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Build the store of the future: Retail and the cloud

Brick and mortar retail is in trouble. It may seem obvious with stores like Neiman Marcus, JCPenney, Toys R Us, and Sears in bankruptcy or bankrupt already. But what’s less obvious and what too few in retail have acted upon is the depth of the dilemma the industry faces.

To be clear, what retail faces today is the prospect of, first, irrelevance and, eventually, outright extinction. The threat is real and not without precedent. Retail would be wise to heed the lessons learned from the history of newspapers.

As with retail, newspapers have existed for hundreds of years and until recently have been a stable, time-tested method of building wealth and influence. But today, there is little doubt that newspapers are largely insignificant and on the path towards extinction.

For newspapers, this ignoble end started with a rather humble technological oddity, the first web browser, NCSA Mosaic in 1993. Few would have predicted then the industry-shattering consequences to newspapers.

But within 15 years, newspapers were being shuttered in droves or selling for a tenth of their previous value, as internet startups like Craigslist, Facebook, and Twitter eroded their most profitable businesses by stealing eyeballs and thus advertisers.

The mistake newspapers made was largely ignoring the internet or only tepidly testing the waters. Newspapers were slow to invest in new technologies that would enable them to compete in a brave new era. By the time they realized what was happening, it was too late.

Retail faces the exact same threat and is repeating the exact same mistakes. This time, it is the internet’s child, the cloud, that is causing the disruption, and retailers ignore the cloud to their own peril. For traditional retail, their only salvation is, in effect, to fight fire with fire and quickly embrace, invest in and adopt cloud technologies. Let’s talk about how.

React and leverage

In order to save themselves, traditional retailers must react to overarching societal trends and leverage their inherent strengths. Overarching societal trends that impact retail include the following (many of which also impacted the newspaper industry):

  • Affordability and accessibility of mobile devices (phones and tablets)
  • Increased technology adoption
  • Retail business models, financial structures, and revenue-generation practices
  • Consumer behaviors related to price sensitivity and changing buying preferences
  • Demographic changes
  • Changing definitions of “social”
  • Increased focus on convenience, customers want a seamless, holistic experience
  • Movement toward a cashless society

At the same time, traditional retail has certain strengths that can be leveraged, including:

  • Local, physical presence
  • Friendly customer service
  • Ability for customers to physically interact, experience, and sense products
An example of how retailers can leverage the cloud: 

1. Store data indicates an excess of red products and a limited supply of blue products.

2. Information is processed and sent to marketing analytics.

3. Data algorithms apply a 15% discount to products to reduce excess.

4. When a potential customer enters the store's radius, the discounted product pops on the shopper's mobile device. 

5. The customer enters the store and uses a mobile app to purchase a red product. The 15% discount is automatically applied.

6. Software processes the sale and automatically updates store inventory. 

7. Supply analytics inform the manufacturer to produce more blue products and fewer red products.

The store of the future

Retail must go far beyond simply having a subsidiary, inferior online presence. This is essentially all that newspapers did to react, and it’s obvious how well that turned out.

Instead, in order to survive and thrive, retailers must quickly invest in cloud technologies to evolve and adapt their businesses to envision a physical retail store of the future.

Imagine, if you will, a retail store of the future like the one illustrated above. As a potential customer nears the store within a mile or so, he or she is notified of a flash sale via phone. Intrigued, the individual stops by the store, interacts with the product, and then can purchase the product simply by opening up a mobile application and taking a picture of it. The customer then walks out the door.

This is the store of the future, and in order to build it, retailers need three components:

  • Mobile point of sale
  • IoT and cloud services
  • Data strategy, analytics, and stewardship

The first step in building such a store is to develop an intuitive, immersive mobile application that can be used to purchase products. Once built, the retailer now has the ability to retire traditional point-of-sale systems, providing huge benefits, including:

  • Increased velocity of sales and inventory data
  • Single sales engine for both online and store sales
  • Elimination of complex and expensive point-of-sale systems
  • Reduction in headcount or repurposing of headcount to improve customer service
  • Decreased dependency on staff and a corresponding reduction in scheduling complexities
  • Ability to target customers with personalized offers and incentives

While initially, the mobile application may simply make purchases from the retailer’s e-commerce portal, the retailer can phase in in-store purchasing simply by accounting for store inventory.

This can be entirely automated through geofencing, a location-based service that triggers a response when a device enters the virtual perimeter — for example, providing real-time inventory data for all stores, information that can be leveraged to drive flash sales on overstocked products or dynamically increase the price of popular items.

The mobile application becomes an extension of the retailer’s brand and store that the customer always carries with them, allowing retailers the opportunity to learn about their customers and build loyalty in a way that is impossible otherwise.

Through standard phone technologies like GPS, the retailer is aware of the customer’s proximity to their store, allowing marketing efforts to be maximized at the point that a potential customer is most likely to buy.

In conjunction with the mobile application, retailers must invest in cloud-scale applications, services, and APIs that will support the mobile application purchasing and inventory reconciliation as well as drive automated marketing efforts and notifications.

These cloud services will collect internet of things (IoT) data from mobile devices and from in-store sensors to help drive more efficient, effective behavior for the retailer and influence potential customers to buy.

Finally, retailers must also ensure that they have a solid data strategy. There must be methods for not only ingesting and processing this increased, high- velocity data, but also in leveraging the information and converting it into knowledge in real time.

Traditional retailers typically do not know what happened within any particular store until the next business day after point-of-sale systems have uploaded their data and overnight batch processes have loaded the data into data warehouses for reporting purposes.


The store of the future requires an entirely different way of thinking about data and changes to business processes and decision making that correspond with the increased velocity at which data flows into the organization.

Retailers have two simple choices. Either address these factors now or join the ranks of other organizations who fought a brave fight, but still perished.

Need help getting started? Let us know.

About the author

Greg Deckler

Greg Deckler is Fusion’s VP of Cloud Services and has over 20 years of experience in the industry. He excels at assisting Fortune 500 firms with global systems by delivering professional services related to data and business intelligence, enterprise collaboration, web architecture and design, business process improvement/automation, enterprise architecture, identity management, application development, core infrastructure design/optimization, and project management. Greg has also been published in numerous trade journals on business and technical subjects and is the author of the book “Achieving Process Profitability, Building the IT Profit Center. 

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