Retailers have always been challenged, from whenever the first sortiment decision had to be made – maybe by the Phoenician traders, who had to decide what to load on their ships. As such retailers always had to anticipate what their customers would buy and at what price point.
Fast forward to today and the industry is in turmoil. Even brick and mortar leader Walmart is closing stores. The whole retail business has gone to become more of an online business – starting with the display ad served to a consumer. But then consumers still flock to malls, my ground check this weekend at the Fashion Island mall in Las Vegas showed a well populated mall. And then the consumer of 201x is different than any consumer before – well armed with smartphones, tablets, comparison shopping sites, coupon clubs etc. Finally it looks like the battle for the consumer is seeing a new dimension when they are out and about. While it was only the airwaves that with a radio commercial may have directed a consumer to retailer A vs B while the consumer was already in the car – the self-driving car will give consumers even more time – to prioritize shopping. The good news is that today – the way how to dominate the ‘drive to the mall’ is well known. Display ads and apps.
In summary – retailers have been very good at dealing with uncertainty, but there is likely more uncertainty facing retailers than ever before. So what is a retailer supposed to do?
Far from having a complete answer – there are a few technology strategies that are certain:
- BigData strategy – It is clear that retailers need to process and exploit more data than ever. Likely across multiple ‘data lakes’. It is probable that the days of the ‘single’ source of truth are gone and done. Being able to exploit BigData across multiple sources, without a central single repository and still action on the transactional side is key (for those missing Social - the digital exhaust is kept here - in my view social 'sprinkles' across all the below trends).
- Analytics strategy – It is likewise clear that ‘true’ analytics (more here) need to be used to make sense of the data volumes. Retailers can no longer rely on humans to find trends and action, but need software to find and predict buying interests and patterns. That requires the ‘trashing’ of models, i.e. running all predictive models one can get hold off and apply them to a problem. The only place where this can be done is in the (public) cloud.
- Cloud strategy – As a third ‘clear’ strategy pillar it is clear that retailers need to operate in the public cloud. Retail is one of the most seasonal industries and seasonality means elasticity of IT resources, and that means public cloud. Nice to see that best practices from the ‘old world’ apply here – don’t have a single supplier like in the real world.
- Apps strategy – It is clear that the current providers of enterprise software are in the midst of moving to the cloud, so they are understanding the move to ‘unlimited’ computing resources themselves. Retailers that want to be leaders in the next years cannot afford to wait for them to move to the cloud, understand the best practices of the 21st century and codify them. That means in consequence that strategic applications for retailers need to be built in-house, so retailers need to look for a PaaS strategy and developers.
- Mobile strategy – More and more retail business will be attracted and done on smartphones. Smartphone presence and apps are going to be more important to retailers than stores. It’s time for retailers to spend the same amount of time to build their mobile applications as they did for their storefronts. Similar to the Apps strategy it means in-house building of these mobile apps.
MyPOV
All industries are facing disruption these days, but retailers may be more exposed. Operating already on thin margins, the risks only go up, the industry sees new lateral entries into their market. Even more important to have an overall and IT strategy that takes advantage of the new capabilities technology offers.