AWS for Industries

Three Strategies for Building Smarter Retail Stores

Consumer expectations are always changing, which means retailers are often playing catch-up to align their offerings with customers’ evolving behaviors. The pandemic illuminated the chasm between the retailers who have kept pace with market changes and those who have struggled.

For a long time, we’ve seen ecommerce sites flex and stretch, while centralized systems and processes in brick-and-mortar stores with their disparate legacy architectures seemed mired in tar. In retail, it’s common for a technology change to take two weeks for the digital line of business and up to six months for the stores. Yes, ecommerce is often the growth engine for retailers. However, 80% of sales still involve physical stores. Retailers need to create smart stores with a modern technology architecture so stores have an ecommerce-like agility.

What’s a Smart Store?

The smart store concept reinvents brick-and-mortar stores to enhance the customer experience so it’s fast, frictionless, and engaging. To achieve these goals, retailers need modern cloud technologies that drive agility and operational efficiencies. Here are a few examples:

  • Offering a shopping experience that allows customers to select items and leave the store without standing in a checkout line. Sensors account for the items and charge the credit card stored in an app on the customer’s mobile phone.
  • Reducing or eliminating stockouts. Stores use computer vision to count inventory and send restock alerts.
  • Using an integrated customer loyalty and purchase-history database to send personalized offers to customers while they are in stores.

Here are three strategies to help retailers build smart stores.

Strategy 1: Migrate Store Systems to the Cloud

This is the first step to create a smart store strategy. Migrate store technologies, like POS, to the cloud so they are easier to manage and it’s easier to synchronize and share data. You’ll gain elastic scalability to add resources as store processing requirements increase, like during the holiday shopping season. Because AWS cloud compute pricing is based on usage, you only pay for the resources you use, which can help you reduce IT costs. You also get high availability from redundant resources when failures occur. These are all important factors to enhance store operations.

Strategy 2: Implement Rapid Application Development at Scale

If you move your physical store POS systems to the cloud, you can implement the continuous integration/continuous deployment (CI/CD) practices that many ecommerce companies use to build and improve their websites. The very nature of putting webstore and physical store POS in the same development environment will force the concept of headless commerce, reducing development time and providing a more consistent experience across all touchpoints. The goal is to build a consolidated, unified backend of commerce services fronted by unique user interfaces for the ecommerce website and the POS system in retail stores.

Are your offline sirens going off?

If you’re familiar with physical store operations, you know that when the internet connection goes down, you’re in trouble. Although I encourage you to put store systems in the cloud, there are a couple of drawbacks. Store data (payments, inventory, and so on) must be sent to the cloud for processing, which uses bandwidth and causes latency. And, of course, store systems can’t function properly when there’s no internet connection. This leads to my third strategy.

Strategy 3: Deploy Edge Computing

The compromise between distributed brick-and-mortar store systems and the cloud is edge computing. It allows retailers to run store systems even when the WAN isn’t available. With AWS Outposts, you get a managed server that runs workloads, like store POS systems, close to where the data is created, which reduces latency and bandwidth. AWS describes it as a managed service because the server is an extension of the cloud and is managed by AWS services. There’s no need for you to continuously patch the OS or run backups because those tasks are handled by AWS.

So let’s circle back to the concept of smart stores. When applications and technology systems in brick-and-mortar retail locations are connected to the cloud, and the store systems can run independently when internet connectivity isn’t available, you’re well on your way to creating smart stores. The agile technologies provide the best of both worlds to keep every physical store location synchronized (inventory, orders, shipments, payments, and so on) with other stores, warehouses, and the ecommerce site at all times, even when the internet connection goes down. This strategy of edge computing facilitates cross-channel transactions and more advanced, modern retail strategies, like the examples I shared earlier. Edge computing also supports endless-aisles and save-the-sale use cases.

Connected Stores Create Connected Commerce

Gone are the days of completely separate store and ecommerce operations. By following these smart store strategies, you can adapt more easily to market turbulence (for example, global pandemics), quickly adjust to changing consumer behaviors, and create better customer experiences. Aren’t these the objectives of every retailer?

Ask how AWS can support your retail transformation. Contact your AWS account team today to get started.

David Dorf

David Dorf

David Dorf leads Worldwide Retail Solutions at AWS, where he develops retail-specific solutions and assists retailers with innovation. Before joining AWS, David developed retail technology solutions at Infor Retail, Oracle Retail, 360Commerce, Circuit City, AMF Bowling, and Schlumberger’s retail and banking division. David spent several years working with NRF-ARTS on technology standards, is on the advisory board for the MACH Alliance, and supports the Retail Orphan Initiative charity. He holds degrees from Virginia Tech and Penn State.