Despite the remarkable advances in online shopping, I’m still staggered when the order I submitted late on Sunday evening turns up at my front door before midday on Monday. How do they do that? As much as I wish it was via supersonic stealth drone, at the moment, it’s a little more prosaic than that: less sci-fly, more well-drilled distribution centre and a logistics network that never sleeps. Even so, it’s impressive stuff and with online reaching such heights it’s fair to ask about the long-term fate of traditional retailers.
We’ve been here before of course, with pundits having previously predicted, many times, that the Great British High Street would already be dead by now. Well I still can’t park on Saturday afternoon so we’re not there yet, and that’s largely because savvy retailers have embraced clicks and mortar to complement bricks and mortar. Note complement, not replace.
Most retailers know the future lies not in a single channel but multi-channels – and this includes the high street and shopping centre. Even if footfall and subsequent sales are declining, bricks and mortar still provide a significant proportion of total revenue for most retailers – whilst also serving as brand flagships and product showrooms, a critical point given that shopping is now viewed as a leisure activity rather than a practical necessity.
But traditional retailers can hit a brick wall when they want to grow and move into new stores – or to change location to help increase footfall. They have already made a large investment in their infrastructure, their POS and other applications and often the budget simply isn’t there to replicate it elsewhere. Yet, if they are going to expand, they need to do so quickly while the time is right.
IT implementation can take years – and by which time rivals will be moving in on their territory or demand will have moved on. Mistime the peaks in demand or in some sectors experience a bad summer or a mild winter and they risk losing everything they gained in the first place.
So, retailers need to look at creative ways to move quickly; ways that will give them the agility to change tack with the market and ensure that if they fail they are not left paying a heavy penalty. One way to do this is to outsource the deployment and management of core communications, IT network and the hosting of data to a managed services provider (MSP). This way an infrastructure is entirely scalable and as new shops open they are quickly absorbed.
Whereas an in-house IT implementation might take a year or so, MSPs have shown that they can move from gutting an empty building to first day trading in 10 to 17 days, depending on the size of the store. At the data centre more racks and servers are simply added as volumes expand. In some cases managed service providers are hosting applications for retailers who already have their own data centres providing an extra layer of security, powerful disaster recovery and live system capabilities.
Outsourcing also takes burden off capital expenditure (as most MSPs use an opex payment model). Retailers are not paying for unused space and, as they expand, they can predict future costs accurately. An MSP arrangement also frees up in-house IT teams to be more strategic about their future growth.
In this climate, when retailers are prepared to move just over the road at the drop of a hat if the location holds more promise, there’s no room for downtime or delay. It seems that traditional and multi-channel retailers need speed and scalability as much as their online counterparts. If only there was an ‘Express Delivery’ option when buying their outsourced IT services, they could be surprised before midday too.