Illustrations by Marco Goran Romano

Introduction


Shopping retail doesn’t mean what it once did. The internet has brought unprecedented levels of visibility for customers. With a few swipes or keystrokes, consumers can compare dozens of versions of a product, read reviews from peers, and, of course, click to buy.

With that much at the customer’s fingertips, expectations of the retail experience have changed, particularly for brick-and-mortar stores. Even with the most competitive pricing, widest selection, and customized, accurate recommendations being available in stores, there’s nothing stopping that customer from going online instead. At the same time, brick-and-mortar stores offer some advantages that e-commerce can’t, including instant gratification, the ability to see and feel a product before buying it, and immediate attention from a sales person.

In response, retailers have increased their multichannel offerings, putting products online as well as in physical retail spaces. They’re also looking into the confluence of big data, cloud computing, and faster, more extensive connectivity. Compartmentalized information has long been a problem for retailers in search of consumer insights, and as some of those silos open up they’re finding ways to put structured data to work—for example, by using it to build location-aware experiences and personalized offers via mobile experiences and store displays.

The cloud is bringing brick-and-mortar and online retail spaces together, helping to create a newly sophisticated, tech-enabled way to shop.

$24 Trillion

The 2015 global revenue for the retail industry1

60 Percent

Percentage of 2015 growth in retail industry attributable to e-commerce and online shopping2

$1.8 Trillion

The U.S. retail revenue projected to be produced by cross-channel sales by 20173

Major British retailer Marks & Spencer has empowered all of its employees with networked mobile devices that can access everything from staff information to company-wide announcements at all times.

CHAPTER 1

The Unified Experience


The most far-sighted retailers are focused on bringing together their brick-and-mortar stores, online sites, mobile-app assets, and customer information. Engaging with customers across all these channels makes for a seamless customer experience, where no detail goes unseen or unaddressed.

If, for example, a customer wants to return something purchased online at the store, the unified platform can give its sales associates all they need to know: when the purchase was made, the customer’s previous purchases and return history, even a possible reason for making the return. Not only would the customer be more effectively served but the in-store associate would also be able to make recommendations on a replacement item based on the customer’s known preferences and history, while inventory would be updated immediately.

When all of a customer’s activity is available on a cloud-based platform that takes in data from online, in-app, and in-store transactions, retailers will be that much closer to “knowing” every customer they have. When that becomes a reality, speaking with customer service will no longer be a headache: It will be more like talking to a friend.

Percent

Percentage of retail firms that will compete primarily on the basis of customer experience by the end of this year4

69 Percent

Percentage of customers who researched a product on a device before purchasing it in-store5

87 Percent

Percentage of customers who said brands should be putting more effort into providing a seamless retail experience6

CHAPTER 2

Tailoring the Experience, Not Just the Product


Given the prevailing shopping experience, it’s hard to imagine a trip to any store being personalized, speedy, and interactive. But with the help of a cloud-based infrastructure, innovators in the retail space have been testing out the marketplace of the future.

COOP ITALIA

Coop Italia, Italy’s leading grocery cooperative, in a proof-of-concept initiative, is combining traditional open displays of goods available for purchase with interactive screens and in-person assistance, making all the information customers would see online—recipe ideas, their nutritional value and calorie counts, etc.—available in stores. Kinect sensors line product shelves, activating screens when customers pass by and measuring traffic patterns throughout the stores, providing valuable insight into shopping patterns and preferences.

Coop Italia became an experience as well as a grocery store by digitizing and personalizing every facet of the customer journey.

JJ FOOD SERVICE

JJ Food Service Ltd., an independent food distributor based in the UK, is proving that a restaurant’s experience with partners in their supply chain can also be personalized. By cross-referencing a client’s past order information with data related to the weather, season, market sector, and current events, JJ Food Service Ltd. is able to predict their clients’ needs and make customized recommendations, whether their client is using their mobile app or website.

For JJ Food Service Ltd., the most efficient approach to delivering time-sensitive produce and ingredients relies on data that is collected and analyzed in the cloud.

Being able to collect and analyze the full extent of customer data and deploy that analysis across various channels produces a major increase in marketing possibilities. When a customer walks past a favorite brick-and-mortar store, that retailer’s mobile app can send out a text alert about a personalized discount on a past purchase or about a new product that matches a known preference.

When customers choose to go inside, they can continue using the store’s mobile app to scan QR codes on products and do research on whatever product they’re thinking about buying. Using the app, they could scroll through customer reviews, view similar products, see what their friends think, even order a version of the product to be delivered. That process would also give retailers detail on their customers’ interests.

To make these advancements possible, retailers need to be able to connect their various data streams. Given the volume, variety, and ongoing updates of that data, that future marketplace requires the computing power and analytic capability of the cloud.

$15 Billion

The retail cloud market was projected to reach $15.1 billion last year, compared to $4.2 billion in 2011.8

80 Percent

Percentage of shoppers who said their perception of a retailer would improve if they offered mobile coupons and promotions9

77 Percent

Percentage of marketers who believe personalized offers are crucial to a business’s revenue10

CHAPTER 3

Insight is Everything


Retail is as much about the back-end operations that fulfill orders as it is about matching customers to the products on real and virtual shelves. The cloud can help with that too. In everything from inventory to trend-prediction to partnering with delivery services, retailers big and small need to be on top of their data if they want to survive.

It’s not in anyone’s best interest to have an inventory item out of stock or any other disconnect between inventory-tracking and re-ordering. Use of the cloud enables a live, accurate, birds-eye view of what products are selling, where they’re going, and if anything is running low. It’s just as bad to sit on unsold inventory. Visibility and insight allows retailers to order more of what’s selling and cut back on what isn’t. Radio-frequency identification, for example, allows retailers to direct merchandise to the right stores and warehouses as demand changes in different locations. That capability is also scalable, applicable to as many or as few items as the retailer wants. That is just one example of how cloud capabilities support retail-as-a-service, where companies have to pay for only the amount of coverage they need.

Those cost savings can be passed along to the customer. In the case of Jet.com, an e-commerce site that has set out to rival Amazon and eBay, a cloud-based dynamic-pricing engine allows customers to see how the prices of certain goods change in real-time, based on the actual costs of getting those goods from the warehouse to the doorstep.

When a platform or website like Jet.com requires constant, real-time updates, the cloud allows it to combine and process multiple data streams into one user-friendly result.

As start-ups, small-format stores, and pop-up shops grow in popularity, it’s increasingly important for their executives to have visibility and control over the flow of their merchandise. Access to historical data helps retailers predict the next big trends and how they will affect inventory. It can also offer insights into how the weather or season affects sales. In many cases, retailers have vast amounts of data stored somewhere, but they need to be able to analyze and deploy it to make it valuable. That’s where the cloud comes in.

At Dunnhumby, a customer science company, the cloud and emerging technologies allow customer service to be led by strategy rather than guesswork.

60 Percent

Potential increase in operating margins for retailers who employ data analytics throughout their enterprises11

82 Percent

Percentage of retailers in a survey who said big data is changing the way they interact with customers12

$1.43

Value of unsold inventory for every dollar of U.S. retail sales13

Looking Ahead


Not so long ago, the future of retail seemed to be e-commerce. Its future now is both more complex and more promising than that. As retailers put more and more data to use, their businesses are becoming ever more seamless, personalized, cost-efficient, connected, and predictive. And as they move toward unified commerce in order to remain competitive, they will find themselves increasingly reliant on the cloud.