With retail sales falling and consumer spending at an all-time low in Australia, there is pressure on retailers to stand out among competitors and attract customers. Cloud based technologies have been used for some time by Australian retailers, not only bringing about operational improvement and infrastructure modernisation, but also offering businesses a competitive edge that can bolster them through tough times.

However, to derive value from cloud investments successfully, retailers need to consider factors such as alignment to business strategy, governance, security, and cost management.

Areas for cloud usage

According to Infosys’s Cloud Radar CPG and Retail Industry Report, 80% of retailers surveyed expect their cloud spending to increase this year. However, higher spending on cloud does not necessarily mean that spending will be effective.

Retailers need to have well defined strategies on how they spend their budget to get the most out of their money. We have found that there are three key areas to focus spending on, in order to build competitive advantage:

  • Uplift in digital commerce: Digital platform performance is a crucial factor that impacts customer experience. A fast-loading website translates to better conversion rates, repeat customers and a lower bounce rate. Leveraging advanced cloud platforms for hosting digital channels provides competitive advantages both from performance and agility perspectives unlike traditional platforms. Cloud native capabilities enable high scalability to meet higher customer demand during peak periods.
  • Personalising customer experience: As data capture across the entire customer journey explodes, retailers require not only cost-effective storage solutions but also the capability to harness this data for improved decision-making. The highly scalable and cost-effective storage capability that cloud enables allows retailers to store customer data and use it to make strategic decisions related to personalising customer experience across the journey from product discovery to sales and after sales service. This rich data can help retailers analyse the channel preference of their customers and fine tune their channel strategy to target specific customers. It also provides insights that drive decisions related to optimizing other aspects of the business such as store design and assortment planning relevant to the specific target customers. Cloud based platforms can break down silos and provide multi brand and omni channel loyalty programs allowing customers to engage seamlessly across brands enabling cross-sell opportunities.
  • Supply chain management: The adoption of cloud-based data streaming capabilities allow retailers to view large volumes of data and analyse the data in real time, helping them react briskly to customer demand, optimizing stock levels to reduce waste. Having a single source of truth also helps them align better with the partners in their ecosystem and make quick decisions related to demand or supply planning.

Areas of competitive edge

Scalability and agility: Cloud helps retailers scale up or scale down capabilities to meet seasonal changes in demand cost-effectively. The agility to roll out changes within hours compared to days provides opportunities to respond to competition more effectively.

Easy access to secure data: Cloud combines data across sources and provides retailers with a unified view more effectively than on-premises infrastructure.  Cloud can also offer greater security than on-premises servers, with more options for back-up and data recovery, in addition to leveraging the security expertise of the cloud provider.

Cost savings: Leveraging cloud platformseffectively can ensure that retailers are able to meet the demands of growing technology needs in a cost-efficient manner. The ability to only pay as per consumption, as opposed to high upfront investments in on physical infrastructure, ensures that smaller retailers can get access to advanced technology resources.

However, businesses need to keep a variety of factors in mind before deploying cloud technology.

Best practice for best cloud outcomes

Retailers should make sure they follow these best practices to get the most out of their cloud estates:

  • Cloud deployment needs to be aligned with the organization’s business strategy. Having a specific business owner with a clear vision of the goals and the return on investment required from cloud investments provides focus to the entire technology program. Cloud deployments must also be closely monitored for how those goals are being achieved and for any failures, which must be fixed quickly.
  • Retailers must establish a governance framework and set out and implement security protocols to prevent data loss. This includes selecting the individuals who will be actively involved in the cloud deployment and make critical decisions. Businesses also need to leverage the expertise of cloud service providers to ensure secure integration and management of their existing processes into the cloud platform.
  • Employees must be trained before an organization can start using cloud, especially if the adoption involves a combination of old and new ways of working. This helps with implementing the transformation more smoothly.
  • Businesses must adhere to data privacy, security, and consumer protection regulations specific to their regions. Lack of compliance with security protocols could lead to the risk of data breach, and huge fines imposed by regulatory bodies.
  • Retailers can avoid challenges related to integration if they ensure that the cloud service providers develop customized solutions that integrate with their existing systems.
  • Businesses must pay attention to the costs of their cloud services and understand the extent and usage of their cloud estate right across the business. In the Infosys study, almost half of the CPG and retail executives surveyed said they are least confident in their ability to monitor and predict costs. Using cloud cost management tools and processes can help them overcome this challenge better.

By making sure they are making the most effective and efficient use of their cloud deployments, retailers can help build and maintain their competitive edge in a challenging landscape.

Maloy Patnaik is associate vice president – consumer, retail and logistics at Infosys.