A strong IT infrastructure is absolutely critical to supporting retailers’ business strategies. Under the traditional model, most retailers designed, deployed and maintained their own systems. From meeting customers’ increased expectations at the point of sale to multichannel integration to price optimization, however, the complexity of today’s retail operations is such that more and more retailers are taking a different approach and utilizing on-demand, software-as-a-service (SaaS) alternatives to traditional, on-premise systems. Under this model, services are delivered via a network, most often the Web, explained Eric Olafson, CEO, Tomax, a leader in developing Web-based, on-demand retail applications. Chain Store Age spoke with Olafson about the changing environment.
What are the most important trends you are seeing in retail today?
Cross-channel transparency. Retailers want to provide a common, consistent customer experience across all channels. It is what customers expect, from the ability to order online and pick up in the store to an augmented in-store experience with merchandise that is not available in the physical space. Customers don’t care about technical problems. They expect this type of convenience to exist. It’s part of the new normal. But customers’ expectations for a common cross-channel experience currently surpass what retailers can achieve. Most retailers are racing to catch up.
Any advice in this regard?
A real-time transaction infrastructure is key to cross-channel transparency and the “endless aisle’ concept, which is based on real-time visibility to anything, at anytime.
Any other trends?
The other big trend from a retail perspective is the move to a Web-based retail model. This movement to software as a service (SaaS) is a reflection of retailers’ desire to move to an on-demand means of accessing applications from the cloud, or Web, as opposed to owning, managing, installing and maintaining all the applications they now have in-store.
With this approach, retailers can get out from under the cost and responsibility associated with owning and managing all the applications on their own. Instead of buying software, the retailer has a monthly subscription fee. This completely changes the economics of deploying retail applications.
What are the biggest advantages of a Web-based or on-demand IT solution over a traditional one?
The biggest advantage is that it provides the type of real-time environment that is critical to success in today’s marketplace. Other key advantages are significantly lowered deployment/running/maintenance costs, and the ability to support real-time cross-channel integration.
Taking all the retail applications that used to exist in the retail store and moving them to the cloud also simplifies IT management, which can, among other things, dramatically speed up the process of rolling out stores. Also, because the model is simplified, you have an inherent chance of doing things on time and on budget.
How much lower are the costs?
Retailers who implement this type of solution typically see a 30% to 50% reduction in IT life-cycle costs.
Why is real-time visibility so important?
It facilitates a higher level of customer service. If, for example, I know the inventory, pricing and availability of an item in real time, I can convey that information to the customer. It sounds simple, but, currently, it is difficult for a retailer to do with a high degree of accuracy.
One of the most important things retailers have been trying to do recently is to get real-time information from their stores to support analysis of shopping behavior.
Ultimately, you can only solve problems with accurate real-time information.
Tell us about Tomax’s Retail.net solution.
Retail.net is a network-deployed, on-demand enterprise application that takes all the various applications going on in a retail operation and puts them into a central data base — the cloud — which provides a single point of connection to the store. It supports retail operations management in the store, at headquarters, and across all customer channels. It provides retailers with an integrated, real-time view of their customers and operations across channels, while replacing the cost and complexity of traditional retail solutions with a thin, Web-based solution.
Our application is designed to help retailers improve business processes, optimize their resources and simplify their IT infrastructure, improve reliability and reduce IT management costs. The end result is that the retailer has a real-time view of what is going on throughout the operation. Every transaction is continually updated.