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Reinvention of the Retail Store - A Case for the Cloud

Online gains increase pressure on Store Reinvention
Returning from the MICROS User Conference, after speaking on the imperative of the Cloud in Retail, I find myself hopeful - even enthusiastic - for the future of stores.

After the release of ComScore's ecommerce growth metrics last week, this may be a surprise. 17% growth in Q1 in the ecommerce channel is clear evidence that online channel growth is accelerating at the expense of bricks and mortar sales. Given retailers' hesitance to dramatically rethink their store systems architecture en masse, the bad news may come with the silver lining - dramatic change has to happen to survive.

YouCommerce versus Multi-Channel
We are no longer talking about multi-channel. In the era of YouCommerce shoppers are hyperconnected, moving fluidly across digital touchpoints, social networks, ecommerce storefronts, devices, and store locations, with many of these touchpoints overlapping.

Should it matter where a customer purchases as long as the touchpoints are integrated and consistent, and the collective cost of engagement through those touchpoints justifies the investment?

Survival Depends on Cloud
And that perhaps is where the rubber meets the road. The cost structure for stores is too high. The focus is on reduction of square footage for the big box retailers, but more focus should be on extensive on-premise, dedicated infrastructure and private connectivity. One retailer shared with me that shedding this infrastructure and moving to a combination of centralized (web-services enabled) and SaaS based architecture would take pennies off of their EPS. With such a dramatic cost savings right at their doorstep, taking the leap seems like an imperative versus an option.

Couple this with the opportunity to innovate, iterate, and effectively outsource to best of breed solutions in a market where reinvention and innovation is critical, as a Retail CEO I'd be demanding to know why we weren't moving more quickly towards SaaS.

A 360 view of the customer is only possible in the Cloud
Let's imagine a commonly cited purchasing journey in the 'future' of stores. A shopper at home looks up several digital cameras on a retailer's website. While out shopping that afternoon they use a Store Locator, and run a local inventory check on their mobile device to verify the address. By the time they walk into that store, the retailer should have multiple opportunities to motivate the customer to continue moving through that purchasing funnel, including a mobile coupon while onsite at the store. 

In today's world of social and mobile, retailers must come to recognize that more data lives outside their enterprise than within it, and a full, real time view of their shopper - and their own product data and inventory - is only possible through the Cloud. 

The Myth of Cloud Challenges
The concern with using the cloud in stores  - particularly for POS - has always been the reliability and security of connectivity. Fortunately the offerings to control performance, reliability, and security in the cloud have evolved. Akamai's TERRA cloud solutions act as an overlay to the Internet, constantly looking for the fastest path, bypassing reliability and congestion issues in real time. This also ensures any end user in stores - whether on a mobile device or a tablet or a kiosk - experiences performance as if that application were hosted locally, ensuring positive shopper experience and store employee productivity. All while dramatically slashing cost. 

The Opportunity to Reinvent is Now
Brian Walker of Forrester recently shared an insight during a presentation - retailers who can experiment, support, scale, and optimize emerging touchpoints have an opportunity to differentiate and capture new market opportunities, leaving their competitors behind.  It's time for retailers to take the leap.

Share your thoughts - why isn't retail moving more quickly to the cloud? Do you agree the opportunity for radical transformation is here and now, with cloud as the enabler?

Lelah Manz is Akamai's Chief Strategist for Commerce