Retailers face an uphill battle, particularly as consumer spending is slowing and putting pressure onto their already-thin margins. In the face of this, digital transformation enthusiasts have made many claims about how technology can change retail’s fortunes. But what does this mean in practice?
Marco Krijgsman can tell us. Dell Technologies’ EMEA Business Development Manager for IoT, Safety & Security, and Computer Vision, shared his insights during a recent trip to South Africa. He reflected on what is happening in global retail and how these examples are being applied.
“Retail margins are like this,” he says, holding up two fingers to illustrate a thin gap. “And you have to be efficient in what you’re doing. The key to unlocking those efficiencies is data, which is why digital technologies are so crucial to retailers.”
Specifically, he expanded, it has to do with analytics. The faster and better a retailer can crunch its data to find meaningful answers, the more it will grow its margins.
“You can measure the traffic of customers in your shop – what they do – or your stock behaviour, shrinkage, faulty or double-scans… Analytics is a powerful ally for retailers.”
Examples of these improvements range from normal operations to exciting revenue opportunities. But before we touch on those, it’s essential to know what sits behind all of these capabilities.
The ghost in the shell
The living force in technology is software, which leverages hardware to run its tasks. But this synergy also had a cost – software was limited in many ways by hardware. That paradigm shifted decisively in the 21st century. Several changes led to the rapid commoditisation of hardware, as well as more flexible ways to deploy software.
“Consider hardware as a shell,” says Krijgsman. “Even something like a vending machine is no longer a big cost. It’s just metal and buttons. The intelligence sits in the software and how you can deploy it to different places.”
To illustrate the point, he raised a project currently being delivered by Dell Technologies. Dell and its partners are currently working with airports and retailers across Europe to install what he calls ‘Vending at the Gate’. These are vending solutions that extend the points-of-sale of stores at the airport, targeting hurried travellers or people sitting around after retail hours.
But we all know about vending machines. What is so special about this example? The vending machine is just a branch of the retailer’s point-of sale-system, integrated through software and modern technology infrastructure.
This concept can place vending machines in areas one would never expect. Large enterprises are using vending machines to distribute company devices to employees. Once a person has been provisioned their device, they can show up at any of the offices and pick it up from a vending box. In this case, a vending machine is a wholly internal delivery system for IT departments.
Software can redefine a vending machine’s use while still enjoying the advantages of that system. Once you consider hardware as just a shell, and software as the enabler, many new opportunities open up.
Analytics that works for retail
Vending machines aren’t the only example. Security cameras can also be put to work, collecting information for the business to analyse, says Krijgsman:
“A camera can be your eyes. It can track customer movement for better store planning. It can monitor stock and warn you if you are running out of something. Software can be used to create a ‘click and collect’ service that uses collection boxes, again extending out of your core systems. So you don’t create retail silos. You use software to expand your core business systems into new areas, even different physical spaces.”
Convenient collection, better stock management, access to customers in unlikely places… with the right software in place, retailers can exploit many new avenues. All the above examples also contribute to rich operational data that reveal efficiencies and opportunities.
How can a retailer develop these capabilities? It’s not easy if they are on older infrastructure. The gold standard for analytics-driven retail is real-time data. If a company is still processing data in batches, it isn’t able to make quick decisions based on opportunities or risks in its stores. The same systems that enable such data streams also realise branches and new services mentioned above.
“The more you generate data, you need reliable, scalable infrastructure. You must move from batches to live data streaming. You must be able to see your data live and use it to create efficiencies.”
The crux of Krijgsman’s message is that analytics software is the game-changer, but you need to empower that software to do its job. It must reliably extend operations to new areas, such as vending machines at airport gates, and generate insights from retail data that can be put to work.
By using new-generation technologies such as hyper-converged infrastructure, as well as the rich use-case experience of Dell Technologies and its partners, a suitable technology environment can be deployed for any size operation. These open the way for real-time data, intelligent operations, and bringing retail services to customers in new and exciting ways. The support of Dell Financial Services can make these possibilities affordable and secure a clear return on investment.
Margins might be narrow for retailers, but there are many opportunities to improve the situation. Modern technology is the thin wedge that opens up software and data, improving profits and customer satisfaction.