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Removing Barriers to Acquisition & Growth

Our recent July in Review: Retail News round-up indicated that a number of retailers are expanding through mergers, acquisitions or setting up new stores from scratch. To name a few examples: Amazon Go are continuing expansion into Chicago and Seattle, Tesco plans to launch 750 new urban stores in Thailand, and Marathon are transitioning their newly acquired NOCO Express Stores.

Contrary to what is reported in the mainstream press, retail is on the rise, rather than the decline. Progressive retailers are increasingly looking at acquiring existing stores from competitors, in order to expand either their geographic or demographic reach. While expansion is often seen as welcome news to board members, however, it can spell out major pain-points for those tasked with facilitating it.

For the full benefits of acquisition to be realized, stores need to be quickly and efficiently integrated into the existing store IT framework, with the same applications and systems. This is proving a major barrier to acquisitive retailers, and the post-merger integration headaches are discouraging some from moving as aggressively as they would wish.

Many stores’ existing in-store infrastructure consist of a complex range of disparate servers and software, and the job of replicating that in the new stores is nigh impossible. Adapting the current hardware and software of each new store to align with the rest of the business, without disrupting its day-to-day operations is essential to mitigate lost revenue.

Removing barriers to acquisition

The biggest barrier to growth is the traditional ‘device-based’ store IT strategy, which can be summed up by: “You need to deliver a new application, then install a new device at each store.” This widely accepted logic has been the bedrock of store IT for decades. As a result, it has led to a proliferation of in-store IT hardware and software, escalating IT costs and a nightmare for maintenance and upgrades. A modern approach that negates this issue is the virtualizing of all in-store devices – otherwise known as a software defined store architecture. It involves implementing automated, virtualized servers in-store. Once that initial step is taken, new needs are met by simply deploying new applications on those servers.

If you have a software defined architecture in at least some of your existing store network, then a golden image of that solution can be created centrally, and then deployed within stores nationally or globally with minimal onsite intervention across the new stores you are acquiring. Post-merger integration lag and cost is effectively minimized, and IT once again becomes a business strategy enabler.

The same approach applies for acquisitions involving differing POS infrastructures. By taking a software defined approach you can remove the need for a major POS hardware refresh.

Research conducted by Zynstra has revealed that retailers with an acquisition or POS refresh strategy experience a significant reduction in new store integration costs, as well as the ability to deploy IT integration in a time-efficient manner.

Find out more about the Economic Value of the Software Defined Store:

Adapt or Perish

The ability to complete mergers and acquisitions without unnecessary downtime and cost will decide which retailers prosper, and which ones fade into obscurity. Therefore, traditional retail IT models can no longer cut it, and new alternatives, such as the software defined store approach, have to be implemented as a matter of priority.

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