Using SAP Cloud Platform to Digitally Transform Brick-and-Mortar Retail Stores

Improve customer experiences and sales promotions by leveraging real-time data

The solution diagram above illustrates a combined architectural pattern of the runtime and design-time environments for implementing a retail model with SAP HANA, SAP Cloud Platform Mobile Services, and the IoT service on SAP Cloud Platform.

Business Scenario

As online customers go about their shopping and navigate through retail sites, their clicks and searches naturally generate data that can be collected for both the benefit of these customers and of the online stores where they are shopping. However, brick-and-mortar retail stores have not traditionally had a similar method to collect and respond to data about customer behavior.

One startup is addressing this limitation through a framework of devices and software based in SAP Cloud Platform. In addition to mobile apps for customers to install on their phones, the solution’s range of possible physical components includes digital signage, interactive shelves, screens displaying tutorials, and Internet of Things (IoT) sensors. These various components work together to allow brick-and-mortar retailers to stimulate sales through app-based promotions, track customer behavior surrounding merchandising displays, and provide customers real-time, responsive guidance for discovering, testing, and picking products.

The digitally transformed brick-and-mortar retail solution benefits both retail shoppers and the stores equipped with the solution. Shoppers benefit from such a system by receiving personalized coupons and special offers on the phone app, customized product recommendations, product information such as product range comparisons, and personalized video tutorials. The stores benefit from the system through increased customer engagement, better customer experience relative to the competition, and improved product marketing through localization. With this solution, retailers also acquire sales and behavioral data that can yield insights into the effectiveness of merchandising strategies, geographic variations, and predictive modeling.

Industry Applicability

The digitally transformed brick-and-mortar retail solution is flexible and relies on both third-party marketing companies and SAP partners to customize its implementation within each store. The solution template is therefore useful to support various retail needs, such as scenarios in which:

  • A mobile app is determined to be a useful method for improving the customer experience, generating sales leads, or collecting data about customer behavior or preferences
  • IoT-enabled systems at point-of-sale (POS) locations can benefit from access to a centralized customer-relationship management (CRM) or enterprise resource planning (ERP)/supply-chain management (SCM) back-end platform
  • Sales associates/store managers need near-real-time access to reports and alerts generated via sensor-data analysis
  • Multiple stores can benefit from the centralized management of merchandising campaigns related to in-store signage or the information sent to shoppers through mobile apps

Solution

The digitally transformed brick-and-mortar retail solution disrupts the retail industry by improving customers’ experiences, merchandising displays, and sales promotions through real-time, in-store data collection and analytics. The solution enhances business processes through SAP and non-SAP data originally collected from any number of possible sources.

Using SAP Cloud Platform Mobile Services, the solution helps retail shoppers through a convenient mobile app that learns about their shopping preferences and that then delivers customized information, such as alerts for relevant discounts or details about targeted products. Retail stores can also equip administrators with a mobile app or web-based management interface through which they can perform administrative tasks, such as updating the vouchers available to customers.

As part of the solution, retail stores typically install IoT sensors such as radio-frequency identification (RFID) inventory tracking chips, in-store infrared foot-traffic counters, and Wi-Fi tracking systems. The data collected through the IoT sensors is collected continuously on an on-premise Edge Platform, and then transferred to the SAP Cloud Platform Internet of Things service. From there, the data is synchronized with the SAP HANA® database. This data combines with the data collected through the mobile app to form the basis of the reporting and analytics for SAP Analytics Cloud.

The digitally transformed brick-and-mortar retail solution based on SAP Cloud Platform includes the following components:

  • A cloud-based application that centrally controls all the promotional content displayed through the mobile app or through signage in multiple client stores
  • Smart equipment/devices that collects relevant data, such as shelf space available, inventory, and shopper movement
  • A retail IoT system with an IoT Edge Platform that resides at each site and constantly receives data from the connected devices (typically via radio frequency); the edge device removes the requirement for a persistent cloud connection
  • An IoT component in SAP Cloud Platform that receives data from the IoT Edge Platform system
  • A central cloud-based SAP HANA database that stores the data received from the SAP Cloud Platform Internet of Things component
  • SAP Analytics Cloud, which performs real-time analytics on the data stored in SAP HANA
  • Third-party APIs that read and perform additional, custom analytics on the data stored in SAP HANA

The collected data allows retailers to gain insight into the buying patterns of their customer bases. Such data provides the necessary insights for retailers to augment future promotions and sales, monitor inventory and store traffic, and better optimize the in-store shopping experience.

SAP Analytics Cloud can access a variety of on-premise and cloud-based data repositories. These include: SAP ASE, SAP HANA, PostgreSQL, Redis, and object store. Prior to the implementation, you must decide which source (or sources) you need to connect. This blueprint assumes the back-end data source is SAP HANA.

There are two development paths for mobile apps that connect to SAP Cloud Platform Mobile Services. One is to develop native apps using the SAP Cloud Platform SDK for Android and the SAP Cloud Platform SDK for iOS. This path provides the most robust options for app design and the greatest ability to tap into the services and functions available in SAP Cloud Platform, but it requires a high level of mobile-app development expertise. The other path is to develop a hybrid app, which is essentially like a Web site wrapped in an app container. This is an easier way to develop flexible apps for multiple platforms if the apps do not require the sophisticated interfaces and complex functionality available in native apps.

Decide whether to plan for an edge services component in your solution. An IoT solution that includes on-premise (edge) services can improve performance and reliability by carrying out operations independent of the Internet connection to SAP Cloud Platform. An alternative design that is simpler but less robust simply connects the base station receiving the data transmissions directly to the Internet of Things service in the SAP Cloud Platform without any edge services. Such a design may be suitable for some smaller-scale scenarios in which connectivity to the Internet is reliable, occasional loss of data isn’t critical, and no processing needs to be done on the data before transmission.

The Internet of Things message processing service provides various ways to handle incoming messages, including SQL, Kafka, and HTML processing. If any of these services are available to you, you can use them to send data to the SAP HANA service. See Internet of Things Message processing documentation.

An additional option is planned for general availability in 2019: SAP will introduce the ability to connect the SAP Cloud Platform Internet of Things service directly to the SAP Cloud Platform HANA service. Until then, we recommend that you write a custom application that connects the two services by retrieving the data from IoT using REST APIs and feeding that data into the HANA service using the HANA Deployment Infrastructure (HDI). See SAP HANA SPS11: New Developer Features; HDI.

SAP HANA is offered for deployment in the cloud in several ways: as a fully managed service; on-premise for maximum control; or through a hybrid model that supports a variety of deployment options. Before moving to the implementation phase, consider your deployment options and choose the best option. For more information about SAP HANA deployment options, see the SAP HANA deployment page. You can access SAP HANA databases using a variety of languages and interfaces, as well as build applications and models using the tools that are provided with SAP HANA. For more information, see the SAP Cloud Platform HANA service Feature Scope Description.

SAP Analytics Cloud can connect to various on-premise and cloud data sources, including SAP HANA, SAP Business Warehouse (BW), SAP Business Planning and Consolidation (BPC), OData, Google BigQuery, SQL, and more. Before starting an implementation, first determine which sources you’ll be connecting to. The manufacturer established connectivity from SAP Analytics Cloud using the SAP HANA service through either a live connection with password authentication or with SSO.

In this use case, SAP Analytics Cloud is used for complex operations like analyzing patterns of customer engagement and evaluating the success of merchandising campaigns. Custom third-party analytics were also be used with the SAP HANA database service using REST Web service connections.

If this is your first SAP Cloud Platform project, you’ll need a system administrator to spend some time setting up the platform and onboarding your company. Tasks include, but aren’t limited to, setting up subaccounts to match your landscape in the back end (typically, this includes development, test, and production accounts), adding at least two additional administrators, and assigning other roles to members in your organization. For more information about onboarding and getting started with your SAP Cloud Platform account, see the SAP Cloud Platform Planning and Lifecycle-Management Guide.

There are different services and databases inside your SAP Cloud Platform account. One of the options is the SAP HANA service. This database can be provisioned in different sizes and offers a fully managed version of the SAP HANA database. You can use it for application development and analytical scenarios, or simply to store data. The manufacturer uses the SAP HANA service to store the data coming in from the equipment sensors (via edge servers) and to build analytical models. These analytical models are then exposed to SAP Analytics Cloud. See the SAP Cloud Platform, SAP HANA Service documentation.

If your project relies on local edge services, you’ll need to set up the SAP IoT Edge platform, which is a messaging endpoint for devices that can be deployed at the edge, that is, at a location closer to the IoT devices. For example, the manufacturer deployed an Edge platform and Edge Services are deployed at each location to collect and persist sensor data from all the connected devices at that location, and to transfer it without loss to the Internet of Things service. In other scenarios, the data might be filtered or processed locally before being sent to the SAP Cloud Platform. Command data can also be sent from the IoT Edge platform to the device to control its operation. See Download and Set Up the Internet of Things Edge Platform.

You’ll need to create your IoT device in the SAP IoT service to reflect the asset you want to manage and the parameters you want to monitor. This means you’ll define sensor types and sensor capabilities for your device. You can create a device in either in the cockpit or via the IoT service interactive Device Management API (see Create a Device Model Using the API). Then you’ll onboard the devices and sensors that use the defined sensor types and set up sensor data acquisition. Data acquisition can be from a device agent that’s deployed on the device or from the IoT Edge Platform.

The SAP Cloud Platform Mobile Services make up a full-featured mobile app platform delivered as a service.  The mobile services allow you to quickly create and operate mobile apps with full offline support, notification services, superior back-end integration, and enterprise-grade security.

To set up SAP Cloud Platform Mobile Services, you would need to define applications, manage application features, and configure assigned features, including connectivity, security and offline settings.

For more information, see Configuring Applications.

When using live data connections to SAP Cloud Platform, the main modelling is already done in the SAP HANA service inside your SAP Cloud Platform account. In the SAP HANA service, you can create calculation views, which are then reused within the live data connection. In SAP Analytics Cloud, you only need to map the measures and dimensions of your calculation views to a newly created model. See Models Based on Live Data Connection HANA Views.

Once your models are created in SAP Analytics Cloud, you can start creating your story. A story in SAP Analytics Cloud is a dashboard, where you can visualize your data with charts and graphs. The story can be created and made consumable via mobile devices. See the SAP Analytics Cloud Stories documentation.

Bill of Material – SAP Cloud Platform Components for Licensing Considerations

Please note that the following Bill of Material is for reference purposes only. The following table is only an example of the SAP Cloud Platform services and components required for this use case.

Sales Item

Function

Licensing metrics

Example

SAP Cloud Platform Mobile Services

Quickly create and run native, hybrid and micro mobile apps with a mobile app development platform.

Named users

25 users

SAP Cloud Platform Internet of Things service

Develop, customize, and operate IoT business applications in the cloud

Per device in blocks of 100

500 devices

SAP HANA service

The most advanced in-memory database fully managed across multiple clouds

Hours of GB Memory in 16 GB Blocks

750 hours

Customers can use the SAP Cloud Platform pricing estimator to calculate the required investment for a particular project. Scale up or down on services as required.

Members and partners of SAP PartnerEdge* can evaluate the development of an application for this use case – most development licensing is covered by the packs offered by the SAP partner licensing services. Click here for details.

*excluding open ecosystem basic.