The Business Case for EDA in Retail

The retail industry has transformed over the past few years, as global events and forces have pressured retailers of all kinds to accommodate new consumer buying patterns, strained supply chains, and increased competition.

Over the past 5 years, the number of digital shoppers has increased by 40%, and the frequency with which people shop online continues to climb too, leading to 218% growth in total sales volume over that time span. In America in 2023, 57% of B2C e-commerce sales flow through marketplaces today. (Forrester), the majority of which are GenXers who have significant spending power today.

This growth means retailers must be focused on creating a user-friendly, engaging and efficient online experience, for it directly relates to customer satisfaction, retention and NPS scores. As another Ottawa-based tech company Shopify predicted in 2021 in their Future of Commerce study, businesses need to be prepared for independent retailers and the next generation of consumers to changes commerce as we know it forever.

Brands need to strengthen their omnichannel strategies and interactions with consumers as they shift to online spending. They’re well aware that customer data is the lifeblood of business today, and are actively rethinking their data strategy and investing in first-party data capture. Most retailers offer a loyalty program to build a stronger connection with their customers, but only 30% are creating a single customer view across channels, and only 1-2% are using such data to deliver a full cross-channel experience for their customers!

The opportunity for retailers to capitalize on all that rich engagement with customers is now and short-lived, so it’s imperative that they have systems in place which can act and react to information and events in real-time.

Thankfully, EDA (event-driven architecture) is here to save the day by giving retailers a way to collect, share and leverage real-time customer data across their organization to perfect their personalization strategy.

What is Event-Driven Architecture?

EDA is a way of building IT systems that routes data from one application or device to other applications or devices, no matter where they’re all deployed – in real-time. In the case of retail, this helps retailers not only capture data points and interactions they previously couldn’t, but share it with other their systems super quickly to then deliver a personalized, sophisticated response to the customer (and keep their loyalty).

EDA relies on the use of event brokers that handle the routing of this data, which can be connected to form an “event mesh” – a fast, reliable, self-healing real-time data highway that spans the retail enterprise across operating environments, geographies, and lines of business.

Digital Transformation in the Retail Industry: Why an Event Mesh is the Best SolutionRetail companies have unique opportunities to serve customers faster and better with new digital technologies — but they also face unique challenges. An event mesh can help overcome these challenges without risking costly downtime or ruining the customer experience.Read Now

The core value of EDA is that it enables real-time communication between systems – something there are many use cases for in retail ecosystems.

The Business Benefits of EDA for Retailers

I spoke to three of my colleagues who have helped leading retailers around the world embrace and beneift from EDA (Floyd Davis, Jason Abram and Vidyadhar Kothekar) about their personal experience, and will introduce with this blog post three areas in which they believe the business case for EDA in retail is clear and compelling:

1. Hyper Personalization & Next Best Offer
2. Omni-Channel Synchronization
3. After-Purchase Experience

Hyper Personalization & Next Best Offer

Customer loyalty programs have gained traction in recent years, originating in the airline industry with concepts like frequent flyer points. This approach to customer loyalty and retention draws a connection with the customer that traditional sales channels could not. Purchases made using a loyalty card/program give the retailer invaluable information about the customer’s purchasing behavior.

As more customers use loyalty programs, retailers to build a profile of spending habits, timing, location, patterns – all of which can be leveraged, analysed and used to calculate and produce special offers tailored to each customer, or customers with similar profiles.

With these special offers, the timing of the ‘next best offer’ is key. A customer at a hardware store, for example, buying a barbeque. As the customer gets to the checkout, they scan the barcode, scan the loyalty card, click checkout and make the payment. In an event-driven world, each of these steps is an event that can be published for downstream processing.

The payment, for example, is a logical end to a customer interaction. If a loyalty card has been used as part of the transaction, the retailer has a combination of customer, items purchased, location and timing data to work with. This information can be encapsulated and published as an event, then consumed asynchronously and in real-time by several systems:

• CRM to enable a deeper understanding of a customer’s interests, which can generate insight into their preferences and early emotional drivers.
• Loyalty to trigger outbound communications and the delivery of a personalized ‘next best offer’ based on the 360 view of the customer.
• Analytics that let retailer analyze how the program is affecting their business in real-time, instead of based on potentially stale data.
• Warehouse systems so new stock level can trigger dispatch or distribution of stock if levels get below a threshold.

There are often many more actors in the mix, of course. EDA lets retailers simultaneously send information about such events to any number of subscribers.

Another element of loyalty is new customer sign-up. The best chance to get a customer to sign up is when they are ready to checkout. Retailers want to entice customers by providing them a discount on their purchase immediately if they are to sign-up. Simple it may seem, there are a bunch of applications that need to be woven together to do that. For example, the Loyalty Application needs to create a new master record for the newly signed-up customer that needs to be sent to CRM, ERP (for accounting and invoicing) and retail store management applications such as Magenta.

Case Study: Luxury Goods ConglomerateThis luxury goods brand modernized their IT architecture to facilitate EDA and real-time data distribution, enabling superior, personalized customer interactions.Read Now

Omni-Channel Synchronization

Gone are the days where the only option consumers had was to get in the car, drive to the store and physically pick up the item(s), or to order it online and wait for the shipment.

The purchasing and fulfilment pattern called “buy online, pick up in store” or BOPIS, is an omnichannel strategy that lets consumers purchase on their computer or mobile device and pick up from a designated customer service booth, curb-side, or a locker.

BOPIS blurs the lines between digital and physical shopping, helping retailers offer a more seamless shopping experience. BOPIS can be a profitable online channel for retailers with 59% of consumers interested in BOPIS-type shopping options.

To succeed with BOPIS, applications for payments, inventory, POS and warehousing must all be synchronized, and communicate with each other in real-time. If a customer orders an item online, specifying their local store, it is important that the store has an accurate quantity of that item in the inventory system. If there are any delays in relaying stock levels between systems – or worse, there is no communication between them – the retailer risks misinforming the customer, wasting their time, and losing them and their loyalty.

Customers want an optimal experience across channels, and want the transition between the digital and brick-and-mortar channels to be seamless. For this to be achieved, events need to flow between the systems that support both securely, reliably and in real-time.

When a customer interacts with an online channel, there are a few simple expectations they have:

• The website or mobile app works
• The stock range/availability is accurate
• There are payment options (e.g. credit card, gift card, store credit, PayPal, etc.)
• There are collection options (e.g. delivery and BOPIS)

EDA enables all of this by streaming and synchronizing information across all of a retailer’s channels, systems, applications, etc. alongside headquarters, stores and warehouses:

• Headquarters: HQ is the home of enterprise applications like CRM, e-Commerce, inventory and logistics. The first touchpoint for customers is e-commerce. Stock levels from inventory need to be propagated to the e-commerce platform in real-time to ensure they are accurate and customers aren’t seeing items as “in stock” when they aren’t. In this use case, an event broker at HQ provides the framework for the e-commerce platform to subscribe to Inventory Update events published by the HQ Inventory platform.
• Stores: If the customer chooses to take advantage of BOPIS, their order needs to be routed from the e-commerce platform to the store of their choice. Additionally, the inventory system needs to be synced to ensure the items are in stock for the customer to pick up.
• Warehouses: If the customer chooses delivery, the warehouse may be the most appropriate and efficient location to source the stock from. A Warehouse event broker connected to the HQ and Store event mesh enables complete inventory synchronisation between the HQ, store and warehouse. Further, once the stock has been picked and packed for delivery, an “order ready” event can be published from the warehouse onto the mesh and subscribed to by Logistics at HQ.

EDA ensures the following:

1. Accurate stock data: The e-commerce platform presents the customer with real-time stock level information at the store of their choice (click-and-collect)
2. Accurate inventory data: Inventory information at HQ is synchronised with inventory information at the store/stores
3. Real-time inventory and stock updates: Any POS transactions in the store update store inventory in real-time, and propagate stock levels to HQ, also in real-time

Solace and Les Mousquetaires: Building the Next-Gen Shopping ExperienceLearn how Les Mousquetaires uses Solace's EDA technology to support real-time data distribution and offer a modern, personalized, ominchannel shopping experience.Watch Now

After-Purchase Experience

The world of retail is getting smarter, as are the products being sold. A primary example of this is products enabled with RFIDs and other sensor technology. More and more “smart devices” are hitting the market every year, enabling the propagation of valuable usage-related information to be pushed to the internet and – potentially – back to the manufacturer for detailed analysis on the usage of their products. This is the world of Retail IoT.

Many retail brands have already started turning to IoT which is expected to grow to $94.44 billion through 2025 (source: Digiteum)., for a variety of benefits: l

• Personalized CX (microtargeting, cost-efficient advertising, etc)
• GPS and RFIS technologies to track and optimize product movement through the supply chain
• Sensor data from wearable devices can be used to capture end-of-warranty and end-of-life information, or as some hoteliers are doing, to identify loyal clients and provide extra services
• Efficient use of in-store staff and optimized product placement (Amazon Go is the most famous example of this implementation)
• Smart shelves (introduced first by Kroger in 2016) with RFID tags can provide customer insight and stock data.
• Improved store management efficiency (drones for inventory monitoring, predictive equipment maintenance, inventory management, automated packing services, SKU accounting)

Case Study: Leading CPG CompanyOne of the world's biggest CPG companies used Solace's EDA technology to achieve real-time supply chain visibility.Read it Now

With EDA acting as the digital backbone for a retail organization’s dissemination of real-time data, sensor-based data can be shared and leveraged by back-end systems such as CRM and marketing tech. EDA ensures there is a high-performance framework to push product usage events from smart devices/products in real-time when in range of mobile networks, and a resilient framework to buffer events on the broker when mobile connectivity is unavailable, delivering them when connectivity is restored.

If we broaden our thinking beyond customer-to-back-end event propagation, the connected stores IoT use cases is also prevalent. For example, if a customer product publishes an end-of-life notification, the event can be published to Marketing Tech to identify same or similar products the customer may like as replacements. The same event can be published to brokers at the stores to identify whether the item is in stock. If the event carries GPS information, the closest store to the customer can also be identified. Once marketing tech and store stock levels have been aggregated, this data can be published to CRM, Loyalty and/or e-commerce systems to push a notification/offer out to the customer.

Conclusion

These are just a few of the ways EDA can offer business value to retailers. Note we didn’t touch on some other sweeping subjects like connected stores or supply chain optimization, both of which are huge, and limited our discussion of omni-channel enablement to BOPIS which is obviously just one slice of that pie.

You can learn how EDA can help you integrate the remote edges of retail operations for connected store purposes here, how a top CPG company has achieved retail-time supply chain visibility with EDA here, and get a general intro to the idea of “real-time retail” here.

To learn more about EDA in retail, we recommend you check out our comprehensive Architect’s Guide to Real-Time Retail:
The Architect's Guide to Real-Time RetailThe 6 steps necessary to architect a scalable, real-time, event-based ecosystem for retailers expanding their global, multichannel footprint.Download Now

Solace has lots of experience helping retailers of all sizes implement EDA within their organization. With our EDA platform, event brokers, and event management tools, retailers can deliver hyper-personalized omni-channel customer experiences and optimize their supply chains by establishing a real-time flow of information across their enterprise.

To get to know Solace better, take a look at our work. To discuss your project, contact our team – we’ll reach out in no time.