It’s official. The new era of retail is here driven by empowered consumers who have changed shopping forever. Consider the recent 2012 holiday season. On Black Friday, online sales grew 20% while sales from mobile devices increased by 65% (over 2011). Cyber Monday increases were even more dramatic: online sales grew 30% and mobile sales grew 96% (over 2011). Consumers are using smart phones, tablets and other devices to research and purchase products at the best price and have them delivered where they need them.
This is stressing retailers’ IT infrastructures to their limits. Consider this fact: 85% of these new empowered consumers expect a seamless shopping experience across all channels. They may see an item in a store, research it on their mobile device and purchase it later online. For them, it is all part of the same shopping experience.
However, only 13% of retailers are able to provide this seamless experience.
This is because current IT systems are siloed and dedicated to core data and business processes such as merchandising and store operations. This IT strategy worked well in a product- and store-centered world where retailers were focused primarily on hyper-efficiency. But, to satisfy consumers across any channel, IT infrastructures must become much more flexible. They must be able to harness insights from social and collaborative systems, share resources seamlessly across multiple systems and orchestrate services to deliver business value faster.
Empowered consumers are demanding that retailers engage with them in a dialog that is relevant, timely and personal. To do this, retailers need to deploy a data-ready infrastructure that delivers actionable insight and allows them to build lifetime relationships with their customers. This is a daunting task considering the data explosion: 90% of the world’s data has been created in the last two years alone, and 90% of this new data is unstructured. Retail CMO’s understand this challenge; 71% of them say they can’t capture and use data fast enough to capture market opportunities. The new retail IT infrastructure must have the performance and scalability to aggregate and analyze vast amounts of data from multiple sources, allowing retailers to anticipate changes and trends, understand who their customers are and what they want at every interaction.
In addition, retailers frequently need to develop and deliver new shopping services quickly in response to new customer demands and to differentiate from competition. This can be in the form of a special marketing campaign or time-sensitive promotion. However, today, nearly 70% of retail IT budgets are consumed by operations and maintenance while as much as 85% of their computing capacity sits idle. Adding new systems and storage can take months, meaning retailers could completely miss the competitive advantage a new consumer service could bring. A cloud ready infrastructure increases efficiency and frees up resources to introduce innovative new services quickly. It allows retailers to integrate public cloud services such as HR and price optimization with private cloud services such as shopping services and sales associate tools.
Lastly, more than ever retailers know how critical it is to protect their customers’ private data. But interconnected systems and the rise of social and mobile commerce are making today’s security and privacy practices obsolete. Exposing sensitive customer information can ruin a retailer’s reputation, which is why 59% of global companies are increasing investment to boost IT security. That’s why it’s critical to have a security ready infrastructure that is able to protect data and safeguard it against unauthorized access. It leverages sophisticated encryption capabilities with hardware acceleration to ensure data security without sacrificing system performance. A security-ready infrastructure can identify potential fraud before it happens and can prevent cyber-attacks and other malicious activity.
This week I will be joining colleagues at the National Retail Federation’s Annual Convention and Expo in New York City to delve deeper into the IT infrastructure challenges faced by retailers in this new era of computing. If you’re planning to attend, I invite you visit the IBM booth, participate in our briefing sessions and share your thoughts.
The new era of retailing is here. Is your IT infrastructure ready?
I look forward to hearing your comments.