The retail industry exemplifies the maxim, change isconstant. Still, the approach of the industry towards emerging technology ofcloud computing is somewhat baffling. Cloud computing, a paradigm shift afterthe client-server model break-through of the eighties, is starting to show upin every other business. Curious, retailing industry is clearly lagging behind.It happens when the practical applications of the technology can do wonders tothe industry. The word 'cloud' in cloud computing is actually a metaphor usedfor internet. Using internet would have robbed the concept of its novelty.


Although everyone is familiar with information sharingthrough internet and worldwide web, performing all the operations of computingthrough the internet is not so familiar. Cloud computing exactly does the same.It shares information, software-applications and operating system-andinfrastructure-hardware like servers and storage units - using internet. Arevolutionary cloud computing model can avail high power computing to thecustomers who need to have only typical input/output infrastructure.


Software industry giants have already started providingtheir services on cloud. CRM of salesforce.com, office applications fromMicrosoft and Google and IBM enterprise solutions have already become popular.Sadly, retailing - one of the largest sectors of the economy - has not yetbegun its experiences with cloud computing.


In the context of retail industry, cloud computing isparticularly efficient in collection and analyses of huge volumes of sales dataand in real time inventory management.

In retailing, points of sales generate large amounts of dataeach day. The sales data can be obtained through loyalty cards and discountcoupons also. Most low and medium level retailers do not have the necessaryresources to capture or utilize such enormous amounts of data. Cloud providerin retail can collect such data from sophisticated server networks connected tothe supply chain to independent cash registers at family owned small stores andstore it for the retailer. Such stored data may be accessed from anywhere,provided internet is accessible. A cloud computing provider can trackperformance of products in comparison to previous time periods. The cloudprovider can identify the trend and seasonality component of each product,brand or category and identify and monitor the performance. Then it can provideanalytical results to the retailers. The provider of the service can serve manyretailers at the same time, without making each retailer do it individually forthemselves.

The sales data collected from the point of sales iscurrently under-utilized. It is more due the incompatibility between volume ofdata and the processing power of the system. Such time consuming analyses failto provide any useful insight in to customer behavior or trends in sales. Thecloud provider can utilize high power computing resources and statisticalmodels to analyse data in much shorter time. This is more so with to real-timeanalysis. Real-time analyses require huge capital expenditure and it incurssignificant operating cost, often unaffordable to retailers.


A good cloud provider can easily help the retailer inunderstanding patterns and trends within large databases. It can be furtherutilized for creating analytical models, and to provide an edge to decisionmaking. Thus retailers can increase their ability to forecast their customer'sbehavior and plan accordingly. Retailers can then develop customer programs,marketing, merchandising and pricing strategies to attract more business. Thecloud provider themselves design and provide such retailer specific plans.


Another important area of cloud application will beinventory management. Real time data and cloud architecture will largely reducethe problems like stock outs and overages. As well known, online retailers donot have inventory managed by themselves. Instead, it is done by themanufactures. Cloud computing can provide an efficient utilization oflogistics, which will keep losses to the minimum in inventory management. Whatthe online commerce does can be extended to whole of retail sector. Besides, asthe cloud provider will be serving numerous retailers, they can very wellmanage difficult situations like stock unavailability. Cloud providers canprovide valuable advises to retailers regarding product availability andback-up stock from forecasts. They can get realistic forecasts by analyzinghuge amounts of data from numerous retailers. Thus retailers can develop asupply chain where the right product arrives at the right time.

Tier one retailers can save lot of expenditure in IT management, if they switch to cloud computing solutions. The complexity of keeping and managing individual systems can be avoided. Today large retailers struggle to keep tens of thousands of computers across hundreds of locations. The management of such a complex system causes enormous expenses for them. Such operations often cause poor decision making in their field of competency - retailing. Large expenses of management and administration of IT and networks can be reduced by simply switching over to a trusted cloud provider.


What is the difference between cloud computing and traditional model? Cloud computing has a number of advantages over the traditional software business in which retailers get licensed software installed in their systems. Here the retailers need not spend huge money on software licensing. They need not buy high end servers with high computing powers. There is no requirement of sophisticated storage units. The administration and networking of computers can be avoided. The pain of providing fire-wall and antivirus protection is avoided. Thus a there can be a significant reduction in investment as well as in operating costs.

One significant benefit for the cloud provider will be that of scale. Affordable solutions can be provided, considering the huge number of retailers in the industry. Most of the tasks to be performed by the provider will be of repetitive nature. Administration and management of databases can be easy due to centralization. The robustness of the whole system can also be ensured. Security and other reliability threats can be minimized due to the salient features of cloud architecture


The future of the cloud in retail starts with small retailers. Small retailers can effectively implement cloud solutions faster. Such solutions offer them significant cost reductions also. Any new venture in retail will also look for quick and easy implementation. An established cloud provider with a successful cloud model can provide quick and cheap solutions. The giants in retail industry may hesitate to adopt the cloud solution, considering the current maturity of the technology. With improvements in cloud applications as well as in internet technology, they will find it cost-effective to switch over. It is significant to note that innovations in most of the fields are taking place in the cloud computing model, not on traditional software business.


Retail cannot shy away from the emerging and powerful trend in the world of computing. With lots of cost-saving and time-saving measures, it will be inevitable that retail will adopt cloud computing once there evolve competent solutions.


Source: http://EzineArticles.com/


Image Courtesy:


  • www.ecommercetimes.com/rsstory/69548.html
  • http://3.bp.blogspot.com/
  • http://www.cybage.com/images/Diagrams/Retail.jpg