How retail digitalization is driving date centre expansion
Thu 1 Nov 2018
A new report from Vertiv has revealed how digital transformation has impacted the data centre requirements of major international retailers
The rapid evolution of digitalization has left consumers expecting an enhanced and flawless service when interacting across retail channels, prompting retailers to rush to leverage IoT, cloud, and big data to get ahead of competitors and deliver unique customer experiences.
To investigate the impact of these initiatives on the infrastructure supporting retail, Vertiv partnered with Data Center Dynamics to interview executives from 50 major retailers with a combined annual revenue of $953 billion.
Survey respondents were responsible for 420 in-house data centres and 522 smaller distributed data centres, spanning 3.5 square feet and with 473mw combined power capacity.
While bricks and mortar retail will continue to favour in-house facilities supported by colocation, external hosting and private/hybrid cloud systems, the predominantly logistical operation needs of online retailers will drive production of more distributed data centres alongside distribution centres.
According to the report, retail distribution centres will receive a 25% increase in investment over the next two years, as consumer expectation for services like next-day delivery normalises.
The report shows a stark polarisation between those firms well underway with digital transformation compared those just getting started.
Only 4.2% of the 10 least digitally advanced companies expect distribution centre numbers to increase over the next two years, compared to 52% among the 10 most progressive companies.
There are also notable differences in how physical, online and logistical operations are embracing new technologies.
Data centres supporting physical stores are being rapidly equipped with technologies for big data analytics, reporting, WI-FI customer tracking, and real-time inventory access, although data centres supporting distribution centres are more readily embracing IoT technology.
Overall there is little evidence of sufficient distribution at the IT architectural level to support edge computing.
“This represents one of the major capability issues that may be holding back the sector in terms of reaching and impacting the customer,” the report reads.
All retailers are reporting high levels of business criticality associated with data centres. Physical and online retailers estimate the cost of data centre downtime to be around $1.1 million per hour, with distribution data centre failure alone costing $875,000 per hour in logistical interruption.