Why Data Centers Are Important for the Retail Industry

Data centers are vital components of retail operations in the modern world, delivering digital services and online customer experiences. Shoppers now demand a highly personalized and relevant experience when interacting with brands, be it online or in a local store. Tailoring a campaign or experience to individual customer needs requires a great deal of data and information.

How much data? Online retail marketplace eBay processes 300 billion data queries each day (that’s 300,000,000,000), with a data footprint exceeding 500 petabytes – enough to backup the American Library of Congress more than 300 times.

Thanks to modern technologies, retail has become a data-driven market, creating demand for data storage and computing power to process and analyze transactions. Nearly every retail business — from big to small — now has access to a data center of some kind, whether local or outsourced.

Businesses today thrive on data. They require information about their customers and habits, their performance, their sales and promotions, the current market they compete in and much more. But what is a data center in the context of retail? What  problems can they solve?

Why Do Retailers Need Data Centers?

Online retail and e-commerce is, in large part, an extension of physical and conventional retail. There are many companies that exist only in a digital and online space, with Amazon being the largest and eBay being another substantial player. Now major brick and mortar retail companies are also focusing heavily on their online experiences, deploying more mobile shopping apps as consumers increasingly use smartphones for in-store comparison shopping.

When retailers market products to customers through the internet, they need strong, reliable online infrastructure and support. Data centers provide that, particularly through advanced IT services and solutions. All manner of companies now rely on data center services and cloud computing to support and optimize their e-commerce and online applications. In retail specifically, they are generally for one purpose — to handle the flow of data.

Here are just a few of the ways that retailers use data centers.

Colocation

Colocation support allows retailers to move their critical and sensitive data to a remote location, more commonly housed at a world-class data center.

These data centers are outfitted with the latest technologies and security solutions, as well as a highly capable and experienced team who expressly deal with such matters on a day-to-day basis. Offsite colocation services let retailers focus on what they do best — catering to customers — instead of devoting too much of their resources to data center necessities.

Increased Reliability

The more capable and proficient use of professional data center systems can provide a much higher guarantee for reliability and network availability.

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Increased uptime means fewer interruptions for employees and customers alike. All businesses can potentially suffer from lost profits due to downtime, but that’s arguably especially true for retailers. Those entities measure lost profits, as well as reputational damage, by the minutes a website is unusable.

A survey of retail managers found 72 percent reported lost profits due to website downtime. But they also said downtime hinders employee productivity, customer loyalty and overall business operations.

Indeed, the total cost of downtime for a retail establishment isn’t always immediately evident, but the amount grows as the outage persists. As such, retailers appreciate the reliability of data centers, knowing that characteristic could directly translate to increased competitiveness.

Instant Scalability

In retail, engagement and performance are constantly fluctuating especially during promotions. Seasonal events, such as the holiday shopping rush, the start of college semesters and weather patterns could all cause retail spikes. When Amazon kicked off its recent Prime Day event, shoppers purchased more than 100 million products from the site. Data centers make such traffic upticks possible, facilitating smooth transactions for customers.

Data centers are the go-to for scalability support because they can instantly handle the changes in web traffic and engagement to need the needs of the business. With proper configuration, this can happens in the heat of the moment with little to no interruptions to customers and active service.

Unprecedented Levels of Security

Data centers are equipped with the latest security mechanisms, devices and tools to ensure that both physical components and digital content are securely handled and stored. They can also support customers with compliance requirements.

Retail targets are especially lucrative to hackers. Not only could cybercriminals orchestrate infiltrations that disrupt operations, but they could seize shoppers’ details and sell them on the black market. A 2017 survey from the United Kingdom found retail hacks doubled within a year.

Moreover, the worst retail hacks spark personnel changes. The 2013 Target data breach triggered a profit loss of more than $148 million, and the CEO resigned after the incident.

The long-lasting ramifications of retail hacks mean that retailers have an exceptionally high need for security within their online applications. Plus, the recently implemented GDPR requires security in another way.

When data centers prove they have top-notch security and comply with all applicable laws, those advantages remove burdens from retailers.

Always-On Support

Data centers offer 24/7 support to customers including through chat, phone and remote monitoring platforms. Data backup solutions are also regularly maintained and optimized to ensure all sensitive data is secure. These advantages are especially worthwhile to retailers as they operate websites that never close like physical stores do.

Simply put, without many of these solutions in place a retailer’s IT infrastructure and systems would be sub-par, and that’s in the best of scenarios. Retailers — big and small — just don’t have the resources to maintain these networks internally.

New Technologies

People exiting the Amazon Go grocery store in Seattle. (Photo: Sikander Iqbal via WikiCommons )

Retail has emerged as a key focus for the deployment of new technologies. Amazon has moved from online to a brick-and-mortar store with its Amazon Go concept store, which allows shoppers to grab products and walk out, with no cashiers. Transactions are tracked through the shopper’s mobile app and sensors on products.

In addition to some of the common uses of a data center in retail are the more modern or bleeding-edge solutions many organizations are just starting to dabble with. An excellent example is innovative digital signage such as the Magic Mirror AR-based technology.

Many of the newer solutions are methods to provide unique and innovative forms of customer experiences, particularly within stores. They give shoppers an even bigger incentive to visit a location physically, rather than buying online or through a catalog. More and more retailers are successfully leveraging virtual and augmented reality technologies, though analysts predict such platforms won’t fully take off until at least 2022.

The data center element of these newer technologies is that they must be able to sync with remote systems in various ways. Companies will need to collect user data to better inform future strategies and campaigns, which is just one form of data flow. In many cases, the apps and experiences themselves require a constant connection to data networks.

Take the IKEA Place AR app, for instance. It allows IKEA customers to overlay real furniture and store products anywhere to give them the chance to see what an item might look like in their home, rooms or out in the world. A constantly updated catalog of items and goods requires an open connection to the resulting network, which — as you might have guessed — requires a remote data center to handle the operations.

Even a simple solution like IKEA’s — though brilliant — requires direct access to a data center. For this reason and the others described above, one can easily see why data solutions are so vital to the modern retail industry.