The problem with making sure that the left hand knows what the right hand’s doing is that it can be a huge headache to manage. Integration capability, being able to bring multiple data sources together to inform decision making, has historically been a costly and lengthy process. Retailers only need to look at the public sector and how some of its digital transformation projects aimed at ‘joined up thinking’ have over-run on both time and budget, to see how painful the process can be.

Integration in the cloud

But this is where those marginal gains become massive gains. And in the same way that the cloud has revolutionised so many other IT purchases, it is now possible to deploy an Integration Capability as a Service (ICaaS) model rather than investing in an in-house development team to bring disparate systems together. 

This give retailers rapid access to digital information across their businesses, allowing them to fully understand the customer journey and to share data across the organisation. Cloud technology, as ecommerce companies know well, also enables businesses to scale up or down depending on demand, without the need for additional investment in technology or consultants. Shorter development cycles and little need for specialist skills also frees internal teams up to focus on analysing data rather than finding it.

Retailers have to recognise that the there is more to be gained from the sum of their technology investments than there is from each investment in isolation. While the customer experience remains paramount, applying insight to the full supply chain also makes a huge difference to operational performance. Adopting a cloud platform for integration can give retailers access to the insights they need to help the business perform better, while remaining in control of their costs – the holy grail for retailers both on and offline.

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