Retail Technology Trends: Turning Middleware Into a Competitive Strength

The 2020 pandemic forced most retailers to compress years’ worth of change into an uncertain and intense five months. Embracing new retail technology trends and furthering digital transformation isn’t anything new to an industry that has already been doing both those things for decades, but several background factors forced companies to react at an even faster cadence than usual:

• Dwindling brick-and-mortar traffic, presence, and sales
• Increased e-commerce reliance and functionality
• Thinning profit margins
• Aging legacy IT infrastructure

In fact, even today, retailers are still trying to catch up. The industry’s digital transformation isn’t over; it has simply moved into a new phase.

The Changed Retail Landscape

Leading up to 2020, retailers had experienced a shift from large crowds to hordes of clicks as consumer spending trended digital. The changes companies had implemented formed an important foundation when the global pandemic pushed almost all shopping online.

Companies like Amazon, which had already boasted an engaging online experience and the infrastructure to provide it at scale, performed well. But many other large retailers, including those with successful track records leading up to the pandemic, struggled with the change. The increased traffic weighed heavily on their current IT systems, and retail bankruptcies skyrocketed in 2020.

Several years later now, it has become clear the dramatic shift to online spending isn’t changing. Accordingly, retailers recognize the need to upgrade their legacy IT infrastructure to more agile technology stacks. These initiatives will help reinvent the customer experience by introducing transformative technologies like generative AI. But they won’t be easy to take on or quick to complete, as evidenced by substantial predicted upticks in retail digital transformation spending over the next five years.

As any industry IT leader knows, the drive for innovation comes with a continual need to also keep IT spending low. This pressure puts companies striving for digital transformation between a rock and a hard place: they don’t have the extra budget to fund these projects, and they also lack the extra funding to hire more technical resources to carry them out.

Along with the need to introduce new front- and back-end digital products, teams also face the complex challenge of building resilience into current IT solutions. Many IBM® software stacks have been running stable versions for years, but the steady increase in traffic poses a threat to consistent uptime. In an industry where large businesses can lose $9,000 with every minute of downtime, finding middle ground between these conflicting needs is essential.

How Much Do You Spend on AIM?

Retailers understand they must commit to digital transformation and supply the funding and resources to see it done successfully. However, a widening IT skills gap makes it difficult to find the right people even with appropriate funds in place.

One budget area Origina’s retail customers often evaluate is Application Infrastructure and Middleware (AIM). Omnichannel retailers tend to have extensive AIM software stacks. For these companies, in-store inventory needs to blend seamlessly with what the website shows interested customers, and the back end must be able to handle an influx of orders, whether it’s for shipping or in-store pick up.

Globally, the retail industry is responsible for some of the highest AIM spending in the world. Associated technologies are commonly thought to account for roughly 5% of retailers’ average IT budget.

Retailers with middleware like IBM MQ likely will spend twice as much to maintain the software compared to what a competitor might be paying – an overspend that represents millions of dollars that would be reallocated to innovation under better circumstances. Zeroing in on ways to bring costs down without impacting IT operations or limiting new additions to the roadmap can quickly become a key advantage in the race for digital transformation.

Turning Middleware into a Competitive Advantage

Retailers should establish three short-term goals to keep up with the pace of change in the industry:

• Reduce IT spending on support and maintenance for AIM
• Maximize stability, uptime, and capacity from existing IT infrastructure
• Allow team members to focus on digital transformation projects

Independent software maintenance and support can help retailers excel at all three. By saving on annual software support costs, companies reduce their AIM spend by half, bringing it back to the industry average and freeing extra assets that can go toward innovation.

Implementing subtle changes to software configuration can create efficiencies that result in even larger savings for retailers. Sainsbury’s, for instance, eliminated serious peak season downtime concerns – which they weren’t able to achieve under an IBM support contract – when they switched to an independent provider. At the same time, the U.K. retailer generated tens of millions in support savings.

Following that, the company shifted its focus from maintaining mission-critical products toward innovative new projects, leading to more optimized use of the current software budget. These are digital initiatives that will radically change the customer experience and enable companies to remain competitive.

The retail sector is evolving rapidly and jumping on new retail technology trends to account for changing consumer demographics and needs. For companies looking to push innovation without breaking the budget – or adapt to post-pandemic budgets that stifle the ability to add new technology – partnering with an independent software maintenance partner frees up funds on one side and allows retailers to do more with their existing infrastructure on the other.

Originally published on March 16, 2021.

Updated January 13, 2025.

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