Digital Transformation in the Retail Industry: Why an Event Mesh is the Best Solution

It’s a new year and a new decade, but customer experience still reigns supreme. In retail especially, customers are extremely demanding and expectations are high. They want everything right now. This is why so many leading companies in the retail industry are prioritizing digital transformation – retail is now real-time.

At the National Retail Federation (NRF) Shop.org conference last year, Kiran Mani, Managing Director of Retail at Google, shared these insights based on tracking Google search activity:

• A 55% growth in searches for “ideas” on mobile suggests that customers are more curious.
• 33% of customers expect personalized recommendations, which indicates customers are more demanding.
• A 120% growth in search for “same day shipping” shows customers are more impatient than ever.

Retailers are working hard to keep up with these changes. The recent Adobe Digital Trends in Retail report found that more than half (54%) of retailers say the customer experience is their most important area of focus.

The biggest challenge in retail customer experience for many companies, however, is expectations around real-time response. Customers expect real-time service and updates, while the business requires real-time data and insights in order to meet these customer expectations. When retail digital operations aren’t able to function in real-time, the customer experience suffers.

The New Digital Landscape of Retail – The Path to Modernization

The Global Digital Transformation Market in Retail report estimates a compound annual growth rate of over 22% between 2019 and 2024 — and that’s not entirely surprising for the industry. Digital transformation is enabling companies to integrate processes and technology solutions using a real-time digital foundation. New digital technologies collect, store, analyze, and distribute information faster and more securely than ever.

In retail, much of the focus has shifted from front-end operations to back-end operations, enabling organizations to view information such as supply chain, customer service inquiries, product details and so on, through a single pane of glass. But there are even more differences in how the retail industry is approaching digital transformation that retail leaders should be aware of.

All to say: the digital solutions that retail companies choose during digital transformation must suit a unique business environment.

Improving Data Exchange is Critical to Meet the Needs of Empowered Shoppers

Retailers must keep up with the buying patterns of increasingly empowered and educated consumers who are embracing the internet to compare and buy products; consumers are increasingly likely to provide a review based on the customer experience as they are for the quality of the product.

Retailers are also competing with online giants like Alibaba and Amazon, two companies that Gartner predicts will have captured 40% of the global online retail market share by 2023.

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The digital landscape of retail today includes a diverse system environment with many different and siloed point-of-sale, warehouses, and logistics systems — all of which must be modernized and enabled to communicate in real-time. Automating and improving data exchange among and between supply chain, e-commerce, and in-store operations is critical to meet these needs.

The challenge is this: Getting disparate technologies and supporting systems (for warehouses, datacenters, merchandizing, order management, and supply chain) to communicate with each other across global lines of business and in multiple environments (private cloud, public cloud, hybrid cloud, and on-premises).

Legacy Systems in the Retail Industry Often Hold Back Digital Transformation Progress

For most retail organizations, especially those that were born before the digital age, the weight of legacy infrastructure has been a barrier to their digital transformation. In the retail industry, legacy systems often refer to on-premises applications, inventory and supply chain management, or those that were created in isolation, with no thought as to how they may need to communicate with other systems (especially digital ones) in the future. Major IT infrastructure replacements and upgrades for large retailers can be a gargantuan task, not to mention disruptive and expensive.

The current need to modernize and exchange data in real-time between legacy and digital applications is hamstrung by lack of communication between them, or rather the ability to communicate. Silos of information in older IT systems prevent back-end systems from aligning with front-end systems, or cloud services from linking with on-premises applications.

Taking steps to modernize the business, like migrating ERP systems to the cloud, is a great start, but you can’t realize the benefits without first modernizing your legacy messaging infrastructure. If legacy technology can’t connect to cloud services and can’t keep up with the volume of data being exchanged in a modern, globally-distributed enterprise, the plan to modernize will fail.

So how can an enterprise unify legacy (physical) and digital operations across global lines of business and in a variety of environments? The answer is an event mesh.

How an Event Mesh Enables Digital Transformation in the Retail Industry

Unifying physical and digital operations requires an event-driven foundation (a data movement strategy) which enables the exchange of events (a change of state) in real-time between front-end and back-end applications — no matter where they are located.

This foundation turns anything that happens in your company into a digital event that travels through distributed systems. On-premises legacy systems talk to the e-commerce platform, to the inventory and POS systems, to the cloud ERP, and to the AI/analytics services.

An event mesh powers this foundation.

An event mesh is an architecture layer that allows events from one application to be dynamically routed and received by any other application no matter where these applications are deployed. This layer is composed of a network of event brokers, a form of messaging middleware that moves events across the distributed enterprise.

This event mesh provides a single view of information from all systems — from storefronts to supply chain. And an ideal event mesh future-proofs retail infrastructure by ensuring that newly developed apps will be able to talk to existing apps and cloud services.

To meet the quickening pace of retail business, an event-driven architecture (EDA) foundation must also be reliable, secure, and high-performing. An event mesh makes this possible by allowing developers and IT architects to integrate old and new apps, architectures and technologies piece by piece. Retail companies can then modernize without risk, and do so at their own pace.

Real-Time Technology for Real-Time Retail Business

Retail 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.

Solace enables a dynamic event mesh with PubSub+ Event Broker, which supports open protocols and APIs, and is simple to deploy, manage, and monitor.

Learn more about Solace solutions for retail in this solution brief.