The retail industry continues to evolve at a rapid pace, yet delivering a superior consumer experience remains a key differentiator for modern retailers. Consumers expect a seamless experience when interacting with retail brands. The new digital era has made engagement continuous, literally at any hour of the day and at any place. A buyer may research a new product at home, put that product into their digital shopping cart while in the office, purchase it from a mobile device and collect it at the local retail store that same evening. Retailers compete for mindshare and wallet share across screens, locations and time.
To thrive in this omnichannel world, retailers must harness the power of data to stay one step ahead of the competition and predict the desires of the consumer — often before the consumer even realizes it themselves. The days of brick-and-mortar being the sole touch point for buying decisions is long gone. Yet many retailers continue to rely on an IT model optimized for this period.
Emerging technologies, such as the cloud, hold immense promise in allowing retailers to innovate in the way applications and services are delivered to their consumers. However, the decision of which infrastructure approach is best must be based on the needs of the applications. To this end, part of the answer in delivering the innovation needed by retailers lies not in the cloud, but rather in the concept of multiple clouds — both on premise and off premise. Enter the hybrid cloud — the ability to develop, deploy and operate critical business applications across public and private cloud environments.
The Current Cloud Landscape
To better understand the retail industry’s deployment of cloud, Nutanix commissioned a survey of more than 2,300 IT decision makers, including 329 worldwide retailers. We sought to find out where retailers run business applications today, their plans for the future and how their cloud challenges and initiatives stack up against other IT projects and priorities. We discovered retailers have come far in adopting cloud technology — but they still have a ways to go.
In comparison to other industries, retail has the second largest penetration of hybrid cloud deployments at 21%, but that still isn’t a notably high number. With 93% of respondents identifying hybrid cloud as the ideal IT model, there is a disparity in the number of retailers that have adopted the hybrid model versus the ones that want to use it.
Retailers prefer hybrid cloud because it allows IT to run and align their applications to the right cloud. For example, workloads with requirements for security and encryption, or applications with stringent performance and availability requirements may run on private clouds, but unpredictable or elastic workloads, like web tier with changing requirements, might be good candidates for public clouds.
The hybrid cloud model also offers a solution to unifying dispersed data and applications in our multi-cloud era. For retailers, clouds live everywhere from the edge (a storefront) to distributed ROBO sites (distribution centers) to centralized locations (main datacenter) to cloud service providers (hyperscalers). The key to managing these dispersed clouds is a solution that is elastic and ephemeral — and one that offers flexibility in easily moving between different clouds.
The hesitation to adopt hybrid cloud, despite these clear benefits, may be due to the daunting amount of work to implement it or the lack of resources to manage it. But regardless of the reasons, taking the plunge to deploy a hybrid model will allow companies to be more flexible to manage resources during busy seasons, manage their IT spend more efficiently and create a more personalized customer experience.
Scaling With Seasonal Traffic Bursts
Statistics show 2018 was the busiest holiday shopping season for retailers in the last six years, with sales growing to more than $850 billion and online sales jumping 19.1% compared to 2017. With consumers spending more than ever during the holiday shopping season, it’s critical for retailers to capitalize on investments during these high traffic periods. The flexibility of the hybrid cloud model gives retailers better access to manage seasonal traffic bursts that happen before, during and after the holidays. Retailers can scale their applications and IT systems on demand, scaling up or even decreasing their level of resources as needed.
Along these lines, retailers can also better manage inventory by storing and analyzing all data around customer purchases in a single data platform system. Card stores like Hallmark, for example, can conduct real-time inventory tracking and gain easy and instant access to stock availability, store orders and shipping details throughout the holiday seasons.
More Control Over IT
In an effort to undergo digital transformation, companies across all industries are investing more money and resources than ever before — and many times, unnecessarily. Recent research found companies are wasting $62 billion on IT infrastructure in the cloud they don’t need. At the same time, retailers need to gain more control over implementing IT they do need, like technology that can ensure secure processing, storing and transmitting of customer credit card data. It is critical to ensure PCI workloads are run in PCI-compliant environments.
Deploying hybrid cloud with the right tools to monitor and report on usage and compliance can help retailers gain control over IT spend again. The model allows companies to be held accountable and to identify which teams are driving cloud spend, while ensuring teams make data-driven decisions that balance need and cost. Moving away from on-premise management can also mean reducing IT employee time needed; those freed-up hours can instead be spent on higher revenue-generating tasks.
The stakes are higher than ever to impress customers in order to retain them for the long-term. A Marketo study found that over 78% of consumers will only engage with brands if offers have been personalized to account for previous engagements with the brand. How can retailers keep up with these increasing demands?
Fortunately, the speed and flexibility of hybrid cloud is well-suited to create a top-notch user experience. Much like shopping, cloud computing, too, is moving beyond a one-size-fits-all solution and becoming customizable. Coupling a company’s existing IT investments and a cloud tailored to support a company’s unique requirements, retailers can gain real-time insights from customer data and tailor the experience for each individual user.
Sephora, Walmart and eBay were all recently ranked on a list of top retailers for impressive personalized customer experiences. For a brand to achieve a high score, it had to have a seamless omnichannel experience, and the nature of each interaction with the brand had to be fluid and comprehensive. Hybrid cloud is key to delivering these omnichannel capabilities and encouraging the agility, elasticity and efficiency required to maintain personalized interactions.
More than most industries, retailers are acutely aware of how IT strategy and execution directly impact customer experience and the bottom line. The adoption and planned growth of hybrid cloud in retail shows that companies understand that hybrid is the best solution for managing customer demands while keeping flexibility, security and costs in line. Staying forward-thinking in IT infrastructure will enable retailers to form new solutions to keep up with the changing industry and higher-than-ever customer demands.
Chris Kozup is Senior Vice President of Global Marketing at Nutanix where he is responsible for regional marketing strategy and execution across the Americas, Europe and the Middle East and Asia Pacific. In his role, he oversees direct marketing and partner marketing initiatives. Prior to joining Nutanix, Kozup was VP of Global Marketing at Aruba, a Hewlett Packard Enterprise company. As chief marketer at Aruba, Kozup oversaw the marketing of a $2.4 billion mobility, security and networking business. Before Aruba, Kozup was Director of Mobility Marketing at Cisco, where he was responsible for the marketing of Cisco’s $1.3 billion WiFi business. Early in his career, Kozup was Program Director at the META Group where he was the primary analyst covering the networking industry. He received an MBA from IE Business School in Madrid, Spain and a BA from Ohio University.