Retail Supplement

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4. The state of retail Shops shut, people stayed at home. All change in shops What did 2020 do to shoping? 6. AI in aisle six hopping is a basic Goodbye to cashiers? AI is driving massive changes for retailers social activity, but it's There's another option. Why changing fast, hit by not take automation the whole 9. Advertorial: Visibility and Monitoring in multiple revolutions, way, and do away with cash, tills, an Omnichannel World in e-commerce and in- checkouts, and anything which store technology. delays the customer from getting 10. Pushing retail to the Edge SWe've rounded up the most their goods and leaving? Faced with online commerce, shops important and far-reaching retail It's the highest of high-tech need to be smarter about technology transformations of 2020 and 2021. solutions. These outlets bristle with cameras, and customer 12. Frictionless retail Pandemic reaction convenience is provided by a level Cashierless shopping needs lots During 2020, the Covid-19 of surveillance which would give of cameras, compute... and trust pandemic struck. Shops shut and privacy campaigners conniptions. people started ordering online. And cashierless shops would 14. Not the droids you wanted? Suddenly, all the predictions of simply not be happening, if Behind the hype, not all is the death of the Main Street came Amazon weren't pushing the idea well in the robot workforce back - and this time, maybe they with its Go outlets. If the giant would come true (p4). succeeds, everyone else will need The reality is more subtle, of an answer (p12). course. Our best guess is that shops will continue to exist, but will go to Smarter service extremes: either offering speed and Before we go think of going no fuss, or else a leisurely hands-on cashierless, all retail outlets are experience where you get time to using increasing amounts of data, make sure you're getting exactly with activities empowered by ever- what you want. smarter AI. If you want to serve your In-store automation customer, it pays to know what Point-of-sale (PoS) systems have they want - before they know it been getting smarter for some time, themselves, if possible (p6). of course. Grocers have moved to All change for robots automated checkouts and self Finally, automation is increasingly checkouts. CCTV has been taking on the physical work of connecting to inventory and other shopping - but robots are no systems (p10). panacea (p14). These may be specialist systems, Warehouse robots make great but they fall into a generic sector. use of space, and play well with They need low-latency technology online commerce. In 2020, one able to handle data locally without Austrian manufacturer took a 4 depending on the cloud. Retail can gamble - and, for his product, the learn a lot from Edge computing odds were in his favor (p16). developed for other applications. Elsewhere, robots can check But as change takes on a new shelves, but do we need that now? urgency, retailers have to decide: And while we all wait in for do they invest more to compete for parcels that never come, the biggest the remaining shoppers, or let them retail question of the year could be: 12 go elsewhere? where are the delivery droids?

Retail Supplement 3 Retail Supplement The state of retail

Shops have shut, people have stayed at home, and the whole world has moved online. Sebastian Moss Sebastian Moss looks back at a year of retail change Deputy Editor

t’s been difficult.” not want to go to shops, and were finally at Physical retail has proved to be home to accept deliveries. one of the sectors hardest hit by This has meant that retailers have had to "A lot of stores have the ongoing Covid-19 crisis. With adapt to a changing market rapidly. government-mandated lockdowns, "I think retailers have had to be been locked down and well-founded concerns about innovative to make online shopping work, shut. That demand has Itransmission, and the declining global because they are suddenly doing three or economy, shop footfall has declined four more times more business online, to gone to e-commerce. precipitously. try and make up for holes in their physical The crisis has changed consumer habits, sales. And they've had to evolve pretty fast I've seen a lot of forced an industry to redefine itself, and left and improve their supply chains. They've an opening for new businesses to emerge. had to adapt pretty quick." brands making legal To understand the crazy year we’ve just Part of that has simply involved applications to chop gotten through, and what the future could hiring more delivery drivers, but it also bring to retail, we caught up with Jack meant rearchitecting existing stores as stores in half." Stratten, senior trends consultant at retail warehouses. For these dark stores, “I've seen analyst firm Insider Trends. a lot of brands making legal applications to "A lot of stores have been locked down basically chop stores in half,” Stratten said. shops - beyond those with massive delivery and shut," Stratten said. "That demand has “And also, they're retraining front end staff infrastructure like Amazon. gone to e-commerce." to do that back end stuff. It has also meant that they’ve had to "Interestingly, it's solving a problem for a rethink who they are. “Traditional retailers Proclamations on the death of the main lot of retailers, because shops being too big have thought of retail as their shop,” Stratten street in favor of the Internet go back all has been an issue for a long time." said. “And yeah, they might have a website the way to before the Dot-com Crash at the However, depending on the country, and social media, but all these other things turn of the century. But the reality is that getting permission to turn a retail space were almost just marketing. And that whole e-commerce retail growth has been pretty into a warehouse has been difficult. "That's model is changing now in front of us - slow, even in nations with high broadband not been straightforward. And some are still there's no middle, the shop isn't the center penetration and strong distribution going through that." of it at all, it's anywhere.” networks. Slow, that is, until the pandemic. Omnichannel businesses (ones with both This is again something that was slowly "E-commerce grew infinitely more online and store presence) "naturally could growing before the pandemic, with brands quickly than anyone could have even turn stores into fulfillment centers," Stratten like Glossier harnessing huge social media imagined," Stratten said, as people both did said, giving them a leg up over online-only followings to command massive direct-to-

Lessons from the makeup industry

Times of turmoil have the unintended side-effect of helping something we talked about for years, but the growth rate has make fringe ideas more mainstream. been small." For retail, one of the surprise hits of the pandemic age has Suddenly the idea has actually become useful, Stratten argued. been augmented reality, Insider Trends’ Jack Stretton said. "People are realizing that it isn't gimmicky anymore." "Big influencers on YouTube are applying makeup through This is part of the future of commerce, or as Stratten calls augmented reality, and they're partnering with brands to help sell it, 'evolved commerce.' It involves "augmented reality, live product. And millions and millions of people are actually using streaming, social media," and all sorts of consumer interaction. this technology," Stratten said. "You have to engage with the consumer where they are," he "That's been a big change, because augmented reality was said.

4 DCD Supplement • datacenterdynamics.com Walmart's warehouses

In early 2021, Walmart announced that it plans to build modular warehouses inside, or adjacent to, its main stores. The new facilities will be designed for online orders - either for delivery or pick up. Each site will feature autonomous 'Alphabot' robots developed in partnership with Alert Innovation, with human shoppers not allowed to enter the sites. Humans will, however, continue to work alongside the robots, picking fresh produce such as fruits and vegetables. “The technology is impressive," Tom Ward, Walmart’s SVP of customer product, said. The company is also partnering with a bevy of autonomous vehicle companies to test out self-driving pickup. It has trials underway with Cruise, Nuro, Waymo, Udelv, and Ford. It also uses cleaning robots powered by an Brain Corp AI system, cash counting machines called Cash360, and self-checkout machines.

consumer sales based on a carefully-build seeing those kinds of brands struggle,” he relationship with their audience. explained. But this means that a large number of In the future, Stratten’s company There will be two types companies may turn to selling their own envisions two types of retail - slow and products directly. That makes it difficult fast. Slow for those wanting a special of retail. Slow, where for retailers that only resell others' goods, experience, where they get to go hands on you sample different without their own product lines. with a product, talk to an expert, and sample "That's a real challenge," Stratten said. different versions. Fast, where they get what versions, and fast, "They need to reinvigorate their online they want as soon as possible with zero and offline space, they just need to be fuss. “Anything in the middle will be lost.” where you get what incredible spaces - either for convenience The pandemic “has been a final nail in you want with no fuss. or something else." He pointed to UK the coffin for average retail,” he explained. retailer Argos, which has built a retail While those businesses will suffer, empire on being one of the quickest and Stratten has a relatively positive outlook for "Across Europe, it was even higher. There most convenient places to get a variety of retail as we slowly return to normalcy in the were quite a few store openings in Europe in household items. coming months. major cities. Some brands were still opening "But if you don't have what they have, "When shops opened up here in the UK some interesting new spaces, footfall didn't which is a massive store network and the between the two lockdowns in the middle of plummet as much as people thought - ability to just sell products cheaply, then the summer, footfall recovered reasonably basically, when people were allowed to get it's very difficult, and that's why we're well," he said. back out and go in shops, they did."

Retail Supplement 5 Retail Supplement

AI in Aisle six: How retailers are embracing

Dan Swinhoe artificial intelligence News Editor

Artificial intelligence is driving massive change for retailers, especially in-store.

6 DCD Supplement • datacenterdynamics.com which can make supply chains and logistics who heavily rely on AI, traditional retailers more efficient. In-store, robots are being used must adopt AI rapidly to boost efficiency,” to stack shelves and clean floors. Machine said Juniper Research analyst Nick Maynard. vision is being brought in to scan shelves and “If they fail to do so, they will face a highly manage inventory, suggest fashion ideas to commoditized retail market with an customers, and in the case of Amazon Go outmoded, uncompetitive business model.” and other competitors, remove the need for At the same time, McKinsey has noted cashiers and traditional checkouts. Robots, a growing number of retailers launching both in-store and in the warehouse, are smaller ‘neighborhood’ or pop-up stores, becoming increasingly common, and sensors and highlighted the importance of using AI are being used to monitor key equipment for in order to create the right mix of tailored potential failures ahead of time. assortments to offer their local consumers Starbucks is rolling out smart coffee more personalized shopping experiences. machines that are using predictive Debbie Bowen-Heaton, partner at maintenance as part of the wider Deep Brew consultancy firm Oliver-Wight, says that he Covid-19 pandemic made AI initiative that CEO Kevin Johnson has many retailers - especially the large ones 2020 an apocalyptic year for called a “key differentiator” for the future. - already have enough data gathered from many retailers. Local lockdowns Uniqlo developed an automated personal online stores as well as historical in-store forced the closure of huge shopper that uses neuroscience to gauge purchases, but often suffer either a lack of swathes of retail stores, many of customers’ reactions to different outfits in urgency or ability to exploit what’s sitting in which have not reopened, and order to recommend different items to suit their databases. Fashion, she says, is probably Tmay never do so. their moods and preferences. Kroger has the furthest ahead in embracing AI and As we look forward to 2021 and beyond, sensors to constantly track the temperatures embedding it into the business to ensure firms must reassess how they approach both inside cold and frozen food cases, sending agility. online and bricks and mortar. Many retailers store associates digital notifications if there’s “The larger retailers have got the look towards more investment in artificial a mechanical breakdown or a door has been economies of scale, they've got the resources,” intelligence to make shopping both online left ajar. From 2017 to 2020 Walmart used she says. “But the downside is that scale and in-store smarter. shelf-scanning robots to help manage stock makes you less agile and they haven't got the Machine learning and AI were cited as levels (see p16) ability to respond when things change fast, the emerging technologies that would have While some of the data will be sent to and it's probably a real frustration for them.” the greatest impact in the industry over the cloud or central locations, much of “The big opportunity is that a lot of the next year, according to TotalRetail’s the important pre-processing will be done retailers have data. They've got it, it's at their 2020 Retail Technology Report. Other AI- either on-site or at a nearby Edge site to fingertips, but it's just about how they exploit enabled technologies, including automated reduce latency. And while many retailers it more. And for me that's the big opportunity, checkouts, augmented reality, robots, and aren’t jumping all-in to cloud for their main doing something with that data and really facial recognition also ranked as important. workloads, some will utilize the scale benefits using it to drive your innovation. Not just Global retailer spending on AI will reach of the cloud to train AI models, while many of new products but services that really excite $7.3 billion annually by 2022, according to their retail tech suppliers will be cloud-based customers.” Juniper Research, up from $2 billion in 2018. to offset costs. As a result of the push to AI, says Dave Whether it’s driving sales with recommendations and personalization, driving efficiency with robots or sensors, or offering new ways to shop and manage "A lot of retailers have data - but it's about how stores, AI is touching every part of the retail they exploit it. That's the big opportunity!" industry.

AI at the Edge of retail Personalized recommendation engines Automation comes to retail en masse Demlow, VP of product strategy at Scale have been a mainstay of shopping for years. Even before the pandemic, the shift to Computing, retailers are turning to hybrid There’s a folk legend in data mining circles, online had already forced thousands of infrastructure models with a combination of which claims Target has such powerful data store closures and many large retailers out Edge, cloud, and central IT. mining and analytics, it once recommended of business. Covid-19 has accelerated many “You collect the data locally and you baby clothing to a girl before she knew she of those challenges. And the stores that do probably do some pre-processing, but was pregnant. Sadly, it’s just a myth, dating survive may well see less room for human training AI models require large amounts of from a hype-filled 2012New York Times staff. compute for very short periods of time and report. McKinsey predicts retail in-store retail you can do that model training in the cloud,” But while big data and AI use cases for roles could fall by 40 percent in the UK alone he says. “But then actually utilizing the model online shopping are still largely based in as a result of automation technology, while on-prem is a very, very common model for centralized data centers, a growing number Juniper Research predicts that transactions people who are looking at AI kind of or any of use cases are seeing retailers embrace using smart checkout technologies like heavy data-intensive applications.” Edge computing and AI, both at the Edge and Amazon Go will jump from $2 billion in 2020 in the cloud. to $387 billion in 2025. The firm suggests Amazon brandishes AI Fulfillment centers are increasingly being the bulk of transactions will be in small Amazon’s ever-expanding retail empire and used to automate warehouses in order to convenience stores owned by large retailers. increasing moves into physical retail, plus the speed up deliveries and optimize space, “To compete with ecommerce disruptors fact it owns the biggest player in the cloud

Retail Supplement 7 Retail Supplement

Kroger is another retail giant to prefer Azure (and GCP) over AWS, with its CIO Chris Hjelm saying at the time there’s no reason “to help grow that business for them.” The company later revealed a smart shelf created in partnership with Azure that enabled real-time pricing for items. Microsoft is also reportedly trialing cashier-less, checkout-free technology that it will offer to customers. Oliver-Wight’s Bowen-Heaton says she thinks a lot of organizations are going into denial about Amazon’s presence across every sector of retail and are “paralyzed with fear.” And while she acknowledges that partnering with Amazon may come at a cost, retailers have to act or face going out of business. “You've got to make a choice; you either embrace it, or you fight it and make some kind of smart move, flank them,” she says. “Embrace disruption, or be disrupted, or find a way to compete. Go find different alliances. But just to ignore it is probably to their significant disadvantage, which I think is what we're seeing.”

AI in retail use cases

Mind-reading fashion: computing space, puts it in a strong position, In Australia, Uniqlo partnered with especially when it comes to AI, and puts its Isobar and Melbourne University to retail competitors in an awkward position. "A lot of retailers are demonstrate an AI fashion booth Jeff Bezos’ company is already one of that used neuroscience to measure the biggest retailers in the world, driving cloud-averse. No one customers’ reactions to different a huge proportion of online sales. And its wants to put anything designs and suggest items that suit the scale and direct access to machine learning individuals’ moods and preferences. expertise means that it can iterate quickly and on Amazon." experiment with ideas in retail technology, Smart coffee machines: especially in the physical space. While its As part of its Deep Brew AI initiative, Dash buttons and barcode scanning wand scaled back its investments in AWS after Starbucks is installing AI-enabled coffee failed to drive quick physical retail actions at Amazon bought Whole Foods because it machines to track what drinks are selling home, its cashier-less Go stores have created didn’t wish to directly fund a rival. well in different areas, but also use a slew of competitors looking to utilize AI Other retail companies face similar predictive analytics for maintenance to to create a walk-in, walk-out checkout-free challenges on whether they should utilize detect failures before they happen. experience (see page 12). As well as deploying technology that directly funds one of their this technology in its own stores, the biggest rivals, and last year Canalys reported Shelf-scanning robots: company is offering it to industry. Google Cloud Platform and Azure were both Walmart tried Boosa Nova’s shelf- Scale Computing’s Demlow says that few ahead of AWS in the retail and ecommerce scanning robots from 2017 to 2020. retailers have gone all-in on public cloud, sectors as a result of the conflict of interest. Simbe Robotics, Fellow Robots make partly due to the direct threat posed by the “Due to this competitive aspect, many similar systems. Pensa Systems offers a company. major retailers have opted to work with other service that uses autonomous drones to “A lot of the retailers that we see and talk to cloud service providers,” Canalys research sweep stores. are very cloud-averse,” he says. “Amazon just analyst Blake Murray said. is the arch-enemy of retailers, and no retailer Many retailers are looking to the other Inventory management: I've ever talked to wants to put anything on public cloud providers as an alternative. Startups such as Opticrib are offering Amazon.” Microsoft offers a similar level of capabilities technologies to improve stockroom and Walmart has turned to Microsoft for for retailers in the cloud, and has made a warehouse management that monitors its public cloud services, with the two number of moves directly appealing to the and updates inventory with reduced companies acknowledging their mutual industry. And while Microsoft has dabbled in reliance on manually scanning barcodes. rivalries with Amazon and AWS were a factor owning stores that sell Microsoft products, Other firms are looking to remove in the agreement. Walmart has previously the Redmond company offers a way for humans from the back-end completely been reported as telling suppliers to move retailers to adopt technology without the fear and use robots to move items to where away from AWS as well. Target reportedly of funding a direct rival. they need to be.

8 DCD Supplement • datacenterdynamics.com

Vertiv ™ | Advertorial

The retail sector presents extreme demands, and only a solid response will be adequate

know if a light has been left on or if someone has gotten too close to the equipment. Because your equipment in the stock room is sensitive to temperature changes, an increase of even a few degrees can wreak havoc on the performance of your IT systems. So temperature, airflow, and humidity sensors can work together to alert you to any potential issues in real-time. Staying ahead of these issues can help you maintain a smooth shopping experience for your customers, no Visibility and Monitoring matter how they choose to shop.

2. Monitoring in an Omnichannel World A robust monitoring solution – like Environet Alert or the Wireless Sensor Network – Retail took a quantum leap in 2020. According to that monitor these factors can act on that eMarketer, ecommerce reached levels we didn’t expect information, to ensure security, issue alerts, to see until 2022. For 2021, retailers will have to continue and even remotely fix problems. That way, that innovation. retailers can stay ahead of issues, avoid costly downtime, and keep customers satisfied with their purchase process and inform onsumers are buying in sure you have the insight you need at all your own important business decisions. more ways than ever before: locations: And monitoring plays a key role in ensuring it’s no longer about buying business continuity. online or in brick-and- 1. Visibility mortar stores. People are Many retail IT sites are at the edge in The retail sector presents these demands buying online and picking storefronts, areas usually without tech in an extreme form, and only a solid response Cup in-store, often curbside or with contactless support nearby or not intended to house will be adequate. Vertiv can help you bring pickup, or buying in-store and returning critical infrastructure. With a large increase in visibility and monitoring to your sites, to make online. And many retailers are using so-called employees working off-site, you need a line sure you can meet your customers’ needs. “dark stores” as retail distribution to fulfill of sight into all the equipment that keeps your e-commerce orders. platforms up and running. We’ll see those trends brought to life when Take IT equipment that’s housed in the retailers start integrating artificial intelligence stock room of one of your stores. Floor (AI) across their omnichannel operations. AI employees may have access to the space can enable agility with more accurate supply to restock items, but you need to prioritize chain forecasting, stronger meta-tagging in minimal interference with the equipment. ecommerce and asset protection at self- Sensors and detectors can spot security

checkout kiosks. issues and check environmental factors for IT Henk Ijspeerd is the director of key The retail sector’s move to a more equipment which is now installed on remote accounts for Vertiv’s retail business distributed set of technology services would sites. When sensors work together, you’re in Europe, Middle East and Africa. be completely unworkable, without an able to have a clear picture of your sites, while Email [email protected] or overall upgrade that makes all the technology alerting you to threatening conditions. visit vertiv.com/ en-us/solutions/ components visible and manageable - Light sensors and motion detectors can retail for more information. remotely. There are two main ways to make monitor activity in the stock room, to let you

Retail Supplement 9 Retail Supplement

Dan Swinhoe News Editor Pushing retail to the Edge

The rise of online retail and the Covid-19 pandemic are driving store closures, so retailers need to get smarter about how they use technology at the Edge.

he Edge is the past, present, inventory management, each store has However, as retailers look to evolve, and future of the retail historically required some local compute they may move beyond consolidation industry. While the Covid-19 capabilities. And while robots, machine and connect those Edge locations into a pandemic has shifted the learning, and autonomous stores garner centrally-managed panel to drive greater model, in-store is typically much of the headlines, modern Edge efficiencies. where retailers make their computing is also being used as a way to “We're seeing new applications being Tmoney, store their goods, and engage with centralize and increase the efficiency of deployed at the Edge,” says Dave Demlow, their customers. legacy systems without moving everything VP of product strategy at Scale Computing. “The retail edges are the things that drive to the cloud. “Some of them are AI-related or customer the company's revenue and so it's very very Cohesity’s Dayeh says that in recent experience related, but some of them are important for them to make sure that they years virtualization has allowed retailers more of what I would consider mundane are able to drive revenue continuously, and to consolidate what might have been things they've always done, like video not have any kind of downtime,” says Ezat multiple pieces of hardware into one surveillance, but they’re now looking to Dayeh, senior systems engineer UK and piece of physical infrastructure. Where kind of consolidate all this piecemeal IT Ireland at Cohesity. once the Points of Sale (PoS), network infrastructure and treating remote Edge IT But, as retailers look to adapt to the management, routers, firewalls, transaction with a centralized management oversight.” difficult commercial realities of Covid-19, processing might all have needed dedicated the Edge is becoming an opportunity to hardware these have all been virtualized consolidate old computing infrastructure and condensed into one unit. This will to drive efficiency, but also embrace new often come in the shape of a tower server "We're seeing new high-data, low-latency use cases to improve or a 1U server attached to communications customer experience. infrastructure at the location. applications being “I could be running a hypervisor with Legacy Edge converges on new Edge multiple VMs on there, they might even deployed at the Edge, Stores have long been an Edge for the retail have a small cluster. I've seen some retailers consolidated with industry. Whether it’s CCTV for security, have things like hyperconverged clusters of control, and monitoring of freezers, or maybe three nodes,” he says. central management."

10 DCD Supplement • datacenterdynamics.com As the legacy Edge consolidates and That's usually the kind of the driving factor, retailers look to add new capabilities, the because otherwise if you could put it in the form factor for the infrastructure has to be cloud.” "If the Internet reduced. Space is money in retail, and every “The worst thing you can do is have connection goes down, inch that computing devices take up could all these things in place and somebody to used to store or display stock. walks into the store in an afternoon and critical things like PoS “The smaller the better,” says Dayeh. “In our systems are down because the Internet an ideal world, they have zero footprint. connection is down, that's just not an doors and CCTV Everything is run on the PoS machines acceptable answer in the retail space have to keep going." themselves and they communicate directly anymore.” over some form of WAN straight to a data Future use cases to drive this hybrid center, for example.” model include smart shelves and digital create the right mix of tailored assortments “We've had customers literally tell us this signage for dynamic pricing, applying for their local consumers. ‘needs to fit in between the bananas and the more machine vision to CCTV, and more “If I had a pop-up shop and I'm physically freezers,’” jokes Demlow. in-store personalization. For retailers, the exhibiting some stuff, there could be some Companies are also looking to simplify Edge becomes pivotal in collecting essential interesting capabilities around showing computing as much as possible, and many in-store information, processing it, sending things using computers though and Edge computing firms are looking at offer the aggregated information home, and then displays,” says Cohesity’s Dayeh. “Again compute devices that require as little receiving instructions back and relaying to having that centralized capability though configuration as possible so the on-site the right devices at the right time. means that I can update all of that on the fly employees only need to plug in the power “The Edge is becoming really really and as and when customers come in they and Ethernet cables. The aim for many important in the pivotal point of all of the can see the latest version of that particular retailers is to reduce the on-site visits from data transfer,” says Simon Pamplin, director product.” IT staff as much as possible and enable of technical sales at Silverpeak. “Every bit of Cashierless checkouts in the shape of more remote management. data has to go to the Edge, out to the cloud, Amazon Go and its numerous competitors or to a central location - and the intelligent are set to grow. Juniper Research predicts A hybrid infrastructure model Edge has to know what that traffic is and that transactions using such smart The Edge has always been a part of the retail how to steer it. technologies will reach $387 billion in 2025, industry’s infrastructure model, but as the “This is just the beginning of it. It will up from just $2 billion in 2020. These stores sector looks to stay ahead of competitors, no longer be just devices that are going to will require much more computing at the the overall model is changing. Increasing be going through this Edge. There will be Edge to process the large amount of data use of AI and real-time supply-chains more integration to following the end- being ingested by machine vision and other mean a hybrid model of Edge, cloud, users so that we can give a better quality of autonomous technologies, before being and centralized data center is a common experience to that particular user.” aggregated and sent home to feed into what approach to accommodate data gravity and will need to be real-time supply chains. low-latency requirements. What’s in store for 2021 and beyond? “That's the ultimate retail where there “New applications are being written An estimated 20,000 to 25,000 stores closed are fully automated cashiers following you for hybrid Edge cloud operations,” says in the US in 2020, double the figure in 2019. about the store and monitoring what goes Demlow, “where they need at least that While Covid-19 vaccines may be on the into your basket,” says Silverpeak’s Pamplin. on-premise ability to collect data, perform horizon, that trend will likely continue to “That's almost taking technology to the nth transactions, but going to upload to a public accelerate. However, long term, the physical degree of what we can do these days but it is cloud or a corporate data center for that retail space looks likely to stick around the shape of things to come.” centralized operations and processing.” even if it is less ubiquitous than in previous At the same time, smart kiosks and “We do see more retailers tend to look years. lockers from vendors such as Amazon, at a centralized data center versus going In 2017, Farfetch CEO José Neves said Cleveron, or Luxor One offer a way for public cloud for that centralized piece brick and mortar accounted for 93 percent consumers to collect items from physical where you aggregate things,” says Demlow, of sales and will still account for 80 percent locations that suit them, whether in-stores, “But application providers are delivering by 2025. public buildings, or properties, in a self- software as a service and using the cloud Admittedly, the pandemic has likely service manner. components to deliver that.” accelerated a further shift away from Again, these smaller locations need to be Another reason legacy Edge physical retail but in-store sales are set to monitored, managed, and embedded with technologies are more likely to see be around for a while yet, and what remains the rest of the company’s infrastructure in themselves consolidated into smaller form will likely be fewer massive retail spaces order to operate effectively. Retailers such factors than migrated entirely to the cloud and more smaller, smarter boutique stores as Uniqlo and Best Buy are investing in is resilience. The Internet being down or acting as drivers of online sales. vending machines at similar locations to being disconnected from the centralized In its State of Retail in 2020 report, provide self-service shopping experiences data center doesn’t mean it’s OK for the McKinsey noted a growing of retailers and make them work. store to stop working. launching smaller ‘neighborhood’ or pop- As stores become smaller and smarter, “Applications that are monitoring the up stores that offer personalized services retail firms will need to rethink how they freezer's temperature for compliance, those and locally-relevant offerings where custom approach what is processed at the Edge, have to keep logging,” says Demlow. “If the designs, highly-focused assortments, what data is sent home, and what is sent to Internet connection goes down, critical and experiential elements create more the cloud in order to serve customers that things like PoS have to keep going, videos of a showroom than a full store with a increasingly demand instant personalized surveillance has to keep going, and you whole range of products. The firm predicts services delivered to their doorsteps, must ensure access control door locks work. retailers will need to utilize AI in order to neighborhoods, and screens.

Retail Supplement 11 Retail Supplement

Frictionless retail Cashierless shopping requires tons of cameras, and even more compute to track everything Sebastian Moss Deputy Editor

e’ve been locked in an no innovation." of firms looking to upend how we checkout endless fight against It’s time to learn from ecommerce, Fisher in stores, with an aim of removing cashiers friction. As a species, argues. “Time matters. Friction matters. You and allowing people to simply pick up items we just can’t face don't even want a 200 millisecond lag, when and walk out of shops. In an ideal world, waiting. Those in the you click a button, because it increases the those cashiers would be redeployed to data center industry chances someone's gonna walk away - we different roles to help customers or handle Wknow this - just think how many billions need to do the same in physical retail." stocking, but it may just lead to fewer job have been spent to stop things taking a During busy shopping periods, waiting roles. whole second to load. in lines to checkout can take minutes, For physical retail, this quest to reduce "sometimes tens of minutes," Fisher said. friction is just getting started "And retailers also make you work: With a "It's really been a massive industry stuck self-checkout station, you're literally doing "You don't want to put in the past," Standard Cognition CEO Jordan the job of the retailer for them. So you're Fisher explained. waiting and then you're working. an insane number of "In ecommerce there's been innovation, "Everyone knows that this is not the and with omnichannel and curbside pickup way it's supposed to be. It just hasn't been cameras on the ceiling ecommerce has begun to come into the technologically possible to eliminate that because it can start physical world and meet you at the edge," he until now." said. "But inside the physical world, there's His company is one of a growing number getting intimidating."

12 DCD Supplement • datacenterdynamics.com advanced machine learning algorithms. standing and where every item is. So we can "Certainly, as we get up to 10,000 stores over start doing routing in stores and saying to “Retailers ask which the course of a year, you're looking at a lot pickers ‘here's the fastest way you're going cloud provider we use, of data." to get through the store to get those 27 items Much of this processing, and all of the that you're looking for.’” because they won't long term storage, is done on the cloud. But This potential goldmine of data will the company also has an on-premises Edge also be stored in the cloud. Standard chose work with you if it's on system. "Currently it uses Nvidia GPUs, and Google for cost and AI reasons - and Amazon Web Services." it does the heavy lifting - and is where most importantly, because it’s not arch-rival of the expenses are," Fisher said. Amazon. "It's running processing for every single "Most retailers don't want to work right “I like to compare it to Uber or Lyft,” he camera for every single frame, figuring out with their biggest competitor, and there are said. “You used to get into a taxi and you what's happening, merging that together horror stories from past retailers that have were thinking about the transaction - do I into a cohesive understanding of the entire partnered with Amazon,” Fisher said. “They need to take it out my wallet, etc. But now scene." ask which cloud provider we use, because you get into an Uber and then you get out The idea is to be able to recognize items they won't work with you if it's on AWS, and you are transacting behind the scenes when they are picked up, and track them all because they don't want a single one of their and not thinking about it. That's what we the way out of the door. When the picking- dollars, even if it's indirect, to go to Amazon.” want to deliver for retail. Stores really start up action is blocked by the person, the It’s this sentiment that also reassures becoming like your personal pantry.” system instead looks at the shelf to see what him that his business won’t be swept away It’s an idea that is simple in its pitch - is missing. For some items, the difficulty is by Amazon Go, the Seattle company’s very let’s remove this friction - but that is wildly not in recognizing the product, but instead own cashierless initiative that it is trialing in complicated to pull off. You need to be able the version - a large and a small chocolate its own stores, but also hopes to sell to other to understand who a shopper is, what they bar look incredibly similar, for example - and retailers. have picked up, what they have put back, for this the company relies on zoom lenses Given their fears over simply using and track them out of the store. in addition to the wider lenses. Amazon’s cloud, it’s debatable how many There are several ways to try to track To identify a customer, without turning retailers will freely hand over their shopping everything, from biometrics, to sensors on to biometrics like facial recognition or processes to the company. Instead, Standard shelves, to the Lidar more commonly found palm prints, Standard just uses the phone and a bevy of rivals hope the threat of in self-driving cars. Standard Cognition in someone’s pocket. Users have an app Amazon’s competition will encourage those relies on cameras - lots and lots of cameras. with their details, and when they leave, it retailers to use their competing platforms "Cameras are constantly improving and sends them a message with all the items it’s - ones that ideally will work from shop to getting cheaper," Fisher said. "We're just worked out that they have bought. shop. using off-the-shelf cameras, there's nothing “Behind the scenes, we're But that still leaves the possibility open special about them. We strive for what we communicating with your phone and for the other two major cloud providers call triple coverage, we try to have three trying to work in collaboration to figure out to step into the ring. Both Microsoft and independent perspectives of any part of the ‘okay we’re gonna go in and charge you Google have retail customers, AI chops, and store that we care about. for the Slurpee that you're grabbing at the buckets of money. Plus, neither inspire the "That said, you don't want to put an convenience store.’” same level of loathing amongst retailers. insane number of cameras on the ceiling All that data could also prove useful to "Google and Microsoft are both investing because it can start getting intimidating. So retailers for item stocking, as well as for heavily into retail and its analytics through we do try to be judicious." pickers who are paid by the likes of Instacart cloud solutions. They both recognize that All of that camera data - terabytes per to fetch produce for others. “We know, it's a massive market,” Fisher said. “What store per week - has to be crunched with down to the centimeter, where everyone's they haven't done, though, is turn their AI engines towards retail in this sort of computer vision way.” If they did, though? “I don't want to say I'm scared of Microsoft and Google. But certainly, if they entered the space with a mature technology platform. Then I would be… well we still have a great team, we've raised close to $100 million, we're over 100 people.” Should it turn into a head-to-head fight between tech giants and startups, the crown may go to the company that best solves that initial pitch: Zero friction. “It's common to wait a few minutes after you leave the store before the receipt gets to you. And we're always working on reducing the latency ahead of our competitors, we're always going over to Amazon Go stores and making sure we're measuring their latency. I think this is going to be a constant arms race over the next couple of years.”

Retail Supplement 13 Retail Supplement

transformation process is not based around robots, but the closure of brick and mortar shops, as commerce shifts online. During the pandemic, this did indeed speed up, but we also saw a move to curbside collection and click-and-collect from stores. This change had interesting consequences for the different classes of robots in the evolving ecosystem which serves our commercial sector.

Automated warehouses Online ordering means a lot more items will be sent directly from warehouses to the customer by post or courier. This means warehouses handling a lot more individual itemsand turning into what Amazon has dubbed “fulfilment centers”. Robotic warehouses have come into their own in 2020 as they enable staff in those warehouses to fulfill more individual orders. These retail robots are not semi- autonomous mobile creatures. The most developed warehouse systems treat the entire building as an organism. In its guts, a set of moving parts acts as a mechanical “digestive system.” Stock is ingested in a loading bay, sorted into bins that fill the Not the droids you three dimensional space of the building. Mobile trolleys on a grid floor pick the products and take them to dispatch where they are labeled automatically. The process is vastly more efficient. were looking for? For Giesswein, a woolen shoe maker in Austria, an automated warehouse enabled a shift from shops to the post: “The whole The last year saw a retail revolution - but not the one business of shoes is old. 80 percent was that technologists had been predicting. It’s left some done by stationary shops,” he told us. Covid changed everything, and with the help of technologies parked in places they weren’t expecting an automated warehouse, the company now sends 80 percent of its stock to online lot of commentators like for better data across the retail supply chain, customers (see Soft Sell p9). to say that 2020 saw years especially on retailers’ shelves,” said Brad This story is not unusual, and similar of digital transformation Bogolea, CEO and co-founder of California- warehouse systems are emerging elsewhere, telescoped into a short period, based robot maker Simbe, adding: “The but the field is fiercely competitive. as users were forced to go pandemic has accelerated the adoption of In the UK, Ocado began life as a delivery online and forego traditional autonomous technology to keep humans firm associated with Waitrose grocery stores, Ainteractions such as going to the shops. But safe.” but became a separate retail company and that’s a simplification. Robots come into play because they eventually morphed into a technology Take retail and the use of robots and can be more capable than humans, but provider. Ocado Technology develops automation, for instance. We’ve been some argue their cost-effectiveness is also systems including automated warehouses, promised a variety of robots in retail effectively compensated by the tax systems and the Ocado Smart Platform online shop settings, but it seems that, during the our businesses work within. system. pandemic, some retailers found some of Government taxes can be a system of As well as running automated droids weren’t the ones they were looking reward and penalty which has unintended warehouses for its sibling company Ocado for. While some robots are thriving, others consequences. In this case, robotization have actually been made redundant by the taxes treat humans as a cost, and technology pandemic. as an asset. In her book Doughnut “The pandemic Digital transformation is almost always a Economics, economist Kate Raworth argues shift away from real-world services to digital that robots become a must-buy because of has accelerated ones, and a major driver is the reduction in “perverse tax policies which charge firms for human staff. This can involve increasing hiring humans (through payroll taxes) and the adoption of web interactions, and using automated subsidize them for buying robots (through autonomous assistants. tax-deductible investments).” “This past year has illuminated the need In retail, the biggest digital technology."

14 DCD Supplement • datacenterdynamics.com Retail (part-owned by Marks & Spencer), the company has supplied its Ocado Smart Platform to customers including Sobeys in "Warehouse robots are designed to be dexterous Canada, Casino in France, and Kroger in the US. like a human hand, able to pick and move Ocado has bought two US robotics products." startups, Kindred Systems and Haddington Dynamics. At present, however, Ocado is being sued by Norwegian automated and Tally has great manners, always giving checks and the robots were redundant. warehouse firm AutoStore for alleged patent shoppers the right of way.” This might be more than a bump in the infringements. Neither company wanted to A robot’s look depends on its function, road for in-store robots: BossaNova has laid speak to DCD for this supplement. said Bogolea: “Warehouse robots are off half its staff in response to the setback. designed to be dexterous like a human hand, But at Bogolea thinks the click-and- Stock checkers able to pick and move products. Because collect boom won’t hurt Simbe: “Tally’s There’s another category of retail robot that Tally’s function is to operate in stores and real-time product location and availability has been less well-served by the pandemic. scan inventory, it is designed to be shy and data is instrumental to store teams, helping In the last few years, some pioneers have non-threatening, able to work harmoniously them more quickly replenish store shelves experimented with robots that move alongside store teams and shoppers.” and fulfill online orders. Schnuck Markets [a along the aisles, checking stock levels and Also in California, Lowes has tested the US grocery chain] provides Tally’s product tentatively attempting to help with customer Lowebot, developed by San Jose’s Fellow location and availability data to grocery inquiries. Robots, a sort of mobile kiosk which rolls pickers, enabling them to more quickly find These robots tend to be tall and thin, around the store checking stock. Customers items in-store or make a replacement if a moving on a Roomba-like base, and can use a touch screen or microphone to ask specific item is out-of-stock.” equipped with sensors to detect people and it where to find things, and then follow as it avoid collisions. Simbe’s Bogolea described leads them to the right aisle. Delivery droids his company’s Tally stock-checking robot Giant Food Stores and Stop & Shop used There’s a final corps of robots looking for to DCD: “Tally is slim and narrow, making another pillar-shaped bot named Marty. work in retail, and that’s the delivery droids. it easy for shoppers to maneuver around it, But despite Bogolea’s optimism, there These can look like diminutive electric are some signs that it might not be working vehicles or, for the more adventurous out. In 2017, Walmart started rolling out retailers, could be drones taking to the air. BossaNova shelf-scanning robots to 500 In Australia, Domino’s has tested the of its stores - but the Wall Street Journal idea of delivering pizza with a robot vehicle revealed in November 2020 that it had called the Domino’s Robotic Unit (DRU). The dropped the robots. company says its plan is to use GPS data It seems that the pandemic, and its kindly provided over the years by its human ensuing boom in online sales, had put these drivers, to replace them with an autonomous robots out of a job. During the pandemic vehicle. Domino’s has also promised - fewer customers visited the shops in person, and even tested - a drone-based airborne relying instead on staff to make up their delivery unit. order for them. As staff walked the aisles One could call that a prototype, but a collecting orders, they performed the stock more honest description would be a stunt. More realistic is the FedEx SameDay Bot, announced in 2019, and now called Roxo. It’s a box on wheels, designed to climb up and down curbs and get packages to their destination. It’s not a road vehicle and is street-legal in seven US states. Amazon has a smaller unit called Scout, which is already making deliveries in four US states, and is reported to be preparing for launch in the UK. However, there’s one thing that makes it clear these are still not ready for widespread use. 2020 saw a huge rise in demand for deliveries, and a pandemic that suddenly turned the job of delivery driver into a dangerous frontline occupation. If anything could turn delivery robots into a winning use case, it was the pandemic. If delivery robots were ready to go, we would have seen platoons of them taking to the streets, bringing supplies to sheltering humans. The fact that we have not tells us that these droids aren’t really ready yet.

Retail Supplement 15 DCD-Retail-Report-AD-EN-NA-210x270-PRESS.pdf 1 1/26/2021 11:57:37 AM

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