Over the past three years, the retail sector has undergone significant changes due to the Covid pandemic, which prompted industry leaders to reevaluate conventional operational strategies. As most organizations shifted towards digital as the primary mode of operation, the significance of digital transformation has surged. As a result, CIOs and CTOs have been searching for breakthrough solutions, with many turning to cloud solutions that offer an agile and powerful approach to driving business innovation.

Why Do Retail Needs a Cloud Framework?

While some IT leaders have considered microservices frameworks that abstract application services, they have yet to develop a broader application strategy that encompasses the entire organization. This is where a new paradigm for retail IT comes in, based on a set of core architectural principles:

• Leverage mature, enterprise-ready cloud platforms to provide unlimited scalability, security, and resilience.
• Deliver advanced network connectivity to stores, enabling new digital strategies that enhance customer experiences.
• Use modern microservices architectures that enable developers to accelerate business innovation through discrete, easy-to-manage application components that build on each other.

The Retail Cloud Technology Framework was created to help retail industry leaders overcome their most pressing challenges, such as meeting the evolving needs of modern consumers and business customers, managing legacy IT infrastructures, and transforming IT systems to be more agile, faster, and productive.

Unlike simply moving existing systems to the cloud, the framework's primary objective is to migrate to a state-of-the-art application architecture that can drive retail growth and innovation. This is achieved by separating business and customer-facing applications from underlying business logic, which are exposed as services to power applications. Developers can focus on enhancing the customer experience by accessing a set of microservices through APIs that conform to enterprise-wide schemas and security standards.

5 Layers of Retail Cloud Services Technology Framework

Retail Cloud Technology Framework provides practical definitions of these concepts, enabling IT leaders to chart a more effective and successful application strategy for their organization and the enterprise as a whole. According to AWS, the framework includes 5 layers as described below:

1. Cloud Core Services: Firstly, this layer is the foundation of the framework, composed of cloud-based IT infrastructure services like data storage, computing, networking, and database systems. These crucial services, which operate on the cloud, supply the fundamental computing and networking resources that drive the retailer's strategic business and customer-facing applications. Retailers should consider features like ease-of-use and scalability in addition to cost when selecting a cloud provider that will help cut IT overhead, and offer greater returns in the long run.
2. Enterprise Tech Debt: It refers to the technical burden that many retailers feel trapped by from their previous investments in commercial-off-the-shelf (COTS) systems such as ERP or POS systems. The framework outlines a path for retailers to eliminate this technical debt by moving away from these costly and inflexible systems, and embracing next-gen retail cloud services over time. During the transition, retailers can progressively drive more innovation and value from their new cloud solutions until they're ready to phase out legacy apps.
3. Retail Cloud Services: This layer consists of a set of cloud services developed by the cloud services provider that provide popular business capabilities like demand forecasting, personalization, and order management. These building-block services harmonize with existing applications while offering flexibility to migrate away from legacy apps at your own pace.
4. Enterprise Services Layer: This layer takes retailers to the next level by empowering their technical teams, who collaborate with pre-packaged retail cloud services to develop inventive, and distinctive business capabilities. These enterprise services, developed specifically for the hosting company, constitute the digital platform that retailers employ to conduct business with their customers, partners, and suppliers. Retailers design the platform by incorporating their enterprise schemas, API standards, security protocols, and other technical components, combined with cloud technologies.
5. Retail Innovation Applications: Finally, this layer is where development teams creatively integrate underlying enterprise services to quickly build compelling new applications and services. It provides retailers with the ability to differentiate themselves in the marketplace by introducing groundbreaking services and solutions. This is where market followers can become market leaders through great innovations. Amazon, for example, utilized this layer to build its market leadership in advanced cashier-less checkout solutions, voice ecommerce capabilities, and new AR/VR tools that are driving the next wave of virtual customer experiences.

Next-Gen Retail: The Intersection Of Cloud And The Retail Revolution

Over the past three years, the retail industry has undergone significant changes due to the pandemic, which forced leaders to re-evaluate their traditional business models. With digital transformation becoming the norm for most organizations, its value has surged. The pandemic unexpectedly boosted e-commerce sales by $218.53 billion between 2020 and 2021, exceeding original projections by more than two years.

The retail industry is evolving rapidly with the adoption of next-generation technologies such as augmented reality (AR) and virtual reality (VR), as well as new shopping experiences like curbside pickup, home delivery, BOPIS, and cashless/contactless payments. However, these technologies require a high level of technical agility, which can only be achieved through a cloud foundation.

Cloud adoption is essential for retailers to support the premium speed and responsiveness required for next-gen retail. The cloud platform enables retailers to move, develop, and run large, complex, and time-sensitive workloads without the need to refactor, rewrite, or change any core database and business logic. It also allows for the migration of mission-critical workloads that support emerging innovation and deliver the best user experiences required for business success.

While there may be perceived challenges or concerns about cloud adoption, organizations can safely move existing environments to the cloud using advanced cloud solutions and gain radically expanded capabilities. With cloud adoption, retailers can leverage AR and VR technology to create immersive shopping experiences and meet the growing demands of customers.

The retail industry is experiencing significant growth in 2022, with the potential to increase online shopping conversion by 17% through the use of VR in e-commerce. By combining VR and AR, the global economy can potentially be boosted by US$1.9 trillion by 2030. However, the barrier to widespread adoption of VR technology is inadequate performance.

According to Vietnam’s Ministry of Industry and Trade, Vietnam's e-commerce activities in 2022 continued to develop and became an important distribution channel. The scale of Vietnam's retail e-commerce market in 2022 is estimated about 16.4 billion USD, accounting for 7.5% of the country's total revenue from goods and consumer services. With an annual growth rate of 20%, Vietnam is ranked among the top 5 countries in the world with the fastest e-commerce growth rate by eMarketer.

In today's retail environment, slow load times can be detrimental to a business. Consumers will abandon their carts if load times are sluggish, resulting in lost sales and potentially long-term damage to a brand's reputation. This issue is avoidable through the use of technology that allows retailers to safely migrate to the cloud, and develop new features while modernizing internally at a reasonable and low-risk pace. It is essential for retailers to prioritize technological agility to keep up with the growing demands of consumers and remain competitive in the market.