The retail industry exemplifies the maxim, change is
constant. Still, the approach of the industry towards emerging technology of
cloud computing is somewhat baffling. Cloud computing, a paradigm shift after
the client-server model break-through of the eighties, is starting to show up
in every other business. Curious, retailing industry is clearly lagging behind.
It happens when the practical applications of the technology can do wonders to
the industry. The word 'cloud' in cloud computing is actually a metaphor used
for internet. Using internet would have robbed the concept of its novelty.
Although everyone is familiar with information sharing
through internet and worldwide web, performing all the operations of computing
through the internet is not so familiar. Cloud computing exactly does the same.
It shares information, software-applications and operating system-and
infrastructure-hardware like servers and storage units - using internet. A
revolutionary cloud computing model can avail high power computing to the
customers who need to have only typical input/output infrastructure.
Software industry giants have already started providing
their services on cloud. CRM of salesforce.com, office applications from
Microsoft and Google and IBM enterprise solutions have already become popular.
Sadly, retailing - one of the largest sectors of the economy - has not yet
begun its experiences with cloud computing.
In the context of retail industry, cloud computing is
particularly efficient in collection and analyses of huge volumes of sales data
and in real time inventory management.
In retailing, points of sales generate large amounts of data
each day. The sales data can be obtained through loyalty cards and discount
coupons also. Most low and medium level retailers do not have the necessary
resources to capture or utilize such enormous amounts of data. Cloud provider
in retail can collect such data from sophisticated server networks connected to
the supply chain to independent cash registers at family owned small stores and
store it for the retailer. Such stored data may be accessed from anywhere,
provided internet is accessible. A cloud computing provider can track
performance of products in comparison to previous time periods. The cloud
provider can identify the trend and seasonality component of each product,
brand or category and identify and monitor the performance. Then it can provide
analytical results to the retailers. The provider of the service can serve many
retailers at the same time, without making each retailer do it individually for
themselves.
The sales data collected from the point of sales is
currently under-utilized. It is more due the incompatibility between volume of
data and the processing power of the system. Such time consuming analyses fail
to provide any useful insight in to customer behavior or trends in sales. The
cloud provider can utilize high power computing resources and statistical
models to analyse data in much shorter time. This is more so with to real-time
analysis. Real-time analyses require huge capital expenditure and it incurs
significant operating cost, often unaffordable to retailers.
A good cloud provider can easily help the retailer in
understanding patterns and trends within large databases. It can be further
utilized for creating analytical models, and to provide an edge to decision
making. Thus retailers can increase their ability to forecast their customer's
behavior and plan accordingly. Retailers can then develop customer programs,
marketing, merchandising and pricing strategies to attract more business. The
cloud provider themselves design and provide such retailer specific plans.
Another important area of cloud application will be
inventory management. Real time data and cloud architecture will largely reduce
the problems like stock outs and overages. As well known, online retailers do
not have inventory managed by themselves. Instead, it is done by the
manufactures. Cloud computing can provide an efficient utilization of
logistics, which will keep losses to the minimum in inventory management. What
the online commerce does can be extended to whole of retail sector. Besides, as
the cloud provider will be serving numerous retailers, they can very well
manage difficult situations like stock unavailability. Cloud providers can
provide valuable advises to retailers regarding product availability and
back-up stock from forecasts. They can get realistic forecasts by analyzing
huge amounts of data from numerous retailers. Thus retailers can develop a
supply chain where the right product arrives at the right time.
Ron
