By Alex MacPherson, Director of Solution Consultancy and Account Management at Manhattan Associates
The last 12 months or more have been immensely challenging for the retail sector. 2020 was recorded as the “worst for 25 years” by The British Retail Consortium, no thanks to the consequences of the Covid19 pandemic’s various lockdowns and trading restrictions on the sector through the year.
Further, across the sector, the sheer number of job losses hit a high as several retailers restructured themselves, closed for business, or were acquired. The Centre for Retail Research, for instance, pointed out that 180,000 jobs were lost last year. It has been staggering for retail. However, one bright spot is the rise of e-commerce, which has helped ensure that many retailers continue trading through the pandemic.
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For some retailers, the rise of e-commerce encouraged them to evolve systems and incorporate an online proposition into their sales mix, as they sought to maintain business continuity and resilience. For others, it meant starting afresh with new cloud technologies online.
In either situation, what is clear is that e-commerce shopping has become the norm throughout the pandemic, and people expect to shop online and have goods delivered to their home – or to be able to pick them up in a store.
So, as retailers assess how best to meet the future needs of the market, one point is clear: to evolve and become agile and resilient means that many retailers still need to move on from using legacy systems to adopting cloud technologies.
Legacy technology stifles innovation
Today many retailers are still using legacy technology systems. In today’s cloud-dominant world, this is not ideal because legacy on-premise solutions come with challenges. They generally require a number of upgrades and have long cycles between when these occur. Further, for some, it can take longer to get internal buy-in to upgrade, and in other cases, there is just a reluctance to change. This stifles innovation.
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These delays in innovation could have a detrimental impact on their customers, seeing them become fed-up and possibly turn to more innovative competing retailers who offer a more modern cloud-based customer experience. Today, the solution to this problem is for retailers to move towards the cloud. Cloud technology is far more sophisticated, and its use of ‘microservices’ enables retailers to innovate swiftly. This is because the way the cloud is designed allows rapid implementation and fast upgrades to systems.
This is a massive benefit for IT teams who are often stretched. Compared with traditional legacy technologies, Cloud’s advantage is that it allows teams to install and upgrade systems fast and means that new processes and ideas can be implemented quickly. This frees up the IT team’s time to focus on performing value-add services instead of solely being devoted to keeping systems running. Moreover, the cloud enables retailers to stay one step ahead of competitors and support their customers’ modern buying requirements.
Today agility is vital
Executing organizational agility to maintain business continuity became crucial for many businesses, especially retailers, through the pandemic. Today, this concept is no longer just nice to have. Organizations must put in place the measures to be able to respond to changes in the market quickly in the event that a similar crisis occurs in the future.
In this scenario, the beauty of the cloud is that it enables firms to innovate and respond quickly to market conditions – in particular, consumer needs. To illustrate this point, during the last year, many organizations did adapt well despite the catastrophe experienced by the retail sector.
Some firms adjusted their click and collect offerings. Some turned their shops into mini distribution centers, and some worked together with other local businesses. What enabled this agility was that their systems were set up to be flexible and respond to rapid market changes.
Further, just by reacting to changing market needs, such as seasonal changes or those brought on by the pandemic, stores can sell products more effectively. For example, during the height of the pandemic, fashion retailers sold a lot more loungewear compared with office attire, with no option for the majority of people to do anything but work from home.
Those retailers with robust order management Systems, Warehouse Management Systems, and cloud technologies were able to swiftly make changes to their processes (e.g., within a couple of hours). This enabled them to meet customers’ demands quickly so that business continuity could be maintained.
Effective systems enabled retail business continuity
For several retailers, the pandemic stopped traditional business operations from going ahead as usual. Many realized that their business continuity systems would be put to the test and that high-levels of agility would be required to be able to meet new market conditions, particularly at that supply chain level. Moreover, many learned that having effective systems to maintain business continuity was crucial during a critical time when many retailers worked hard behind the scenes to meet customer expectations.
During this time, many retailers also appreciated the importance of being able to upgrade systems easily and quickly to facilitate essential changes. Consequently, they realized they didn’t have to consider sticking to rigid upgrade schedules and that they could drive continuity forward with agility in the cloud.
Conclusion
The pandemic has brought a dramatic change in the retail sector. The ability to adapt, evolve, and survive was significantly driven by firms’ capabilities to move with agility pragmatically.
Moreover, when consumers buy products these days, they often buy them online, via their laptops or mobile phones. They don’t think about the technology required to make retail happen. But, in light of trends like the consumerization of IT, they have high expectations of what retailers deliver in customer services and experience. Today, part of meeting that customer service requirement also means modernizing technology in line with consumer expectations and considering cloud applications.
This trend only continues to grow in importance. Research by The Cloud Industry Forum says nearly 88% of organizations expect their cloud services adoption to increase in the next 12 months. If retailers want to continue innovating and growing, they must consider the cloud as part of their future technology strategies.
