The retail industry faces a period of great change. Increasing supply chain costs, economic uncertainty, and poor consumer confidence are putting pressure on margins.
Meanwhile, global sourcing strategies that rely on low-cost manufacturing hubs are being re-evaluated due to tariffs, shipping disruptions, and geopolitical tensions.
Martin Ryan, VP Retail at EPAM, comments: “Retailers are considering alternative supply routes and nearshoring options to reduce risk, but this often comes with higher labor costs. Along with low consumer demand, retailers are concluding that the old way of operating is no longer sustainable.”
Reimagining business models and supply chains
Retailers are therefore experimenting with new business models. Fashion brands and retailers such as H&M and Selfridges now allow consumers to rent rather than buy items. New competitors such as Rent the Runway, Nuuly (owned by Urban Outfitters) and Vivrelle have emerged specializing in this market.1 Other retailers offer aftermarket services, such as Currys’ repair shop,2 and Marks & Spencer’s alteration service.3
These and other opportunities promise better margins but require new capabilities. Take the example of a fashion retailer moving into clothing rental. This is a major operational change, as systems need to be reengineered to manage dynamic pricing, returns logistics, garment refurbishment, and new customer service workflows.
Rewiring supply chains brings other challenges. Legacy inventory systems were built for fixed suppliers and warehouses, serving predictable customer demand through a retailer’s stores. Today, however, retailers are sourcing from multiple suppliers and routing goods through different ports, third-party logistics providers (3PLs), and facilities. That requires more flexibility in systems controlling inventory, allocations and logistics.
Retailers are struggling with legacy systems. Ryan explains: “Legacy systems are slow to adapt because they’re old and poorly documented. They’re risky to change because they often sit at the heart of revenue-critical operations. And they’re expensive to modify since the specialist talent needed to maintain them is scarce and the testing overhead is high.”
Modernizing retail operations on the cloud
The cloud plays a crucial role in modernization efforts. The global market for retail cloud was valued at $28.3 billion in 2024 and is projected to reach $81.3 billion by 2030, growing at a compound annual growth rate of 19.2% from 2024 to 2030.4
Platforms like the Microsoft Azure can help retailers modernize by giving them a flexible, scalable foundation on which to replace their legacy systems. With built-in features such as AI, analytics, and automation, cloud platforms enable retailers to build more flexible inventory management, more resilient supply chains, and accelerate the launch of new business models.
According to Ryan, retailers looking to shift systems to the cloud should take a measured approach: “Retailers should take a risk-adjusted approach to migration, taking the opportunity to modernize their technology stack at the same time as introducing new functionality and flexibility, using the power of cloud to accomplish this on an accelerated timeline.”
Tailoring the approach comes down to understanding the type of system, the scale of the change, the risks involved, and how operationally critical that system is.
“Partners like EPAM can help map a retailer’s ambitions against the reality of their current technology,” says Ryan. “From there, they can design a roadmap that aligns business goals with technical feasibility, setting out a sequence of changes that gets the retailer where they need to be.”
The challenges facing retailers are here for the long term. Those that undertake their modernization journey quickly will be more likely to thrive.
1 Vogue, “Thinking About Fashion Rentals? Consider These 6 Services,” 2025
2 The Guardian, “Alex Baldock: the Currys boss plugging into a more sustainable future,” 2024
3 The Guardian, “Marks & Spencer to launch clothing repair and alterations service,” 2024
4 RESEARCHANDMARKETS, “Retail Cloud Industry Opportunities, 2025-2030: Increasing Use of Cloud-Based POS and Inventory Management Systems Expands Addressable Market,” 2025
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