Market News

Industry Snapshot: How Hybrid Cloud Enhances Global Omnichannel Retail Experiences

Estimated to grow at a 20.9% CAGR from $11.06 billion in 2016 to $28.53 billion by 2021, the global retail cloud market – which encompasses retail organizations and retailers moving their business applications and infrastructure to SaaS, PaaS, and IaaS environments – is booming.

With the pandemic triggering a spike in e-commerce and online shopping, and as more customer data is stored by retailers in the physical and online spheres, the retail industry is relying on cloud and network architectures now more than ever.

So, we’ve taken a deep dive into how cloud computing is supporting retailers as either in-store or online vendors, why hybrid cloud is surging in popularity among industry leaders, and how this all plays into enhancing the customer experience.

Utilizing cloud and colocation to support the retail industry

Even back in 2018, global revenue from the wholesale and retail data center colocation market amounted to around $38 billion, and this figure is expected to increase to over $50 billion per year by 2023.

And while colocation continues to grow to support the demand of the retail industry in this way, cloud does too. Only, the impact of cloud on the online shopping experience is transforming the industry entirely as its impact reaches full effect.

By moving their business applications and infrastructure resources to SaaS, PaaS, and IaaS environments, retail organizations are afforded a whole new level of business optimization, continuity, and agility across use cases like pricing and transaction management, real-time inventory visibility, inventory optimization, and omnichannel order fulfillment. 

Implementing cloud technologies means that players in the retail industry are able to reap cost savings and the financial benefits of usage-based billing, as well as automate manual processes and operations, which ultimately allows retailers to funnel their resources into enhancing other high-priority aspects of their business such as production or customer experience.

As online and in-store retailers realize the immense benefit of cloud computing and start to increase adoption, business activities such as Supply Chain Management (SCM), customer management, merchandising, and workforce management also become a whole lot easier - and certainly more efficient - to undertake.

The increasing adoption of hybrid cloud

When considering their options for cloud infrastructure and technologies, hybrid cloud is rapidly increasing as a viable and flexible solution for many decision-makers in the retail sector.

A study featured in Nutanix’s Enterprise Cloud Index (ECI) report found that 87.5% of retailers identify hybrid cloud as the “ideal IT operating model,” and that “ other companies, retailers have aggressive plans to move away from legacy data centers in favour of hybrid cloud infrastructure.”

When it comes to deciding which is the best cloud environment for each of their applications, the most recent ECI report found that retailers ranked the ability to accelerate IT deployments (54.3%) as the top factor.

Security has also become a critical factor for retailers who deal with cloud, particularly as data privacy regulations continue to change, which has further incentivized retailers to opt for hybrid cloud operating models which were identified by 32% of the study’s respondents as the most secure cloud deployment.

Altogether, Nutanix observes that “...Retailers are leading the pack in maximizing flexibility of IT infrastructure to keep pace.” Industry players get the best of both worlds when it comes to hybrid cloud; the reliability of traditional compute and storage and the new-world agility and efficiency of cloud environments. 

Enhancing the customer experience

The capabilities of cloud go way beyond simplifying operational processes; they can, and are, also being utilized to provide premium offerings in an effort to enhance the overall customer experience.

Amazon, Alibaba, and Flipkart are just a few of many global companies that offer custom product choices to their customers based on their specific preferences using retail cloud computing.

This type of personalization and customized shopping not only helps to reduce time and costs for both retailers and their customers, it also enriches the customer experience by providing an offering that delivers more than just the actual products sold in retail.

Recognizing the importance of cloud computing in enhancing the overall shopping experience, Nutanix’s Greg Smith, VP of Product Marketing, says that “...Staying relevant to today’s customers means having the necessary cloud infrastructure in place to embrace omnichannel retail experiences.”

Specifically he says, “Retailers use data to connect the e-commerce and in-store shopping experiences, and the only way they can do this accurately and efficiently is through flexible, scalable technology.”

More use cases include the solutions IBM offers to the retail vertical; smarter retail experiences like using their AI platform, IBM Watson Assistant, to scale customer service by responding with accurate answers to shoppers’ questions. Or, using IBM’s analytics, design, and development technologies to enhance branding, design, and content experiences across their business. 

So, regardless of their presence as either an online or in-store retailer, the need for cloud is clearly pervasive. Implementing hybrid cloud technologies, in particular, can streamline business operations and refine customer experiences for retail organizations of any size, ultimately increasing agility and the power to scale efficiently. 

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