Cloud and AI technology for evolving consumer experience and driving smarter retail in Malaysia

By Catherine Lian, Managing Director of IBM Malaysia

Everywhere in the world, the retail sector is under tremendous pressure because of rapidly changing customer expectations and the rise of innovative competitors that “the new normal” brought to light. According to new data from IBM, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years.

The report indicates that department stores are expected to decline by over 60% for the full year. Meanwhile, Ecommerce is projected to grow by nearly 20% in 2020. Retail digitization has been advancing for the last several years as e-commerce continues to grow.

According to IBM’s report, the growth in e-commerce due to the pandemic has set a high bar for what’s now considered baseline growth and we see the same trend in most economies. Given this change in consumer buying behaviour, retailers were forced to consider new innovative technologies that could support a significant increase in online shopping and better customer experience.

As results, many retailers in Malaysia are now prioritizing online sales and marketplace listings to improve their topline results in the immediate term. They recognize that there is a need to reinvent themselves with digital strategies and business restructuring identified as key strategic options in the next 12 months.[1]

Against this backdrop, hybrid cloud and artificial intelligence (AI) are two dominant forces driving digital transformation not just in retail but across other industries. Large retailers and consumer brands such as The Mall Group in Thailand, the North Face in America and Primadonna in Europe, have already implemented Cloud and AI to help them meet the changes in customer demand, enhance personal shopping experience, modernize key business processes such as sales and customer care, and also support expansion to global markets.

Within this ever-changing landscape, cloud computing offers a new path for sustainable, efficient, flexible growth. A hybrid cloud technology and services, allows retailers to run workloads on-premises, in the private cloud and in the public cloud. A scalable, secure and flexible cloud-based IT infrastructurehas been key for retailers to adapt their new operating models.

Cloud is transforming the retail business landscape

Enterprises in Malaysia need an application development platform that can run on any cloud, workloads that can execute seamlessly across multiple clouds, and a comprehensive orchestration capability that spans across clouds. IBM Institute for Business Value Hybrid multicloud survey 2020 reveals that key industries in Malaysia including retail will continue to expand deployments of multiple clouds in the next three years. According to survey respondents from Malaysia, 19% of their IT spend is allocated to cloud and they plan to increase the share of spend on hybrid cloud from present 36% to 46% by 2023.

Further, the study confirmed the return on investment (ROI) of a platform approach as respondents said that the value derived from a full hybrid, multi-cloud platform technology and operating model at scale is 2.5 times the value derived from a single platform, single cloud vendor approach.

There’s no doubt that Cloud and AI are a game-changer. For the retail industry, cloud computing offers the potential for significant improvements. Cloud can help retailers redefine and personalize customer relationships, transform and optimize operations, and create more efficient merchandising and supply networks.

These technologies also help retailers to accelerate the speed of business operation, differentiate their offerings, to meet financial objectives and the new digital demands both employees and consumers.

Leading retailers leverage cloud for:

  • Operational innovation – Simpler and faster processes drive internal efficiency; reduced complexity enables better governance and expanded access to more and broader data to manage risk; and IT capacity is better aligned to business volumes.
  • Revenue model innovation – Customer relationships, data and other assets are monetized more readily; time-to-market is enhanced; and relevant partner services are incorporated more easily.
  • Business model innovation – Third-party services extend into the retailer ecosystem; open collaboration and sharing are expanded; new types of business can be pursued; and innovation is introduced systematically.

At IBM, our experience with cloud solutions underscores its power to fundamentally shift competitive landscapes by providing a new platform for creating and delivering business value. To take advantage of cloud’s potential to transform internal operations, customer relationships and industry value chains, organizations across industries must determine how best to employ cloud-enabled business models to drive sustained competitive advantage.

As we look to 2021, retailers in Malaysia need to rethink every step of their customer journey. They will need to invest in technology that makes not only online shopping easier for consumers, but also more profitable. On the back end, investing in the right technology will allow retailers to automate returns routing to the most profitable channel and recoup revenue while also providing data on return reasons that can inform the forward supply chain.

IBM can help retailers by bringing our global and local industry and tech expertise to work on their digital reinvention with cloud and other emerging technologies to help retailers adapt to ever-changing consumer behaviour.

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