Story image

Retail transformation fuelling data centre boom

01 Nov 18

Digital transformation is rife around the world and nowhere is that more apparent than in retail.

As customer expectations continue to grow, retailers are racing to deliver more unique and personalised customer experiences through the use of cloud, IoT, and big data in stores, online channels, and distribution centres.

Despite this, a new report co-sponsored by Vertiv and DatacentreDynamics revealed that one quarter of retailers are still lagging in the process of adopting new technologies and integrating them across operations.

Participants of the report (Into Uncharted Territory: Retail Transformation and its Impact on Digital Infrastructure) included executives from 50 of the world’s largest retailers with a combined annual revenue of US$953 billion in 2017.

And according to the report, the continued focus on online retail has seen a dramtic change to businesses’ digital resources, which has driven Vertiv to forecast the amount of space dedicated to online retail to increase by 20 percent over the next two years, while cloud hosting is expected to climb 33 percent to support store applications.

A particular area that is undergoing significant change is the retail distribution centre. The research suggests the number of distribution centres will surge 26 percent over the next two years as a result of retail companies increasingly transforming their operations to meet customer demands for online shopping.

Because of this, the amount of data centre space dedicated to distribution/logistics is forecast to rise by 10 percent, while the use of cloud hosting to support distribution will skyrocket by 87 percent.

“It's no secret that online retail is driving significant IT investment for retailers. However, as this study makes clear, digital transformation in the retail space is about more than e-commerce,” says IHS Markit data centre infrastructure analyst Lucas Beran.

"Today’s retailers are striving to improve the IT systems in their stores and distribution centres as they pursue impactful customer experiences across all interactions with their brand. More business-critical online, distribution and in-store environments require new approaches to physical infrastructure to increase IT reliability, speed time to market, hold down costs and reduce management complexity.”

As Beran alludes to, it’s not just the distribution centres that are flourishing but also in-store tech, as retailers adopt more computing power to support edge computing types of applications to offer greater customer influence at the point of use.

“Retailers are going to move more IT footprint into the stores, to communicate with customers and to influence them closer to the point of decision,” says Vertiv global edge and integrated solutions vice president Martin Olsen.

“Our forecast for the next couple of years shows about two dollars going into stores and distribution for every dollar spent in the core data centre. And much of that data centre investment is being made to support online and stores.”

In an attempt to support their transformation, Olsen says retailers are increasingly turning to standardised modular data centre designs that are easy and fast to deploy with high reliability.

The new world of edge data centre management
Schneider Electric’s Kim Povlsen debates whether the data centre as we know it today will soon cease to exist.
Can it be trusted? Huawei’s founder speaks out
Ren Zhengfei spoke candidly in a recent media roundtable about security, 5G, his daughter’s detainment, the USA, and the West’s perception of Huawei.
How HCI helps enterprises stay on top of data regulations
Increasing data protection requirements will supposedly drive the demand for Hyper-Converged Infrastructure solutions across the globe.
Vodafone and PNSol champion new ‘invisble network’ broadband project
"As an industry, we've increased the speed of broadband to one gigabit and beyond, which is a remarkable achievement, but we now have to look beyond speed."
Top 3 cloud computing predictions – what’s in store for 2019?
Virtustream's Deepak Patil shares his predictions for how cloud computing will evolve in 2019.
London’s pricy data centres allow Frankfurt to overtake
According to a new report, data centre pricing in the UK is among the highest in Europe, which is seeing other countries prosper.
Rubrik welcomes $261m funding for new market expansion
The company intends to use the funds from new investor Bain Capital Ventures will go toward future innovation and expansion.
Survey finds retailers 'bullish' on hybrid cloud adoption
The retail industry takes no prisoners and that’s made clear in its 'on the pulse' adoption of new technologies.