Today’s Digital Landscape for Retail
Shopping happens everywhere. Whether in a bustling downtown or from the comfort of the living room couch, customers today engage with the brands they love in a myriad of ways. These retail experiences increasingly rely on an expanding, interconnected digital ecosystem to make them happen. Even in-store shopping excursions now heavily utilize Internet-based technology to deliver top-notch service. And when shopping online, customers expect to be able to purchase anything from anywhere with a few taps or clicks—and have it delivered almost as instantly.
Making sure all these experiences are seamless is critical: 80% of customers say that the experience a company gives them is as important as its products and services. Retailers need to ensure high-quality customer experiences to help remain competitive and retain existing customers.
Retailers are getting increasingly creative about meeting—and exceeding—customer expectations in new ways, and providing thoughtful digital experiences that go far beyond visiting a website and scrolling through a catalog of products. They count on a service delivery chain composed of a collection of best-of-breed systems, services, and applications—both internal and external.
As a result, Internet outages and degraded service are a big deal for retailers. If any of these impact any point of this multi-system service delivery chain, it can cause downtime or slow performance, which may lead to lost revenue and affect brand loyalty. Additionally, the risks of outages and performance issues are heightened by the fact that many aspects of a retailer's service delivery chain are outside of their direct control. This makes it especially difficult to troubleshoot, address, and proactively prevent outages while striving to provide a complete and optimal customer experience.
In this blog post, we’ll cover some common ways outages can impact retailers and what your company can do to minimize these impacts.
It’s (Not) Personal: How Outages Impact Personalization & Revenue
With competition among online retailers high, if your website or another digital interface your customers count on is slow or glitchy due to an outage or service degradation, shoppers may choose to buy their new headphones or sweater elsewhere.
However, a functional, high-performing website isn’t all that matters for retailers. You also need to be able to make continuous real-time updates to your site in order to personalize the experience for specific customers, geographies, and more. Outages or disruptions that prevent or delay these updates can contribute to lost revenue since the customer’s experience isn’t as optimized as it could have been.
A recent McKinsey report emphasized the importance of delivering these personalized experiences, revealing that 71% of consumers expect companies to provide them with personalized interactions, and 76% get frustrated when businesses fail to do so. Furthermore, McKinsey research found that businesses who really shine at personalization generate 40% more revenue from those activities than average players.
Delivering this reliable, highly personalized digital experience for customers is no easy task. It’s complicated by the fact that many of the services retailers rely on to deliver great digital experiences lie outside their control. As a result, retailers need visibility across environments inside and outside their direct control, so if outages do happen at third-party providers (or at your own company), you can quickly identify the problem and act to mitigate the impacts on your customers. These mitigating steps might include activating backup plans to keep business operations flowing. Proactive monitoring can also help you spot potential issues early and take steps to guard against them.
Hear how Room & Board, a modern home furnishings retailer, provides a confident retail experience. Read the case study.
Digital Experiences Matter: Other Important Website Considerations for Retailers
In addition to personalization features, retailers leverage a plethora of other digital services—many of them third-party—to provide their customers with great digital experiences and boost revenue.
For example, a furniture company’s website might use augmented reality (AR) so customers can visualize how a new couch will look in their actual living room. If the third-party tool providing that feature goes down, the customer’s overall experience on your website will be impacted.
Stores may also rely on a backend third-party inventory management system. If this system experiences latency or an outage, or if the connection between the third-party and the retailer is disrupted, problems can occur. For example, you might accidentally promise the same item to too many people if stock information is not accurately displayed on your website because the inventory system fails to correctly report it; or it doesn’t accurately put certain items on hold if they are already in someone’s shopping cart.
In a similar vein, product listings may also be streamed in from third-parties; a retailer might not handle all their product listings in-house. If this third party encounters a glitch or an outage, all manner of issues could arise—from incorrect price listings to missing products or even issues with payment processing—making it harder for customers to discover and purchase products on your website. This could ultimately lead to loss of customers as 41% of consumers say they have switched brands due to product availability and 41% also report switching due to product selection or variety, a 2023 Salesforce study found.
And it’s not just your own website that matters. In our era of social commerce, businesses can use social media platforms as another digital storefront, with the option for customers to purchase products from directly within the app. A February 2024 survey revealed that 35% of U.S. digital buyers aged 18 to 34 have made purchases on Instagram, 36% on Facebook, and 31% on TikTok. And globally, 59% of shoppers used social media to buy products and 50% used social media to discover products, according to a 2023 Salesforce report. If a social media site that’s part of your sales strategy experiences an outage, your revenue may be impacted.
It’s important for retailers to have a clear understanding of their end-to-end service delivery chain and all the third parties they’re relying on—and have tools in place to monitor performance and proactively mitigate any potential issues. When an issue does arise, you need to be able to quickly determine the source of an issue: Is it a third-party provider or an internal problem? With this knowledge, you’ll be able to quickly take the right steps to resolve the problem and minimize any potential customer impacts by implementing workarounds or alternate processes.
Hear more about how you can reduce the impact of downtime and strengthen your business’ resiliency. Read the eBook.
Brick and Mortar Is Digital Too
Digital experiences are increasingly central to in-person, in-store experiences as well. For example, customers may use a tablet to place their own order at a restaurant or request a new size from the screen within the dressing room at their favorite clothing store.
Grocery stores might also use cameras to observe how many people are spending time in a certain area, influencing how they organize the store in an attempt to boost sales. Other retailers may update pricing dynamically in real-time on digital signage in response to an observed or expected increase in demand.
Additionally, many retailers now rely on third-party point of sale (POS) systems hosted in the cloud, instead of homegrown POS systems housed in their own data center. And these third-party services often go beyond mere point-of-sale systems, but rather offer a combined system that also handles inventory management and more.
Physical stores also need to be able to interface successfully with delivery apps. If the requests from delivery apps keep getting lost due to tech issues caused by outages or degraded service, the delivery app may mark the restaurant as temporarily unavailable, which prevents the restaurant from taking orders and selling through the app. For example, DoorDash pauses stores that are having difficulty fulfilling orders for five or more consecutive minutes.
Outages can bring any of these in-store digital platforms down, which may result in negative customer experiences and slowed or halted sales.
We saw an example of this at McDonald’s on March 15, 2024. At 5 AM (UTC) / 10 PM (PDT), McDonald’s experienced a global technology outage that the company said was caused by a third-party provider’s “configuration change.” Reports indicate that restaurants, including McDonald's in-store kiosks or app, couldn’t accept digital orders or process digital payments. While there are reports of some stores switching to manual orders and accepting cash-only payments, this doesn’t seem to have been a universal workaround.
A similar third-party-related incident impacted businesses in September 2023, when contactless payments terminal and service provider Square experienced backend connectivity issues that led to companies being unable to process transactions. The “disruption” hit “multiple Square services,” and took 18.5 hours to remediate, with residual effects potentially lasting even longer.
When an outage impacts POS systems or another digital system necessary to deliver a positive customer experience, companies need to be able to quickly identify the cause. Is it on the server side, something local, or related to the network? With this understanding, businesses can determine the proper mitigating steps to take—or whether its best to simply wait for the outage to resolve, which depending on the circumstances can sometimes be the case.
It’s also wise to have backup solutions in place, whether those be alternate digital solutions or even manual options as we saw in the case of McDonald’s.
Get tips for how your IT team can scale to meet the demands of Black Friday or other high-traffic seasons.
Outage Monitoring Checklist: What Retailers Should Watch
Staying on top of the complex ecosystem of owned and unowned services that help your business provide excellent digital experiences to your customers is an essential, but sometimes daunting task.
To help focus your efforts, below is a recommended checklist of important areas that your IT team should consider prioritizing and suggested actions to take. For each item listed below, make sure you’re monitoring its overall performance, including the health of relevant APIs, cloud services, and other tools necessary to maintain proper service functioning.
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Customer-facing Apps & Websites: Keep your customers happy with smooth shopping experiences by emulating app service interactions to proactively spot potential issues and prevent outages.
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Remote Workers: Make sure the remote and hybrid teams supporting your customers’ shopping experiences have the infrastructure they need to stay productive. Proactively monitor things like VPN gateways, Wi-Fi, and VDI environments for any problems.
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Internet, Data Center, & DNS Providers: Set up monitoring for the core IT services and applications across your infrastructure and cloud from each store and office location.
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SaaS: Maintain visibility into B2B connectivity and API performance from external services, including POS, CRM, and reporting systems. Also monitor the health of software your employees count on like timekeeping apps, and back-office services such as word processing and email.