House of Digital Retail Optimism and how Store Infrastructure is evolving
One could be forgiven for thinking that the struggles in retail continue especially as Apple was the first company ever to hit the fabled trillion dollar valuation.
This is compounded with the news that SportsDirect and Mike Ashley have launched an uncertain rescue mission with the acquisition House of Fraser (founded in 1849, 59 stores and 17,500 direct & concession employees), for the equivalent amount of a 23 year old, relatively unknown goalkeeper (artistic license here, HoF acquired for £90m, Kepa was acquired by Chelsea for £72m).
Of course Homebase was acquired for the equivalent of a Sunday non-league water bottle (£1), and others didn’t make it at all (Maplin, Carpetright and Toys’r’us to name a few). All of this has led to a pretty dim view for the fortunes of the high street.
However, there are signs that the some retailers are starting to gain dividends for their digital transformation projects. The S&P Retail Index has seen growth of 25% in the past year (as of writing) as the market gains confidence that physical bricks and mortar stores can remain relevant in this digital age.
Organisations are still grappling with the costs and timelines to deliver a complete omnichannel consumer experience and indeed, what form that will ultimately take.
HoF attempted a belated digital upgrade of their online platform last year, budgeting £25m. However, this seems to have been too little, too late. To put this in context, John Lewis has invested £500m into eCommerce. According to this BBC article, https://www.bbc.co.uk/news/business-45127423, this is one of the key reasons for HoF entering administration.
R&D also represents a significant cost as retail seeks the magic digital pill. Retailers are coming up with lots of ways to use digital to transform their businesses, from distribution to EPOS (more on this in one of my other blogs), especially as digital not only offers the opportunity for bigger market share, but also reduces the cost of operating:
- Virtual Reality Shopping malls in Dubai
- Sainsbury’s opening a store that allows consumers to purchase by scanning barcodes on items (although sadly not for alcohol…)
- Smart shelf technology to track inventory and determine theft
- DIY chain deploying app that enables consumers to scan the size of a nut and show where this can be found in store
- Micro-warehousing and the announcement that Walmart is going to use robots to pick the stock for you. Think Ikea except you’ll get to the warehouse part and there’ll be C-3PO, Optimus Prime or Wall-E waiting there with all your choices, where presumably they’ll stick it into your self driving Tesla and you’ll be whisked home.
- Face scanners to open stores for delivery drivers – saves retailers millions a year removing the requirement to send employees to stores to open up in the early hours of the morning when the delivery lorry arrives.
All of this is happening now. There is increasingly a line being drawn, between the retailers who are successfully embracing how consumers want to engage with a brand (think John Lewis, Next, Boots, Burberry) and those that do not. Sadly HoF is yet another example of this. So what does this all mean for those of us responsible for the deployment of IT infrastructure in the store?
In our experience, the challenge is pretty big. Stores have been traditionally built for EPOS and print services and it’s not always entirely clear what retail initiatives are going to prove successful, so any new infrastructure being deployed in the store is going to have to be very flexible.
In response, increasingly brands are virtualising the store infrastructure, even in the small box stores. This provides an agile platform that is much simpler to manage centrally and also offers the opportunity to layer services securely and quickly into the site, and increase speed to market. It also standardises the architecture across all stores (an issue we’ve come across many times!), which is typically a nightmare for rolling out new apps. It means that Ops teams don’t need to touch the store to deploy new services (like firewalls for instance) thereby reducing costs.
A retailer may have started to consider SD-WAN as a means of securely breaking out locally to newly deployed Cloud based applications, or implementing greater security controls with virtual firewalls as the attack vectors increase. Perhaps a brand is looking for greater insight into the way a customer engages with a store and wants intelligent Wifi services, or to deploy a Mobile EPOS solution. All of this can now be managed and deployed in a single automated virtual platform faster, securely and for considerably less than a premier league goalkeeper!
An ecosystem of vendors are able to provide these services, and organisations like Gyrocom provide expertise to clients to determine the requirements and identify a complete solution that aligns with business objectives and budgets. If you have come across similar challenges, please get in touch, I’d like to hear your thoughts.
Gyrocom are a passionate team, we specialise in supporting retail organisations maximise the digital opportunity through delivering secure, virtualised infrastructure solutions from warehouse and distribution to EPOS. If you would like to know more, please get in touch with Alistair Slocombe at firstname.lastname@example.org
Business Services Consultant at Gyrocom - Connecting Companies to their data, their applications & their customers.