The retail sector has been among the slowest industries to adopt new technologies, but with the continued rise of unified commerce -- the catch-all term for shopping experiences meant to flow seamlessly from in-store to online -- retailers are increasingly more willing to ramp up their tech transitions and explore the cloud. The challenge many retailers now face is an abundance of choice, and deciding exactly how to navigate their complex cloud journeys.
Out of the key cloud vendors, hybrid shift player IBM -- which has made some big bets on a hybrid and multi-cloud future, including its $34 billion Red Hat acquisition -- is approaching the retail industry as the management console for customers in the cloud, managing multiple systems, services and providers.
IBM's platforms plug into multiple cloud environments, giving retailers the flexibility to piece together clouds in their own way. For retailers, choosing multiple cloud providers and clouds is common to support different applications and use cases -- everything from managing product inventory across brands to tracking customer loyalty programs.
This approach is in large part driven by the consumer. Shoppers today want purchasing experiences to be personalized, real-time and connected. For retailers, this requires marrying complex, physical infrastructure and digital modernization.
But according to Chris Wong, IBM's VP of strategy and industry ecosystem, retailers today are still focused primarily on moving their base infrastructure as a way to drive cost efficiencies and improve elasticity. The bulk of a retailer's services are still run on-premises. That's slowly changing, Wong said, as retailers look to build the next wave of applications, services and workflows from the HQ level down to the store associate.
"While adoption is growing rapidly, enterprises, including retailers, are still very much in the early phases," said Wong. "Initially we're working with retailers in the data center, but we are also looking at moving beyond data centers and corporate headquarters and into the store. This is an area where retailers have been reluctant, because there's a mission critical, high availability need they have for their stores."
Wong said IBM is working on a range of solutions to ensure high availability of infrastructure at the store level, with cloud being utilized for efficiency and flexibility efforts. More broadly, Wong said retailers are also exploring surrounding capabilities around AI, blockchain and automation.
"The fundamental challenge is that retailers have had the same business model for ages," Wong said. "They now need to invest in existential innovations to compete in the market. This will all require new technology."
Wong said IBM's approach to cloud is focused on a few core areas:
- Hybrid multicloud: IBM is betting that most companies, including retailers, want multiple cloud providers and clouds -- public, private, software-as-a-service.
- An open approach to cloud: IBM's pitch is that retailers that choose IBM will have the flexibility to stitch clouds together in a cost-effective and seamless way.
- Higher value cloud services (AI, blockchain, IoT) to drive innovation: IBM is aiming to help retailers migrate critical workloads and then apply additional serves that will pull more value out of that data.
"It's going to be a multi-cloud world," Wong said. "A retailer may want to use blockchain for supply chain, or demand planning and forecasting in another cloud. We can help them bring that all together."
Looking at the broader cloud vendor market, players such as Google, Microsoft and Amazon have been touting the perks of their respective platforms and promising to support retailers on their digital transformation journeys. Microsoft recently announced a retail-as-a-service (RaaS) partnership with supermarket chain Kroger, which is splitting its cloud buying between Azure and GCP. Meanwhile, Walmart is partnering with Microsoft to use its AI, Internet of Things tools and Azure.
IBM fits in as a provider that can help retailers make the cloud leap without necessitating a major infrastructure overhaul or posing a competitive risk -- something Wong acknowledged is a factor for some retailers that choose to avoid AWS for potential conflicts of interest. However, Wong also credits Amazon with forcing the retail industry to advance and innovate.
"Amazon has tapped into what consumers need and want, and everyone else has to up their game."