Cloud for Retail: Boost Innovation and Maximize Profitability
Whilst the unprecedented COVID-19 pandemic has accelerated the digital transformation within the retail industry that had already commenced to digitize, the fight to recover the long-term growth in retail will most presumably be succeeded by those who adopt a more bespoke approach to the customer journey and embrace innovation.* A data-focused cloud solution is the digital transformation that retailers need, and digitally-driven and omnichannel customer experiences are more vital than ever.*
The benefits of the cloud are prominent across a variety of industries, yet retail is one of the top industries to grasp these benefits immediately to remain resilient during uncertainty and outshine the competition. Google Cloud states that with cloud adoption, retailers can capture digital and omnichannel revenue growth, become customer-centric and data-driven, and drive operational improvement. Leveraging the cloud helps retailers become more resilient and sustain profitable growth.
While major cloud advantages are perceived as being related to optimizing IT costs, a study by McKinsey indicates that 75% of the cloud’s predicted value comes from boosting innovation. More businesses have started seeing the cloud as a catalyst for innovation and digital transformation with its ability to increase development speed and provide vast scalability. Innovation is not simply about implementing new technologies onto existing processes; it is about delivering new solutions to help create remarkable experiences tailored to today’s empowered customers with unique buying habits.
Business leaders have begun perceiving cloud adoption as an integral part of their digital business expansion due to its speed, scalability, innovation, and productivity benefits rather than merely an engine for growing revenue and efficiency.
In this article, we will look into some of the significant cloud advantages for retail businesses.
1) Improved Shopping Experience
Cloud networks disrupt the shopping experience through a variety of applications, such as advanced CRM tools and enhanced point-of-sale (POS) systems. CRM systems help retailers access comprehensive customer profiles that are essential to creating omnichannel customer experiences. (You can refer to our blog “How to Create Seamless Cross-Channel Engagement” for more details on this topic.)
“Power has shifted from the retailer to the consumer. Consumers are influencing product trends through reviews and social media, doing extensive product research online, and expecting a seamless omnichannel experience across all touchpoints. To stay competitive, retailers face tremendous pressure to deliver new business capabilities faster.”
Source: The cloud as catalyst for retail | McKinsey
Using a virtual network, retailers can streamline their operations within their brick-and-mortar stores and the entire company. Cloud systems enable omnichannel order completion to facilitate smoother check-out processes by keeping important customer information such as rewards, profiles, or preferred payment methods.
Cloud also allows retailers to offer highly personalized omnichannel services such as in-store welcome messages, customized recommendations, daily exclusive membership offers, coupon codes, and other loyalty deals. In addition, customers can receive convenience information, such as the closest stores for product pickup and accurate order-ready time predictions.
“While most retail companies have utilized cloud for back-office optimization and cost savings, some pioneers are beginning to leverage it in ways that enable business growth rather than simply cost control. One large retailer has used Google Cloud to transform its brick-and-mortar business and develop its e-commerce and omnichannel capabilities by launching new services, such as drive-up orders and curbside pickup”
Cloud POS systems help retail businesses move beyond traditional sales limitations, such as the need for large check-out areas, and become more innovative. Payment can be collected via mobile devices anywhere on the floor, reducing customer wait times and increasing customer satisfaction through hassle-free checkout options.
2) Increased Supply Chain Visibility and Operational Excellence
Supply chain management (SCM) is a critical business procedure in retail. If any SCM steps go wrong, there may be severely damaging consequences. By leveraging the cloud, retailers can track goods using real-time location data and gain more insights into their supply chain, resulting in fewer stock-outs, late/wrong deliveries, missing packages, and, eventually, operational excellence. In addition, the cloud enables customers to monitor supply chain steps relevant to their purchase, such as payment, order status, and product updates.
3) Enhanced Communication Capabilities
A retail business operation relies heavily on flawless external and internal communication. Cloud-based collaboration and instant messaging tools enhance employees’ communication with each other and customers, allowing them to securely access internal systems, handle customer concerns quickly and thoroughly, and document immediately.
With the enhanced communication tools and state-of-the-art technologies enabled by the cloud, retail teams can foster a better knowledge culture and create a better employee experience.
4) Better Insights via Integrated Data
Cloud brings advanced data analytics capabilities that help retailers collect, store, and unify sales, stock, and customer data and turn these into actionable insights to build strategies and drive overall performance. Retailers, then, can boost profitability by utilizing these meaningful insights as a lever to shift from a product-centric organization to a customer-centric ecosystem.
5) Higher Scalability
Retailers experience peak demand and spikes in traffic during seasonal/limited promotions, and the system load may fluctuate depending on the time of the day/year and even the weather. Thus, they need highly scalable systems that can effectively handle the changing load on traffic, adapting the resources cost-effectively with various pricing options based on computing usage. This way, retailers can maximize profit and ROI via outstanding uptimes during peak periods with the built-in scalability capabilities of cloud systems.
6) Better Control of Pricing and Margins
Retailers, more than other sectors, encounter price-sensitive customers. Thus, they must be well aware of competitor prices and study sales history at a granular level for accurate profitability estimations and critical strategic decisions. However, pricing calculations are mostly done manually and are usually based on scattered data, which is time-consuming and inefficient. The cloud enables healthy estimations based on integrated data ingested from multiple sources by combining data analytics and ML capabilities to build pricing modeling. Cloud helps retailers use effective pricing to maximize profits and sell out stocks with minimal markdowns.
7) Improved Overall Security, Business Continuity, and Data Recovery
Retail businesses are often concerned about the safety and security of their customer data. With the help of advanced built-in security capabilities of cloud systems (i.e., advanced firewalls, data encryption, event logging, internal firewalls, etc.), retailers can protect their data and systems and avoid data breaches and cyber attacks more effectively than they would with on-prem servers. Cloud systems, as managed services, provide automated software and service updates, top-notch monitoring options, and continuous improvement of security practices, thereby ensuring data safety and integrity.
Protecting business-sensitive data is one of the massive challenges perceived by retailers. Cloud allows accessing data securely with robust access management options, in addition to disaster recovery plans and scheduled backups.
Additionally, a cloud system means 100% business continuity during renovations or moving physical stores. However, with on-prem, downtimes are unavoidable during such times.
8) Reduced Costs and Improved Profitability
Current market conditions continuously challenge retailers to restructure their operating models and upgrade their technical infrastructure. As one of the most rapidly evolving sectors, retailers need future-proof technologies to cater to the fast-changing business demands and keep up with faster times to market.
Retail cloud unleashes businesses from legacy software and equipment limitations and offers tremendous advantages over on-prem by surpassing the planning and procurement times and CapEx budget approval processes and avoiding IT infrastructure, licensing, and maintenance costs.
With a cloud service, retailers can choose a subscription model that fits their business needs. Since cloud solutions require no prohibitive upfront payments, retailers can only pay for a portion of the hosting, power, and hardware expenses, which are proportional to the services and storage space used.
Cloud provides analytical and AI/ML capabilities that allow retailers to gain a competitive advantage by creating elastic business models that scale in disruptive environments. Retailers can achieve a strategic edge by migrating more workloads to the cloud to transform store operations and digital experiences across their organization via intelligent and data-driven offerings and unlock growth opportunities.
As Kartaca, we have worked alongside many retail businesses helping them develop, set up, implement, and run cloud solutions, and we understand potential pitfalls. If you are a retailer developing your strategy to move to the cloud in search of the right partner to help you identify your approach for cloud migration, please check this page and contact us.
Kartaca is a Google Cloud Premier Partner with approved “Cloud Migration” and “Data Analytics” specializations.