By Jason Lim
Country Manager, Vertiv Philippines
When it comes to digital transformation, the retail industry is arguably one of the first adopters of new technology. Online shopping has revolutionized the way retailers do business, forcing them to rethink new approaches to sustain customer interest. At the heart of it all, customer experience (CX) is key to driving business.
In the Philippines, online shopping is fast on the rise. Sure, there were some hesitations before and many still prefer the old-school window shopping experience. But according to studies, we now have a booming e-commerce industry that’s only expected to steadily grow over time. Poland-based discount coupon provider Picodi, in a recent report, revealed that mobile shopping accounted for 49 percent of retail transactions in the country in 2018.
The future of retail is digital
With the digital shift, there is growing pressure among retailers to deliver what experts are now calling the “bricks and clicks” experience – combining both the physical in-store experience and the digital/mobile platform. To be competitive and to stay competitive, retailers need not only focus on offering mobile or online shopping options, but they need to take it one step further by making shopping more experiential.
According to Datacenter Dynamics, there are seven technologies that will impact the future of retail:
1. Analytics – as things become increasingly digital and online, there needs to be a platform where retailers can store and process all the information that’s coming in. This is where retail analytics comes in, looking at everything from inventory levels, supply chain movement and market demand – everything that allows an organization to make smarter decisions;
2. In-store customer tracking – video cameras, Bluetooth and Wi-fi enable retailers to do “proximity marketing,” where, through an app, a store can push tailored notifications according to a customer’s activity;
3. Interactive signage and smart labels – interactive signage such as touchscreens allow a more personalized shopping experience providing immediate information such as discounts and promos, as well as product availability, making physical stores at par with online stores in terms of ease of access to information;
4. Smart Mirrors – also known as “virtual mirrors” or “magic mirrors,” this innovation enables customers to try on clothing, accessories or footwear without having to undress. Using a high-tech camera and sensors, the mirror can easily measure your body dimensions, and then superimpose clothing over the customer’s on-screen image. This technology is already being tested in some of the world’s global retailers;
5. Chatbots – while not as sophisticated as the Alexa’s or Siri’s of today, chatbots can act as a customer’s virtual assistant in providing in-store information such as product availability. At an operational level, chatbots can help lower the cost of retail operations by providing manpower support as well;
6. Augmented Reality (AR) – by creating a digital overlay for the physical world, AR can guide customers around the shop. When combined with a shopping cart functionality, these can simplify yet enhance customer experience;
7. Alternative payments – while not exactly popular, cryptocurrency may become an alternative mode of payment in retail. Some retailers in the U.S. are already accepting Bitcoin as an alternative mode of payment. We also have mobile payments available that can be used to pay for retail transactions.
These technologies will put the spotlight on the use of cloud, internet of things (IoT) and big data in retail. For retailers to succeed in this digital shift, they would need to adapt changes within their existing IT infrastructure support and enable the adoption of these technologies.
The competitive edge in retail
With the increased adoption of new technologies to improve the retail customer experience, retail organizations need to rethink their strategy when it comes to their digital infrastructure. From a traditional centralized IT network, there is now a need to shift focus towards the edge, or in distribution centers and warehouses to deliver products swiftly and accurately.
In a joint study conducted by Vertiv and Datacenter Dynamics, we spoke to 50 of the world’s top retailers to find out what their approach is to their digital infrastructure. In the study, titled “Into Uncharted Territory: Retail Transformation and its Impact on Digital Infrastructure”, we found that there is increasing focus on investing in technologies to support the data center. In fact, over the next two years, the amount of data center space dedicated to online retail – both on premise and colocation – is expected to increase by 20 percent, while cloud hosting would increase by 33 percent to support store applications.
Notably, an important part of the retail digital evolution includes a massive transformation of distribution centers. Distribution centers, such as warehouses, will increase by about 26 percent over the next two years as retail companies increasingly realign operations to meet consumer demand for online purchasing. The amount of data center space dedicated to distribution/logistics is expected to increase by 10 percent and the use of cloud hosting to support distribution will increase by 87 percent.
What this tells us is that organizations are rethinking their approach towards technology in providing the best customer experience. The important thing to note is this: customer experience is paramount. This means the overall supply chain of a retail organization needs to be faster and more responsive. The Amazon effect means every retailer is going to offer 1-2 day delivery – everything from furniture to cereal.
3 steps to maintain availability in your retail IT
How can retail organizations best prepare their infrastructure for the digital shift? As retailers, there is a need to invest in solutions that will enable you to maintain availability, plan and manage capacity in your organization’s digital infrastructure.
I’ve outlined here three steps that you can take:
Step 1: An intelligent, remote management solution to prevent IT failure and protect your revenue.
An intelligent, remote management software solution for the data center can enable IT administrators to access IT assets anywhere and anytime to easily manage, diagnose and fix issues. Vertiv’s full-suite of remote management solution, such as the Avocent Advanced Console Server, can give you a consolidated view of your IT infrastructure assets using just one software tool. This gives organizations the benefits of: faster repair time thereby keeping business operations normal; eliminating needless travel to any IT facility; and reducing overhead staff.
Step 2: An intelligent software tool to support future growth
To be agile to changing demands, a retail’s IT infrastructure needs a single pane of glass to document, visualize and manage current and plan future capacity in the data center. This is particularly true with the technological advancements and opportunities available for retail. With our Trellis system manager, your IT manager can have a view of power and cooling performance in the data center, as well as overall system performance. Visibility of all those aspects enable IT managers to rapidly make decisions with confidence, so they can deploy with speed and accuracy.
Step 3: Micro data centers – the ideal approach to standardization at the edge
As the retail experience becomes more personal, the value of the edge of the network increases as there is a need to provide service with speed and accuracy. Edge of the network locations, such as distribution centers and warehouses, need a different approach when it comes to IT assets.
Micro data centers are an ideal option for edge locations due to its compact, flexible and powerful features. Micro data centers combine power, thermal management, IT management, racks and containment in a single, pre-packaged solution that can be deployed virtually anywhere and can be operational within days. In addition, the standardization of IT assets allows you easily manage multiple edge locations, thereby reducing operational cost.
Vertiv’s portfolio of micro data center solutions range from the SmartCabinet, SmartRow Plus and SmartAisle solutions, each depending on the need and footprint of an organization.
You can learn more about how to achieve a competitive advantage in your retail business by visiting www.vertiv.com/RetailAsia.