The events of 2020 hit the retail industry harder than most. As businesses around the world were able to continue their operations by enabling remote working, non-essential shops were forced to close their doors and look for new means of engaging with their customers. In the UK alone, data from the British Retail Consortium has revealed that physical footfall to brick-and-mortar stores fell by as much as 43.4 percent year-on-year, contributing to non-food related retail sales falling by 5 percent throughout the year.
The priority then for many retailers has been to try and replace their lack of physical footfall with digital footfall. Indeed, data from PwC indicates that online sales accounted for 88 percent of all sales in 2020, up from 77 percent the year before, while it has also been noted that this move to online shopping will be maintained post-pandemic, with 46.7 percent of consumers claiming they won’t return to their previous level of in-store shopping.
In order to survive, it’s imperative that retailers continue to develop new and innovative means of engaging with their customers and enhancing their online shopping experience, while simultaneously cutting costs. However, in order to digitally transform their front-end, retailers must first overhaul and modernize their critical IT infrastructure - and this means turning to the Cloud.
With Cloud investment within the retail sector expected to increase from $11.6 billion in 2018 to as much as $48.46 billion in 2025, it is evident that retailers around the world are banking on Cloud-based technologies to aid their post-pandemic recovery. So, how exactly can Cloud help struggling retailers re-architect their survival?
Enhancing customer experience
It is now believed that customer experience trumps both product and price when it comes to consumers making a purchasing decision. Combine this with advancements in Artificial Intelligence (AI) and Big Data and it becomes clear that collecting and leveraging customer and sales data is now more important than ever for retailers. Retailers can apply AI and advanced analytics to customer data to learn more about what motivates their customers' purchases, get ahead of consumer shopping habits and gain a competitive edge over rivals by delivering personalized online shopping experiences.
In order to reap the rewards of AI and data analytics, retail businesses must first migrate from their legacy systems to the Cloud. Only Cloud infrastructure will have the compute power and storage capacity to give retailers real-time insights into rapidly changing consumer behaviors. By moving to the Cloud, retailers are modernizing and giving themselves the opportunity to make data-driven decisions that inform how they engage with their customers. This will be essential for retailers as they look to recover from the damage caused by the pandemic.
At a time when retailers are facing increased pressure to deliver unique online shopping experiences, migrating to the Cloud can provide an agile and flexible framework upon which they can innovate and deliver new personalized services to their customers. Research from McKinsey has indicated the importance of personalized experiences, with retailers stating that there is a direct correlation between offering personalized shopping experiences and increased revenue.
The increasing popularity of click & collect services during the pandemic is a great example of this. It is estimated that 12 percent of all sales in the UK in 2020 were ordered online via a click & collect service. This service, while not new, offers consumers the opportunity to be flexible when shopping and to some extent personalizes the individual’s shopping experience. Offering personalized services such as this has been key for retailers looking to keep up with their competition throughout the pandemic.
By adopting Cloud-based infrastructure, retailers are giving themselves the opportunity to take personalization to the next-level by offering their customers personalized ecommerce sites that only show individual consumers the products they are likely to be interested in. Only Cloud-based technology can give retailers the ability to effectively clean-up their customer data and quickly stitch together data on specific products from multiple sources to offer consumers the correct unique product recommendations.
Without the foundation of Cloud infrastructure, it would be impossible for retailers to holistically view their data and send customers the correct product recommendations. This means brands risk sending consumers the wrong recommendations which could have a negative impact on their revenue.
Another constant challenge for retailers is data security. Retail is one of the most heavily targeted industries for cyberattacks, with the majority of attacks being designed to try and make financial gain at the expense of the retailer. Bloomberg estimates that in the year leading up to November 2020, over 400 million customer records were stolen from retailers, and with the average cost of a data breach costing organizations’ $3.86 million in 2020, it is vital that retailers take all necessary security precautions in order to avoid further financial harm as they look to recover from the impact of the pandemic.
By migrating to the Cloud, retailers can improve their data security in a number of ways. First and foremost, Cloud-based security services are cheaper to deploy than on-premise services as there is no need to invest in specific hardware. The Cloud also offers IT departments greater visibility into their organizations’ data, meaning they can implement bespoke security tools and services and scale them up and down as they see fit - something that can’t be done with on-premise infrastructure.
Finally, Cloud security is also highly automated, meaning that risks can be mitigated and remediated quickly and in real-time, with little burden on IT. This is vital, as the longer vulnerabilities go undetected, the worse the impact they are likely to have.
As retailers look to re-architect their survival and recover from the impact lockdown store closures have had on their business, Cloud will be at the forefront of their mind. The explosion of valuable data, an increase in demand for personalized experiences and the rise in cybercriminal exploitation has left retailers struggling to manage this new era of the retail revolution. Migrating to Cloud-based infrastructure offers retailers the best possible opportunity to survive and thrive within the challenging environment they currently face.
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Felix Shalom, Account Manager, HeleCloud