As part of its efforts to take its digital business to the next level, Gap Inc. (GPS - Free Report) signed a five-year deal with Microsoft Corp. (MSFT - Free Report) for availing the latter’s cloud services. Pursuant to the deal, Microsoft Azure will be Gap’s key cloud provider.
Retailers are lately choosing to shift to cloud-based services as these provide a wider range of real-time facilities that traditional data centers do not provide. Further, these cloud-based services are cost-effective and provide speedy access to data.
The aforementioned deal also gives Gap the access to cloud-based Microsoft 365 services, which ensures robust security, reliability and user productivity. This is likely to equip Gap’s employees with better ways to converse, work together and share information with one another, without putting the company’s security at stake. Further, the deal gives access to Microsoft’s Power BI business-intelligence software that empowers Gap employees to visualize and act upon information to provide better customer experience.
With this partnership, Gap expects to craft enhanced customer experiences for all its brands, including Old Navy, Banana Republic, Gap, Athleta, Hill City and Intermix. The company remains keen on developing newer technologies while also enhancing speed and flexibility through its latest deal. It expects the Azure platform to improve its capability to attract customers with innovative and personalized experiences along with improved speed.
The Azure platform also enables the company to create and centralize its database. This data can be used for analysis to get a better understanding of customers across channels and provide personalized merchandising, advertising and service for all brands.
Gap’s deal with Microsoft is another instance of a retailer preferring Microsoft over Amazon’s (AMZN - Free Report) cloud services. Earlier, we have seen Wal-Mart (WMT - Free Report) sign-up for Microsoft’s cloud services. Also, the industry witnessed some other interesting deals for cloud-infrastructure with Google .
Notably, Amazon is a leader in the cloud infrastructure business. However, it is also a dominant player in retail, giving strong competition to the bigwigs in the retail space. This is probably the reason why most retailers opt for cloud services of Microsoft and Google against Amazon. Clearly, retailers are inclined to safeguard their database and prefer a cloud-partner that is not their competitor.
We believe that Gap’s partnership with Microsoft is likely to aid in Gap’s efforts to boost e-commerce and omni-channel businesses alongside enabling efficient management across the organization. This should speed upthe company’s digital transformation efforts while also providing enhanced customer experiences.
Shares of Gap declined 1.3% on Nov 9 despite the big cloud deal. Further, this Zacks Rank #3 (Hold) stock has decreased 11.7% in the past three months, wider than the industry’s decline of 4.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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