Retail Cloud Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Retail Cloud Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The retail cloud market is anticipated to register a CAGR of 16.3% over the forecast period (2021-2026). The rise of e-commerce has set the standards for brick -and -mortar retail high in recent years. Although shoppers complete most transactions in brick -and -mortar stores, customers have grown to expect the same personalized, relevant, convenient, and easy -to -use experiences they encounter online when they shop in-store.

Key Highlights

• This is where retailers are increasingly adopting digital solutions that are highly personalizing customer experiences. According to a study by Accenture in 2019, over three quarters (76 % ) of retail industry executives claim that mobile, social media, analytics, and cloud capabilities are now core components of their enterprise IT strategies. Also, 93 % credited these technologies for accelerating their pace of innovation during the past three years.
• The digital transformation amongst the retailers is gaining traction and retailers are emphasizing increasing their IT spending. According to a Global Retail Industry Digital Transformation study by Fujitsu in 2020 , about 39.8 % of the organizations are increasing their overall ICT budget with 37.8% mentioning communication, networking, and cloud being the focus.
• Due to the spread of Covid-19, there is a significant impact on consumer behavior, product demand, retail store, factory, and logistics services functionaing. However, the impact on retail cloud is uneven depending on the demand from various industries. For instance, electronics and fashion industry have been hit hard due to low demand whereas food, household goods and pharmaceuticals have seen a drastic shift in demand and thus are looking for Omni channel presence which is further boosting the demand for retail cloud. The market is expected to prosper at a high rate during the forecast period due to it's offered benefits as compared to traditional retail.

Key Market TrendsSaaS to Account for a Significant Growth

• In the retail cloud environment, retail businesses and retailers can move their infrastructure resources and business applications to the different service architectures of cloud, such as Software as a Service (SaaS), to gain an advantage in terms of speed and agility. In the retail industry, SaaS is expected to hold the largest market size during the forecast period compared to the other two service models, as retailers have an affinity for enhancing customer-facing functionalities.
• According to a survey by RightScale, as of the first quarter of 2020, 42% of respondents indicated that they are running applications on VMware's vSphere private cloud SaaS services. According to the same source, the Global Software-as-a-Service market alone is expected to grow past the USD 150 billion marks by 2020, presenting lucrative opportunities for cloud service vendors globally.
• The retail industry is one of the delayed adopters of SaaS, but have bounced after recognizing its potential. Presently retail industry is aggressively adopting it as SaaS provides everything (and even more) than traditional software does at the same cost (in fact sometimes cheaper). The chief benefits of using SaaS for retailers include minimum initial cost, almost no hardware expense, scalable and accessible, and easy to control and maintain. SaaS eradicates the need to buy, install, update, and hold an online retail store.
• Companies like UK retailer Regatta has moved its Cegid Retail solution to the cloud. The new solution is allowing Regatta to free up time for IT staff members, reduce storage costs, and improve data security by moving away from on-premises infrastructure. Having previously collaborated with Cegid to roll out its point of sale (POS) software at 170 of its locations, Regatta completed its migration to Cegid Cloud SAAS – the firm’s software-as-a-service (SaaS) cloud application – in March 2020.

North America to Hold Major Market Share

• The retail market in North America is growing at a fast pace, with retail trade accounting for more than 10% of the GDP in both the United States and Canada. The retail market in North America is one of the biggest. Wal-Mart, Costco, Kroger, The Home Depot, and Target have their origins from this region.
• Further, North America leads the demand for retail cloud solutions. The region has one of the most experimental retail scenarios when compared to many other regions. Also, the use of cloud solutions in the region is high in specialty stores. For example, consider Bernhardt Furniture Company Inc. The company has used IBM’s retail cloud solutions to create a mobile sales app and analytics platform that boosted the company's sales by 20% in just ten weeks. Also, the company reported that its executives could engage 205 more customers during sales events.
• Such penetration in the region is expected to keep North America on top of the charts for cloud-based retail solutions. However, in the near future, the demand for cloud-based retail security solutions in the region is expected to bolster due to high cyber attacks in the region.
• Further, according to a recent survey conducted by Citixsys Technologies, prominent vendors of cloud POS solutions (iVend Retail) based in the United States, over 67% of the respondents leave empty-handed from a store because they couldn’t find a product they are looking for. The survey also reveals that over 51% of the respondents turn away from stores due to high waiting time at POS.

Competitive Landscape

The market is moderately fragmented and has become competitive in recent years. The players in the market have adopted different strategies to gain competitive advantage, for example, new product development and acquisitions are some of these strategies. Consistent innovation, with a specific end goal, is a primary strategy used by these players to keep up their aggressive positions in the market and advance consumer loyalty.

• June 2020 -- Microsoft Corp. announced a strategic change in its retail operations, including closing Microsoft Store physical locations. The company’s retail team members will continue to serve customers from Microsoft corporate facilities and remotely providing sales, training, and support. Microsoft will continue to invest in its digital storefronts on Microsoft.com, and stores in Xbox and Windows, reaching more than 1.2 billion people every month in 190 markets.
• June 2020 -- Wipro and IBM Corporation got into a partnership to offer cloud solutions to help businesses migrate manage and transform their mission critical operations across public, private and on premise cloud infrastructure. Through this partnership, Wipro would also leverage IBM's cloud offerings and technology alongside in-house services to develop solutions to BFSI, retail and energy and utilities.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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