🚧 The Role of Edge Computing for the Retail Industry

Embracing Innovation at the Frontier of Shopping Experiences

Customer experience has overtaken price and product as the key brand differentiator. New technologies like the Internet of Things (IoT) and Edge Computing help retailers support this demand with a more flexible, reliable, secure, scalable, and resilient in-store infrastructure.

As the industry prioritizes customer experience, the demand for robust and adaptable retail infrastructure has surged. This white paper delves into the intricacies of retail infrastructure, examining the shifting paradigms that underscore its importance, current IT infrastructure limitations, the relentless pace of continuous innovations, and the considerations for a future-proof infrastructure environment.

The Retail Industry is Changing Dramatically

Customers are changing their buying behavior rapidly, searching for a seamless transition between online and in-store experiences.

As the retail industry undergoes a profound transformation, propelled by technological advancements and shifting consumer behaviors, the foundation upon which retail operations are built becomes increasingly pivotal. Now more than ever, retailers are recognizing that success hinges not only on the products they offer but also on the seamless and immersive experiences they deliver to their customers. Consequently, the demand for robust and adaptable retail infrastructure has surged, driven by the imperative to prioritize customer experience in an intensely competitive market environment.

Prioritizing Customer Experience: A Paradigm Shift

Traditionally, retail success was often measured by sales figures and profit margins. However, in today's digital age, the focus has shifted towards cultivating meaningful and engaging interactions with customers at every touchpoint of their journey. With consumers increasingly expecting seamless, personalized interactions across all touchpoints, retailers are compelled to revamp their infrastructure to meet these escalating demands. This paradigm shift underscores the vital role of infrastructure in facilitating seamless omnichannel experiences, personalized recommendations, and frictionless transactions.

Retailers must now navigate a landscape where customer loyalty is cultivated not just through product quality but through the quality of the overall shopping experience. From online platforms to brick-and-mortar stores, every facet of the retail experience must be optimized to cater to the discerning preferences of modern shoppers.

Continuous Innovation is Required

Despite the imperative to enhance customer experience, many retailers find themselves hindered by the constraints of their existing IT infrastructure. Legacy systems, fragmented data silos, and rigid architectures impede agility and innovation, rendering it challenging to adapt to rapidly evolving consumer expectations. Moreover, the growing complexity of omnichannel operations exacerbates these limitations, underscoring the urgent need for a more cohesive and scalable infrastructure.

Legacy systems, developed over years or even decades, were often designed to meet the needs of a different era and struggle to adapt to the demands of today's dynamic retail landscape. Fragmented data silos, disparate software applications, and inflexible architectures hinder agility and innovation, impeding retailers' ability to respond swiftly to changing market trends and consumer preferences.

Today’s retail innovation is driven by digitalization. Many shops have closed their doors because they did not anticipate changes in customer buying behavior. Traditional retailers state that they cannot fight online retailers like Amazon anymore - and they’re often right.

Online retailers have taken on a large portion of ‘brick and mortar’ retailers’ business. This transition from physical to virtual buying exposes the lack of innovation in the physical space. Many retailers still use the same technology as a decade or more ago: point-of-sale (PoS) systems, one or more servers, and some external storage to host it all. Although functional, this design is often clunky, slow, and not secure or scalable when considered against an online retailer’s infrastructure design. More innovative retailers have digitized by installing security appliances, using an in-store digital promotion, offering free in-store customer Wi-Fi, and other modernization, but they still fall short of the flexibility offered by a virtual storefront.

In response to these challenges, the retail sector is witnessing a wave of continuous innovations aimed at redefining the infrastructure landscape. Advanced analytics, artificial intelligence (AI), and machine learning (ML) algorithms are enabling retailers to glean actionable insights from vast troves of data, driving more informed decision-making and personalized customer experiences. Internet of Things (IoT) devices are revolutionizing inventory management and supply chain operations, enhancing efficiency and reducing costs.

In-store IT infrastructure must become easy, flexible, scalable, and secure. Infrastructure that works for the retailer is ready to support in-store innovation and promote the new applications driving today’s customer data and tomorrow’s customer experience. New technologies like edge computing and the Internet of Things (IoT) will help to facilitate the needs of the modern retail store. Retailers must innovate to provide the experience customers desire and thrive in today’s market.

Introduction to Edge Computing

While edge computing isn’t a new concept, it has become increasingly important for almost every kind of organization. The central idea involves placing computing capabilities away from the data center and closer to where data is created and used.

Edge computing addresses the unique requirements of emerging technologies in retail by providing a decentralized computing model that enhances performance, reliability, security, and flexibility. It enables retailers to leverage the benefits of emerging technologies while overcoming challenges associated with latency, bandwidth, and connectivity of traditional infrastructure. Edge computing also unburdens networks by transferring some rather than all information to distributed locations, and it relieves centralized compute and storage facilities from handling all that data.

Edge computing makes the case even more compelling by incorporating virtualization and, in some cases, convergence (for example, hyperconverged infrastructure, or HCI). This means companies can do even more with infrastructure investment by running multiple applications and workloads on the same hardware.

With the growth in IoT devices, sensors, cameras, and more at distributed retail locations, there has been a sharp uptick in data generation, and pushing all of that data to and through a central data center or cloud no longer makes sense. It taxes resources and consumes bandwidth, and it can slow response time both to the edge and to other key systems, such as those for transaction processing.

By placing compute services at the edge, organizations can implement strategies that enhance content caching, IoT management, improving response time, and faster data transfer rates. This also represents capabilities that can’t really be matched by cloud technologies, while delivering those capabilities at a very competitive price point.

Evolution of Edge Computing

Edge computing has evolved over the years as a response to the increasing demand for faster and more efficient data processing closer to the source of data generation.

In the early days of computing, centralized mainframe systems were the norm. All data processing occurred in a centralized location, and users accessed the system through terminals. This model was effective for the time but had limitations regarding scalability and responsiveness.

With the advent of client-server architecture, computing became more distributed. Processing was distributed between machines and server systems, which improved scalability and responsiveness. However, most of the processing still occurred in centralized data centers.

The rise of IoT devices has led to a massive increase in the volume of data generated at distributed locations. Traditional cloud computing models struggled to handle these devices' sheer volume and low-latency requirements. And, certain applications, such as real-time analytics, require extremely low latency for optimal performance. This need for low latency drove the exploration of decentralized computing models that could process data closer to the point of origin. Instead of sending all data to a centralized cloud server, processing occurs at the edge devices or in local data centers.

As edge computing gained traction, industry players started working on standardizing architectures and protocols to ensure interoperability and ease of adoption. Various organizations and consortia have contributed to the development of standards for edge computing.

Exploring Alternatives: Why Cloud Solutions Might Not Suit Retail Infrastructure

Despite the undeniable benefits of cloud technology, including scalability, flexibility, and cost-efficiency, its applicability to the intricacies of retail infrastructure requires careful examination. While many industries have seamlessly transitioned to the cloud, retail faces unique challenges that warrant a more cautious approach.

In a recent survey, Citrix found that 42% of organizations are considering or already have moved at least half of their cloud-based workloads back to on-premises infrastructures, a phenomenon known as cloud repatriation. Why?

Cost. Increasing costs are a key reason for the repatriation of workloads, especially for organizations that have been leveraging the cloud for several years. What was once attractive has now become very expensive. From a TCO perspective, on-premises infrastructure is more attractive with a short payback term.

Integration Complexity. Retail operations are inherently complex, encompassing a multitude of systems, applications, and processes that must seamlessly integrate to ensure smooth functioning. Migrating these disparate systems to the cloud can be a daunting task, requiring extensive reconfiguration, data migration, and integration efforts. Compatibility issues between legacy systems and cloud platforms may further complicate the integration process, potentially leading to disruptions in operations and customer service.

Data Explosion. More devices create vast amounts of data, which only have value when properly collected and analyzed. Bandwidth for transferring all that data to a central data center, private or public cloud becomes impractical. Most data generated at a specific edge location is only relevant to that location. Real-time analytics at the edge is often required as well. Therefore, we have seen more and more data being analyzed locally on-premises, without requiring huge processing power in a central location.

Reliability and Latency. In retail, every second counts, particularly in online transactions and point-of-sale systems where delays can result in lost sales and dissatisfied customers. While cloud providers offer robust infrastructure and high availability guarantees, concerns persist regarding the reliability of internet connectivity and the latency of cloud-based applications. Retailers operating in regions with unreliable internet infrastructure or requiring real-time processing for latency-sensitive applications may find that the cloud introduces unacceptable risks to their operations.

Data Security and Compliance. Retailers deal with vast amounts of sensitive customer data, including payment information, personal details, and purchasing history. Entrusting this data to third-party cloud providers raises legitimate concerns about security and compliance. Compliance with regulations such as GDPR (General Data Protection Regulation) and PCI DSS (Payment Card Industry Data Security Standard) requires meticulous control over data storage, access, and processing, which can be challenging to achieve in a cloud environment where data is stored across multiple servers and jurisdictions.

The Role of Edge Computing for Retail

Edge computing provides retailers with the tools to minimize downtime, streamline operations, enhance customer satisfaction, and ensure the seamless flow of critical data for optimal business performance to meet and exceed the expectations of today's tech-savvy and time-conscious customers. Edge computing benefits include:

System Reliability and Uptime. Employs redundant systems, regular maintenance, and proactive monitoring to help minimize downtime, ensuring continuous service and customer satisfaction.
Offline Operation. Allows certain operations to continue even when there is a loss of connection to the central cloud. This is especially important in the retail industry, where continuous operations are crucial for business continuity.
Cost Savings. Reduces bandwidth usage and costs associated with transmitting large amounts of data to the cloud, enabling the use of smaller, less expensive hardware devices for local processing.
Reduced Latency. Minimizes the latency in data processing by performing computations locally for tasks like order processing, inventory management, and customer service.
Enhanced Efficiency. Handles specific tasks such as inventory management, monitoring equipment health, and processing orders, making operations more efficient.
IoT Integration. Enables real-time process of Internet of Things (IoT) devices, such as sensors and smart kitchen equipment that generate massive amounts of data, leading to better monitoring of food safety, equipment performance, and overall operational efficiency.
Data Security and Privacy. Helps keep sensitive data within the premises of the restaurant rather than transmitting it over long distances to a central cloud, enhancing data security and privacy, which is critical for compliance with regulations such as the Payment Card Industry Data Security Standard (PCI DSS).
Customization and Personalization. Facilitates on-site analysis of customer preferences and behaviors to customize offerings and provide personalized experiences based on real-time data, increasing customer satisfaction.
Supply Chain Optimization. Optimizes supply chain processes, including inventory management, order fulfillment, and logistics, which is particularly beneficial for ensuring the freshness and availability of food items.

Edge computing in the retail industry not only ensures operational efficiency, reliability, and enhanced customer experiences but also heralds a new era of data-driven decision-making, security, and personalized services, positioning retailers at the forefront of innovation.

Today’s Retail Applications are Connected

Historically, application development in the retail industry has produced large, monolithic applications designed with specific functionality in mind (warehouse management systems, scanning and pricing, etc.). These systems are traditionally interconnected through a complex web of point-to-point interfaces. These non-flexible infrastructure configurations constrain retailers from responding rapidly in the new and dynamic digital-physical environment. Instead, retailers must adopt new and agile applications to innovate a better customer experience.

We got rid of the chaotic infrastructure in the stores, provided a template for ALL stores, and are able to manage all stores from a single pane of glass. We’ve been able to consolidate the number of vendors and contracts and drive better economics. We created a Store-as-a-Service for ourselves and our franchisees. — Rolf Vanden Ynde, Manager Networking and Strategic Innovation, Delhaize

Innovative Applications are Connected

Innovative retail applications play a crucial role in the survival of retailers in today's competitive landscape. Those who fail to innovate risk facing significant challenges or even potential downfall. Many established retailers have already succumbed to this fate, largely due to the limitations of outdated, inflexible retail applications. These traditional systems, characterized by their rigid and stagnant nature, hinder adaptability and responsiveness to changing market dynamics. In contrast, forward-thinking retailers recognize the importance of embracing innovative applications that prioritize connectivity and flexibility. Innovative applications that consider connectivity and flexibility will be the key to driving customer data and subsequently better customer experience.

Operational Applications

There are two different types of software applications. The first comprises operational applications, which encompass a range of functions essential to the day-to-day operations of a retail establishment. These applications handle tasks such as pricing software (traditionally executed) and product labeling. Operational software pushes the price and weight data to scales, assists in inventory management, and helps to manage the security software covering the retail location(s).

Operational applications also extend their influence to energy management systems deployed in physical store locations. Given that many retail outlets still rely on conventional heating and air conditioning systems, operational software is often tasked with optimizing energy consumption to minimize costs. Additionally, as concerns surrounding energy usage, loss prevention, and security continue to grow among retailers, operational applications are increasingly relied upon to address these challenges.

With the proliferation of IoT devices and other intelligent systems deployed in-store, the risk of security breaches has heightened. Retailers must remain vigilant about the potential vulnerabilities associated with these technologies and reassess their security priorities accordingly. Safeguarding sensitive data and fortifying security measures within retail environments are imperative tasks to mitigate the risks posed by cyber threats and ensure the continued integrity of retail operations.

Applications Drive Customer Intelligence

The second type of software application encompasses strategic or analytical applications that drive customer intelligence. These applications are geared towards analyzing data, generating insights, and informing strategic decision-making within the retail organization. Unlike operational applications, which focus on day-to-day tasks and operational efficiency, strategic applications delve into broader business objectives and long-term planning.

Strategic applications may include business intelligence (BI) tools, predictive analytics software, customer relationship management (CRM) systems, and enterprise resource planning (ERP) platforms. These applications gather data from various sources, including sales transactions, customer interactions, market trends, and operational metrics, to provide retailers with actionable insights and strategic recommendations.

Retailers today face the challenge of adapting to the changing landscape of customer behavior, particularly as more shoppers utilize smartphones to browse products in-store before making online purchases. To address this shift, retailers are turning to innovative software applications that drive customer intelligence, bridging the gap between physical and digital shopping experiences.

One such application is location-based beacon technology, which leverages sensors to track a customer's path through a store. This technology provides valuable insights to improve store layout and enhance the in-store experience. It also opens up possibilities for real-time personalized recommendations and promotions, enriching the shopping journey for customers.

Game-changing technologies like augmented reality/virtual reality (AR/VR)can empower retailers to introduce immersive experiences in-store, particularly in segments like beauty and apparel. "Virtual try-ons" of makeup or clothing can revolutionize the customer experience, allowing shoppers to visualize products before making a purchase decision.

Intelligent electronic shelf labels represent yet another innovative application. They enable retailers to track customer selections and drive engagement at the point of decision. Micro digital signage devices strategically placed near products can deliver customized offers based on customer interactions, enhancing product visibility and driving sales.

Consumer applications further augment the retail experience by allowing shoppers to prepare shopping lists at home and receive guidance on efficient product retrieval in-store. Coupled with checkout technologies, retailers can analyze customer shopping behaviors, distinguishing between planned purchases and impulse buys to inform future marketing strategies.

These applications, among others, form an interconnected ecosystem that revolves around the consumer. By gathering and analyzing customer data, innovative retailers can optimize pricing strategies, identify growth opportunities, unlock deeper insights, and drive more meaningful interactions with their customers. These applications play a critical role in driving innovation, fostering competitiveness, and ultimately shaping the future trajectory of the retail organization.

"To make these kinds of retail experiences work in practice, you need near-instantaneous response times, to process large amounts of data, and to keep customer details completely secure—all of which are ideally suited to an edge-based solution." — Accenture

Innovation at the Edge Requires Innovative Infrastructure

Hyperconverged infrastructure (HCI) is a simple and easy-to-use platform combining compute, storage, and virtualization in a single solution. In most cases, HCI can be deployed rapidly and much easier than traditional infrastructure. HCI also allows better streamlining of IT operations and reduces management footprint by automating many of the common management tasks. Hyperconverged infrastructure is highly available–by design. This high availability reduces planned and unplanned downtime and will typically mitigate what would have been a disaster in a traditional infrastructure design. Hyperconverged systems are intended to scale. Once an HCI solution is implemented, expanding compute and storage capacity is easy to do and typically completed in minutes.

In some cases, how HCI is delivered is not in line with the above: simple and easy. Some infrastructure vendors offer an “HCI” layer on top of various complex products, hiding the complexity. It looks simple, but underneath these solutions are complex and difficult to manage.

In the retail industry, edge computing ensures system reliability, offline operation, cost savings, reduced latency, enhanced efficiency, IoT integration, data security, customization, and supply chain optimization, ultimately improving customer satisfaction and business performance.

Overall, the future of retail IT infrastructure is marked by increased automation, agility, and responsiveness. These enable businesses to adapt to changing customer preferences and market dynamics while delivering seamless and personalized dining experiences—at the edge.

Scale Computing Platform

Cultivate more seamless, personalized customer experiences and spend less time managing infrastructure. Combine virtualization, IoT, and edge computing with an adaptable infrastructure that streamlines retail IT operations and provides major opportunities to enhance the customer experience while also lowering costs.

SC//Platform allows your traditional applications—such as point of sale, inventory management, and video security—to run alongside new transformative technologies such as IoT applications, contactless checkout, AI customer identification, real-time pricing, freezer and cooling systems, and electronic shelf labels.

Lower TCO

When considering a new IT infrastructure solution, the acquisition cost of the hardware and software to stand up the infrastructure is only the starting point for cost analysis. It is important to look into the operational costs of deployment, training, licensing, scale-out, downtime, and management.

Reduce IT infrastructure costs in almost every way. Hidden IT infrastructure costs such as unplanned downtime, management, maintenance, training, and consulting are reduced to almost nothing.

Consolidate Retail Applications and Infrastructure

Compute, storage, virtualization, and disaster recovery are combined into a single, easy-to-use platform. Eliminate the cost and complexity of caring for separate hardware and software to support individual point solutions. Even run legacy and modern applications on the same infrastructure.

High Availability

Provide multiple backup and disaster recovery locations, and options to minimize or eliminate downtime and flexibility for data storage and application growth for critical on-premises applications.

Designed for locations with no IT staff on-site, autonomous, self-healing capabilities maximize application uptime and performance. Failover, redundancy, and resiliency are fundamentally designed into every aspect of the solution to create a highly available, reliable computing environment unlike any other.

Flexible Scalability

Easily scale up or down as needed with exclusively cloud-based management, including templated security and zero-touch deployment.

Centralized Edge Management and Orchestration

Centralized management provides instant visibility into the state of your entire in-restaurant environment, highlighting issues that may require attention or jeopardize application availability. By remotely orchestrating software updates, hardware swaps, and new infrastructure setups, skilled technicians no longer need to go onsite to manage environment.

Built-In Data Protection

SC//HyperCore’s architectural flexibility and native backup and recovery are unmatched in avoiding data loss. Scale Computing HyperCore integrates with leading advanced backup and proactive ransomware third-party software vendors, to take data protection to any level stores may need.

Containers

SC//HyperCore provides a highly available and resilient container runtime environment with lower management effort for containers.

Cloud-init Customization with REST-APIs. SC//HyperCore includes cloud-init customization via REST-APIs to enable infrastructure-as-code so developers and administrators can automate otherwise very manual processes. With cloud-init, mass provisioning of customized VMs becomes possible, saving time by automating steps in site and application setup. Another benefit is the consistent change control and more reliable updates through standardization.

Consistent Performance Across Locations

Achieve consistency in application performance across multiple locations by leveraging the standardized virtualized environment. Ensure a uniform and reliable customer experience regardless of the restaurant’s physical location.

Related Resources

If you would like to know more about Scale Computing Platform for retail, please contact your local Scale Computing representative or email info@scalecomputing.com.

The Role of Edge Computing for the Retail Industry