Data Center

Seismic Shifts in Consumer Buying and Digitalization of Shopping Reveal How IOT and Edge Computing are Essential in the Changing Retail Scene

One thing we all have in common is that we shop. Some of us routinely order groceries online while others try on diamonds at Tiffany’s or test drive sports cars at dealerships. Whether a chore or a splurge, shopping is a fact of life. So, we all have our own personal vantage point from which to view the seismic shifts that are taking place in the retail industry through the digitalization of shopping and changes in buying behavior.

Every day, we hear of established retailers like Macy’s, Toys R Us, J. Crew, Sears, and J.C. Penney shuttering stores and others filing for bankruptcy. Nine thousand stores closed in the United States in 2017, and a record 12,000 are expected to close this year.*

But amid the doom and gloom, a few stores are opening.

Touted as the store of the future, Amazon’s new convenience market opened recently in Seattle and Amazon Go was newsworthy for what it didn’t have: lines of impatient shoppers, checkout counters, or cashiers waiting to tally your items.

It’s no surprise that Amazon, an online retailer that prides itself on offering the earth’s largest selection of everything, has harnessed technology to make check out a thing of the past. Instead, an app charges customers when they leave. For many customers, speed and convenience are the point. The app tells them exactly how long they visited the store. A customer can enter, grab lunch, and leave in less than a minute.

two women shopping in a mall

Some established online retailers are introducing stores to connect with customers firsthand. One such company is Rent the Runway, an e-commerce brand where customers rent designer dresses. Rent the Runway was founded in 2009, and after building a strong online presence, it opened showrooms, which have been described as dream closets, in a handful of United States cities starting in 2013. The stores feature check-in kiosks so store associates know the online interests of customers, and stores offer personal stylists, a further differentiation from traditional retail stores.

“It’s more like a club, or a place that you feel like you’re kind of a member of,” Maureen Sullivan, president of Rent the Runway, told CNBC in December of 2016.

Recently, company leaders have said Rent the Runway wants to be more than an extension of a customer’s closet. It wants to be a “closet in the cloud.”**

I believe this trend is evidence that consumers crave retail shopping experiences because, in person, you get to see the merchandise, you can touch the fabric, compare one product to another in a tangible way, make it social by shopping with friends, and those aspects of shopping get lost online with the focus on speed and convenience.

What is happening in retail reminds me of when DVDs came on the scene and people predicted the demise of movie theaters. Everyone was going to stay home, microwave bags of popcorn, and watch DVDs in the comfort of their own four walls! Instead, we witnessed many multiplexes transform themselves by installing bars and comfortable furniture. Instead of getting popcorn at the snack counter, moviegoers could order appetizers to be conveniently delivered to their seats while they watched the film.

In the same transformational way, I believe the future will hold a mixture of online shopping and shopping at physical locations but the two will continue to become more tightly interconnected. Brick and mortar shops, where the overwhelming majority of goods are purchased,*** will be using more technology than ever, such as virtual dressing rooms where you can try on clothing without the hassle of getting undressed.

A colleague recently experienced this embrace of technology by retailers when she went shopping for a TV. She saw the model she wanted, compared it to others, and heard all about its benefits, only to learn it was sold out. The clerk suggested she order it from the retailer on her phone. So, instead of waiting in a long checkout line and dragging an enormous box to her car in the hope that it would actually fit in her car, the TV was delivered to her home. Now that’s convenience.

At Schneider Electric, we know all this technology in stores means an enhanced dependence on cloud-based applications. Therefore, edge computing will continue to become even more critical to the overall data center solution. To manage these expectations, we need to think broader and embrace the complex data center ecosystem of cloud, regional, and edge computing, and invest in solutions for a more resilient edge.

The digital transformation is happening to industries across the board but retail is one industry where all of us can see the changes as they are happening, especially when we visit our favorite store only to discover it has shut its doors for good.

*http://www.businessinsider.com/store-closures-in-2018-will-eclipse-2017-2018-1

** https://www.cnbc.com/2017/10/16/rent-the-runway-is-expanding-its-fashion-subscription-service.html

*** https://www.forbes.com/sites/michelleevans1/2018/01/18/new-technologies-that-will-change-how-consumers-shop-in-store/#6919bdc45fc9


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