Business Applications

The proportion of retail sales is now 25.3%, this has fallen since the pandemic peak, but is still well above pre-pandemic levels. Many retailers adapted quickly to the growth but now need to increase stability to meet demand. The pandemic has created a five-year acceleration in consumer behaviour towards e-commerce. Retailers need to embrace omnichannel and deliver a seamless customer experience irrespective of starting or finishing channel. This extends into partners, social media or e-commerce platforms.

Ecosystem platforms have become the entry point of choice for consumers into their shopping journey (for example Alibaba and Amazon). McKinsey research has found that 80% of retailer investments continue to be in legacy areas, this needs to change.

Retailers are looking to partners to help them re-platform applications or to create an API environment to surround legacy applications to allow modern digital platforms to be introduced. They have four paths they can follow to build digital platforms; develop it themselves, extend existing enterprise software, partner or exploit the cloud platforms. Containerisation of legacy applications will be a necessary step in the large-scale migration of workloads to public cloud and allow workloads to shift across a hybrid multi-cloud architecture.

Compute & Cloud

By their very nature digital platforms leverage hyperscale infrastructure from cloud providers in computing, data storage and security to deliver scale, reliability and customer experience. Retailers were slow to adopt cloud due to security and regulatory concerns, but adoption is now growing fast. The global retail cloud market is growing at an unprecedented Compound Annual Growth Rate (CAGR) of 17.7% between the time period of 2019-2025.

McKinsey suggests six common use cases that could improve performance and consumer experience if migrated. Three are front-end workflows that require real-time decision making: pricing & margin management, website & recommendation-engine personalization, and loyalty-program management. Three are back-end workflows: real-time inventory visibility, omnichannel order fulfilment, and inventory optimization.

Retailers are particulrly levergaing hyperscalers for their analytics & AI toolsets [1].

Multi-cloud architectures are seen as key to delivering agility, cost and performance while addressing security and compliance challenges. Eventually, container-driven application portability in a hybrid or multi-cloud IT architecture will enable the multi-directional movement of workloads to best execution venues on an ongoing basis for optimisation of cost and application performance. Skill shortages are key inhibitor with retailers seeking cloud platform, security and machine learning expertise.

Digital Workplace

Organisations must now provide a digitally enabled, flexible and collaborative working experience to attract and retain staff. They must also move beyond the fast reactions required to achieve a lockdown, where staff worked from home. Currys is set to close its west London head office after signing a deal with WeWork. With its workforce steering away from the “old normal” way of working, the retailer is looking to shift to a more creative, agile workplace strategy that provides greater flexibility.

A modern collaborative digital workplace is critical to a remotely located workforce. It ranges from access to HR applications and core business applications to e-mail, instant messaging and enterprise social media tools and virtual meeting tools. 

Retailers have adopted technologies such 3D design, virtual sampling, video signoffs, virtual showrooms and virtual shows to collaborate with suppliers.

Security, Compliance & Data Privacy

Privacy continues to be top of mind for customers. “Keeping my payment information private” ranks as the number one issue, with “keeping my personal information private” coming in as a close second. This has been underlined by high profile attacks and data breaches in the retail industry. Just in the last few months Spar, Tesco and Ikea have suffered attacks. Neiman Marcus has to contact 4.6 million customers after a data breach and Shein was fined £1.69m over its handling of a data breach of 39 million customer accounts [5]. The challenge has intensified as COVID-19 has helped cyberattacks to increase by 400%.

The financial and reputational impact of on retail firms is significant. Costs arise from the attack itself, the remediation and repairing reputational damage by regaining public trust. For instance, WHSmith has said its high street arm has been “adversely impacted” after its online greetings card business Funky Pigeon was victim to a cyber security incident [7]. The average loss for “extreme” cyber incidents is £35 million, but 28% of incidents cost more than £75 million. Fines for data breaches are also rising. Since GDPR was enacted in May 2018, EU data privacy watchdogs have issued over $332 million in fines. 

Consumers expect retailers to operate at a high level of security and privacy. This includes identity management, data security, privacy management and cybersecurity. Delivering this across a hybrid cloud and remote working environment is challenging given the ever-increasing number of attack surfaces.