The Impact Data Centers Have on the Retail Industry
By: Kayla Matthews on March 4, 2019
When people shop for things — whether online or in physical stores — most don't think about the data centers working in the background that let those stores keep operating.
The dependence the retail sector has on data centers is already substantial, and it will go up as retailers start using new technologies.
Retailers Frequently Opt for Colocation
Retailers that deal with data have to decide whether to use in-house data centers or work with a colocation provider. The latter option allows them to rent space in an existing data center set up to accommodate numerous other clients. Taking this approach is ideal if retailers don't have sufficient infrastructure or cannot afford to invest in creating it.
Plus, colocation allows retailers to scale up their needs easily. That's essential since times of peak demand, such as the holiday season, could cause a store to have above-average data needs. It's not a stretch to think of retailers and data centers as supporting each other.
Retailers pay for data center services, thereby helping those facilities continue to exist. And, data centers help retailers use and manage data in ways they otherwise couldn't.
Data Centers Help Retailers Stay Reliable
People in today's society are accustomed to going to a website, choosing an item, and finalizing the transaction all in a matter of minutes. Even the individuals who plan to buy things in stores often go to brands' websites first to check pricing or reserve items to pick up in person. If retail sites don't work, people immediately feel frustrated and disappointed.
Data centers help reduce the likelihood of such outages. Their equipment can handle fluctuations and heavy loads, and most providers have uptime guarantees to reassure retailers that they shouldn't worry about frequent issues.
Walmart recently began engaging in several strategies meant to help it compete with Amazon. The retailer has physical and online presences, and data centers make both of them possible. For example, during the most recent Black Friday rush, Walmart staffed its customer reliability center with employees 24 hours a day. If shoppers ran into problems, they could call that number and get the issues triaged.
The retailer also goes through "stress tests" that mimic how customers behave while shopping. Then, based on the outcomes, the retailer aims to adapt before problems happen. The customer reliability center is a data-heavy place, too. The people working there can see information representing all of Walmart's in-store and online.
Walmart is only one example of a retailer that uses data to give consistent experiences to customers. Retailers often use enterprise resource planning (ERP) software to manage core business practices. Many have cloud-based ERP solutions, and data centers help those platforms function. It's not surprising that analysts predicted a 16 percent increase in the combined annual growth rate (CAGR) of enterprise cloud spending from 2016 through 2026.
New Technologies Causing Data Increases
Even the retailers that have modest websites or operate brick and mortar stores that only have internal computers, those entities still generate information that makes them need data centers. And, many forward-thinking brands are using technology in innovative ways that account for substantially more data.
As a start, stores use artificial intelligence (AI) to recommend products to customers, assist with payment processing needs and facilitate product deliveries. All those applications generate data and sometimes require real-time processing.
Internet of Things (IoT) sensors open opportunities for retailers, too. Some use sensors that track the number of people in a store or even allow shoppers to buy things in low-staffed or unstaffed stores where consumers pick out what they want and pay for it without interacting with employees.
Moreover, the brands experimenting with how technology could help people shop with limited or no employee interactions typically have complex security equipment such as cameras and weight sensors that try to prevent shoplifting.
Companies are also designing smart shelves that digitally distribute information to shoppers. Many have screens that show people the nutrition facts of an item, alert them of limited-time offers or clarify which things have potential allergens. Unlike the information on a traditional shelf, content changes when promotions occur or stores alter their layouts
Data Centers Are Essential for Retailers' Competitiveness
As brands and tech developers continue to envision how advancements could benefit the retail sector at large, people will inevitably notice other tech-based improvements at stores. Others work in the background where shoppers may not interact with them but would see the effects if a retailer's data center provider failed.
Data centers help retailers compete in an increasingly challenging landscape, and that will remain true for the foreseeable future.
About Kayla Matthews
Kayla Matthews writes about data centers and big data for several industry publications, including The Data Center Journal, Data Center Frontier and insideBIGDATA. To read more posts from Kayla, you can follower her personal tech blog at ProductivityBytes.com.