The crescendo to the retail year now starts in late October, thanks to the retail industry positioning big shopping days such as Black Friday, Cyber Monday and Singles Day within a month of Christmas.
Offering multiple instances of the heaviest shopping days within a short space of time provides huge revenue opportunity, but it also concentrates operational risk across the whole retail ecosystem. Consumers, quite naturally, expect everything to “just work.” They expect stock availability, a slick purchasing experience, but also next-day delivery and frictionless returns. This doesn’t always happen.
Historically, many retail systems have failed under the strain, as they did on Black Friday in 2018, with many online websites suffering extended outages. Further down the chain, Singles Day in China has already exacerbated supply chain issues with supply delays running into weeks and months for some product lines.
If the results from the 2021 Singles Day are anything to go by, the pressure on retail is set to increase with pent-up demand from Covid-19 contributing to revenue increases of 15%. So how can retailers and their supply chains ensure avoiding a bleak Black Friday? How can they perform under the most extreme conditions, where one-third of annual revenue can be derived from one retail event like Singles Day?
It’s down to performance and resilience, but most of all it’s down to frictionless scalability
Harnessing the cloud
The cloud has revolutionized retailers’ ability to scale in response to extreme events such as Black Friday. Before the cloud was a reality, retailers had two distinct, very high-cost options. Option 1 was to make swinging capital investments in hardware infrastructure to accommodate severe, short-term spikes in demand, and then see that infrastructure sit idle for the remainder of the year. Option 2 was to sidestep the capital investments, and deal with the potential fallout of poor customer experiences, lost sales and reputational damage.
The public cloud offers retailers with a third, much more compelling “have your cake and eat it” option. By providing virtually limitless access to compute and storage resources, retailers can now rent infrastructure on a short-term basis, elastically expanding and shrinking their infrastructure in sync with excess demand, without capital investment in hardware.
Indeed, the flexibility associated with cloud-centric infrastructure provides retailers so many opportunities for improving business objectives and helping them deliver against their brand promise that it is becoming increasingly common to adopt cloud infrastructure as a strategic imperative, not just a response to an isolated retail event.
Truly scalable hybrid data integration
While the benefits of adopting cloud infrastructure are clear, moving to the cloud is certainly easier said than done, especially for retail organizations with mature on-premises IT infrastructure. As the saying goes, there is no such thing as a free lunch.
Of all the impediments to cloud adoption, connectivity and integration are among the most significant. By adopting cloud infrastructure, IT infrastructure is often more disparately spread out across different locations. And while systems and applications may be in different locations, to have a happy Black Friday, they need to perform as if they are not – they need to be truly connected. IDC recently highlighted data silos as one of the biggest potential barriers to retail business objectives. Accordingly, adopting the cloud will require retailers to adopt hybrid integration, capable of connecting, anything to anything, anywhere.
However, this integration capability must be truly scalable. To be truly scalable, it is not just the ability to deploy lots of it across different cloud and on-premises environments. It is also requires the commercial freedom to do so on a transactional pay-per-use basis, which recognizes the economies of scale and provides price certainty for retailers looking to control costs.
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This blog was written in collaboration with Oliver Guy.