Revolutionizing Retail: How Nothing, Yet Everything, Changes

The word ‘disruption’ certainly causes concern for those running established businesses. Yet if we put aside fear of uncertainty, we find digital ‘disruption’ brings with it far-increased business opportunities. Rather than abandoning original business principles, companies can use technology to build on them, bringing core values and past successes to the world’s digital economy stage.

We have never had such a richness of technologies and tools to call on for business success – from data analytics, automation and artificial intelligence, to cloud-based systems, software-defined infrastructure, and the Internet of Things (IoT) – there’s a lot to consider when future-proofing your business.

Building a business strategy on constants

Amazon’s Founder and CEO, Jeff Bezos has said many people want to know what will change in his business in the next ten years, but he is rarely asked what will not change over the next decade. He sees the latter as the more important question, “because you can build a business strategy around the things that are stable in time[1]”. He has gone on to list these pillars of certainty as being low prices, fast delivery and vast selection, which underpin his unwavering, overall vision “to be Earth’s most customer-centric company, differentiating with technology.”

Providing outstanding customer service consistently is, as retailers know, an immense and unrelenting task. But a critical one. A ‘customer-first’ approach is actually what we’re leading with at Equinix – you can’t run a successful business without keeping customers front-of-mind, particularly in the digital age of instant – demands, praise and complaint.

To meet increasing customer expectations, retailers need to implement a reliable digital infrastructure to enable the effective communication of data across all moving parts – from where the product or service, whether digital or physical, originates, through distribution, to engagement with and/or consumption by customers, and perhaps after-sales support too.

This is of course difficult when there are many processes and parties involved. Each company now typically generates huge swathes of siloed data that must travel across systems, often incompatible with others in-house, never mind with those of trading partners.

Supply chain revamp

To enable supply chains to meet the data-driven demands of the digital revolution, retailers must move away from a step-by-step sequential process, to a platform-based operational model. This operational model enables a whole trading ecosystem to communicate and transact via a central hub in a more efficient, economic and scalable way, than anything that came before it. In fact, the world’s largest, fastest-growing and, most profitable companies are all platform-based, displacing the oil companies and banks that held the top slots for decades.

To date, the best-known platform-based companies are largely perceived as business-to-consumer (B2C) platforms, and the business models (as opposed to the operating model) of companies like Facebook, Apple, Amazon, Alibaba, Netflix, Google et al, all vary considerably.

How does this apply to retail?

Retailers are in a potentially powerful position, as they can place themselves as the central exchange in the supply ecosystem. This means they are part of every exchange between all parties, and can therefore monetize transactions, as well as collating and analyzing data being shared, to make ongoing improvements to the business and operational models, and leverage dynamic pricing

Rearchitecting digital infrastructure to utilize data in this way, and therefore transform a business and reach far broader audiences (and potentially new markets), does not need to be a painful and costly procedure. Retailers do not need to build their own enabling infrastructure to gain scale, security, speed and agility. They can avoid huge upfront CAPEX, often tied up in real estate and inhibiting experimentation, by leveraging an existing global ecosystem of clouds, networks and other potential partners. Not owning infrastructure doesn’t mean ceding control.

In fact, the scale of this ecosystem play was highlighted in the second annual Global Interconnection Index (the GXI) published by Equinix, which found that interconnection (that is, the direct and private exchange of data between key business partners) will be a major enabler of digital transformation in all vertical industries, including the wholesale and retail sector.

Modernizing an established retailer

This shift is happening all over the world and can be seen in the most traditional of retail businesses. The Wing On group of department stores is one of the oldest and best-known retailers in Hong Kong, established in 1907. In 2015, the company devised a three-year transformation plan to modernize and become a digitally-enabled and data-driven business.

Wing On chose Equinix to host its business-critical data and applications, and for access to its ecosystem of partners and providers. Connecting via Equinix Cloud Exchange (ECX) Fabric, provides Wing On with the flexibility of a hybrid cloud architecture, allowing the company to connect to any CSP housed within Equinix, anywhere in the world. This enables Wing On to consolidate connectivity between applications hosted in public clouds and other on-premises applications, whilst having the scalability to explore emerging technologies like the IoT.

Restructuring in this way has allowed Wing On to integrate its loyalty program and POS, while maintaining reliable and high-performance connectivity between its systems so customers enjoy smooth transactions inside and outside the store. This flexibility also means companies like Wing On can scale their services up or down, on demand, when there are sales and promotions, to manage fluctuations in buying behaviors.

Scaling with a startup

Of course, it’s not just in long-established traditional companies we see data-centric models driving business. Founded in 2005, trivago has grown from a German start-up to a global online brand valued at circa €8 billion. The company has undergone dramatic growth as consumers change the way they search and shop for hotels, including the increasing use of mobile, which is forcing the business to re-architect its IT for a digital edge.

trivago has been an Equinix customer since the launch of its beta program in 2005. Since then, the company has been working with us to get as near as possible to its customers. What was once a website only available in Germany, trivago’s platform now offers access to over 1.3 million hotels in over 190 countries and is globally accessible via 55 localized websites and apps in 33 languages. Wherever they are, visitors to trivago sites benefit from the same performance and reliability when researching hotels, thanks to direct connections to partners within Equinix sites, standardized across the world.

These are just a couple of examples of how retailers are beginning to innovate and expand their offering. There are a variety of new shopping experiences evolving in the digital sphere, with household names such as John Lewis, Sainsbury’s and Tesco, all having transformation strategies and plans in place with private interconnection central to enabling them. It’s an exciting time to be a consumer, as companies collaborate to bring us the best possible service. If retailers are willing to take the plunge and move to a platform-based operational model they will not only meet customer buying preferences but perhaps even exceed them as they embrace change to woo their customers.

Read more on how retail organizations can leverage a marketplace of ecosystems: Consumer Retail Playbook

 

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