Cloud in Retail: Driving Personalization and Enhanced Consumer Experience
Cloud, cloud, cloud … it’s not just buzz, it's being used everywhere. And one of the industries with visible impacts from cloud adoption is retail. But how great is cloud for retail really?
An Accenture study projects that the cloud market will triple this year in retail, comprising a $15.1 billion business. Why are people investing in the cloud? There's certainly a return on investment behind these moves. In fact, many predict that cloud will usher in a new business model for retail.
In some respects, cloud has already made its mark on retail operations. Take a trip to your local mall and you'll likely find cloud already in use. You might also find that cloud has changed, and perhaps personalized, your interactions in brick-and-mortar stores. For example, a company called FaceCake Marketing Technologies has a “Try-Ons” product that allows consumers to “virtually try products on their own images in real time, while instantly providing relevant product recommendations within each user session for superior personalization.” Try-Ons are accessible from anywhere, and is compatible across devices, whether it’s an in-store kiosk, desktop, tablet or mobile phone.
Additionally, eyewear retailer Warby Parker offers a virtual try-on booth on its website which lets potential customers upload a photo or take a picture of themselves via a webcam. By simply uploading a picture, visitors can try out different frames, ultimately helping them make a better buying decision. Warby Parker also provides a similar experience in its retail stores, where shoppers can take pictures with different pairs of glasses on and then have their favorites printed and/or emailed to them for future reference.
Whether it's powering the mobile point-of-sale (POS) system in the hands of associates who are now free to roam the retail floor or allowing a fortunate few to skip the line and pay via Square, cloud has made stores more mobile and interconnected. Powered by mobile and tablet devices, POS systems now extend beyond the traditional cash register, accommodating customers who shop online and aren’t used to wait times. For example, Apple emphasizes the consumer experience above all else, having eliminated dedicated checkout areas in its stores.
Consider the speed of information that cloud enables. For multilocation operations or franchises, data gets batched up nightly and uploaded to "headquarters." Do you really want to wait until the next day to find out a store was down for a few hours? Cloud enables real-time collection of data, real-time analysis and even real-time business continuity of operations.
There's also a shift in the function of brick-and-mortar stores to be that of a showroom where consumers go for the “experience” — i.e., to interact with a brand, its products and associates. This is partly due to online sales commanding a greater share of the retail marketplace. Forrester Research estimates that by 2017, 60 percent of retail activity will take place online, whether it's the POS or pre-purchase research that's occurring digitally.
Cloud Insight Will Have Big Implications
Another big demand is for predictive analytics powered by big data. The growing role of online retail calls for closer integration of the online and in-store retail experience. By leveraging the cloud to integrate disparate systems, retailers will benefit from analyzing customer behavior across channels and use it to predict consumer preferences. This translates into using the cloud to allow retailers to deliver a more personalized experience to each customer. If leveraging cloud insights to their full potential, some retailers may use beacons to know when a given customer enters their store, greeting him or her with personalized promotions and offers.
Today, brick-and-mortar retailers are held to the online shopping standard for convenience and speed. The cloud is the ideal facilitator, allowing retailers to deliver streamlined operations to enhance the customer experience. There's also financial incentive resting in the opportunity to consolidate.
Though its infrastructure has since come under scrutiny due to a now infamous data breach in 2013 when Target virtualized its servers, the retail chain announced that it was able to cut down the average number of virtual servers in each of its locations from seven to two. Accenture elaborates, “In total, Target has retired 8,650 in-store servers, saving millions of dollars in hardware and electrical and maintenance costs, and now rolls out software upgrades to its stores in 45 days.”
In a market that’s more competitive than ever, these savings will be passed on to the customer in the form of price cuts as comparison shopping online becomes common practice, or put towards enhancing the shopping experience. The cloud is at the center of this change, both driving and powering a different tone in retail.
As the cloud market moves toward the $15 billion mark set by Accenture for this year, it’s clear that cloud is a key driver in retail transformation and, in combination with online sales growth, is putting power back in the hands of the consumer with “experience” at the forefront of every retail interaction.
Ali Din is the senior vice president and chief marketing officer at dinCloud, a cloud services provider that helps organizations rapidly migrate their IT infrastructure to the cloud.