Shopping around: Cloud and post-pandemic retail

A blog post by Evan Sheehan, Global Retail, Wholesale and Distribution Sector Leader

COVID-19 has had sweeping impacts on how we live, work, and shop. It has changed the retail landscape and experience, both as a disruption to business-as-usual and an amplifier of deep-set forces that predate the pandemic and have no sign of abating. The result is a more competitive environment where retailer responsiveness increasingly predicts success.

Now more than ever, retailers need to differentiate themselves using every tool at their disposal and that means going all in on cloud. Cloud can provide retailers with the technical foundation they need to be responsive and thrive in this post-pandemic world and strengthen core attributes to better weather and adapt to changing conditions.

Retail post-COVID-19

Global forces are now shaping retailer action in a post-pandemic world, amplifying deep-set forces and compelling retailers to develop new or enhanced strategies in response. The most impactful of these forces are those that are most closely associated with the use of digital technologies, including:

• Customer shopping patterns are finding a new normal: The ability to deliver in an omnipresent way with high customer connectivity is more important than ever as shopping patterns and expectations continue to find their new normal post-pandemic.
• Consumer packaged goods companies (CPGs) are maturing direct-to-consumer channels: The fight over who owns the customer relationship is intensifying on all sides as retailers face off against traditional threats, digital upstarts, and CPGs that are actively working to disintermediate them.
  
• Acquisition is shrinking the middle market: Larger players continue to steal market share through convenient offerings or by seizing the moment to absorb smaller players, furiously competing for digital talent to overcome legacy platforms.
  
• Supply chain vulnerabilities are further exposed: Global challenges ranging from climate change to economic shifts and increased digitization are all propelling the need for flexible and resilient operations with high visibility and control across the value-chain.
  
• New retail models are disrupting the balance: Increased pressure is being placed on current technology and digital engagement platforms to deliver new shopping experiences with global innovations feeding into local experimentation.
  
• Complex regulations challenge global operations: The global regulatory environment has been further complicated by the pandemic, adding additional challenge to retailers entering new markets or operating globally.
  

Retailers must respond to these forces or improve their overall responsiveness and the ability to adapt. Cloud technologies have the potential to complement and enhance this response.

Responding to cloud trends

In this challenging global environment, retailers are accelerating their shift to cloud to strengthen core attributes needed to thrive in a post-pandemic world. Indeed, cloud-based technologies can improve agility, resiliency, efficiency, innovation, and scalability—all critical in the new normal. 

However, making the most of cloud can be challenging in practice. To unlock its full value, retailers need to address some key issues:

Managing the cost of cloud: The first step for most retailers’ cloud journey is negotiating partnerships, developing a migration plan, and transforming legacy applications. But as the cloud estate grows, the focus needs to shift to financial control without compromising agility. The most successful retailers are looking at the problem from a total cost of cloud perspective and utilizing tools and automation to control the levers of their cloud spend.

Embracing multicloud: The benefits of having a sole cloud service provider are increasingly outweighed by the risks of a concentrated IT infrastructure. Whether for reasons of operational resiliency, improved negotiating power, regulatory requirements, or access to a broader array of services, retailers should expand their cloud provider relationships and develop multicloud strategies and platforms that are flexible enough to seamlessly transition workloads and support new retail models.

Building bespoke ecosystems: To develop a flexible and connected platform best suited to their needs, retailers first need to understand the competitive differentiation they are trying to achieve and how technology can help. Once retailers answer the question of what differentiates them, they can build a cloud native ecosystem to match. This can enable the ability to build out tailored features that can quickly respond to the marketplace.

Putting data to work: Cloud enables retailers to host their data and convert it into meaningful insights and digital efficiencies. Retailers should invest in cloud-based data platforms that give them full visibility into customers and value chains and enables them to strengthen interactions and responsiveness to shifts in demand. Retailers that have moved past data quality and governance issues can then reap the advantages that connected, cloud-powered data unlocks.

Differentiating digitally: Digital maturity is now more commonplace for both retailers and CPGs, who are working to create their own direct lines of communication and commerce. Retailers need to define the next stage of digital differentiation by adopting more expansive views of digital. This can help them realize the full potential of cloud technologies to create a unique customer experience.

Powering the new store: The reopening of physical stores is causing retailers to reopen questions about their roles. With new shopping patterns and expectations, such as curbside and contactless checkout, retailers should pursue edge computing and mobile capabilities so store associates can meet these new demands. Retailers can do this by expanding digital investments and operating models into the store to drive an omnichannel strategy powered by in-store cloud-based technologies.

Realizing cloud’s potential 

Retailers are at different positions in their use of cloud, with some poised to take full advantage of cloud and others just beginning—and each will need to address a different set of the issues outlined above. Some retailers are not yet sure what cloud means to them and their business and will need to focus on managing its total cost and how to embrace multicloud. Other retailers are working through the challenges of migrating to and managing a new cloud infrastructure—with building bespoke ecosystems and figuring out how to put data to work to achieve their main goals. And those retailers that are mature cloud users are ready to begin exploring how to use cloud to differentiate digitally and power the new store.

But no matter where a retailer is on the cloud journey, taking the next step is vital. With uncertain business conditions, a shopping new normal, and new entrants capitalizing on these forces, making the most of cloud could very well be the only path forward.