Why Location Is Critical in Retail’s Digital Transformation

Nicolas Roger

Like all industry sectors, retail is undergoing a dramatic transformation. It started years ago with the emergence of what we then called e-commerce, and the trend is now accelerating with massive disruption in the way consumers are shopping. It’s requiring traditional retailers to adapt to digital and pure internet players to connect with physical stores.

Technology has revolutionized the shopping experience and raised consumer expectations to new heights. For instance, the ability of shoppers to easily do online price comparisons puts pressure on physical stores. When they order online, they often want to receive their order within 24 hours and have it delivered at the location they choose, such as home or some collection point. They also expect personalized offers based on their shopping habits, and they want a seamless experience, from online to physical.

We are now seeing the merger between online players and traditional retailers. For the latter, embracing digital transformation is a matter of survival.

To cope with current and future trends, companies have to rethink their IT infrastructure, and it starts with Interconnection, defined as direct, private data exchange between businesses. Companies need to design a future-proof, Interconnection-first architecture that will support them in the current challenging environment, as well as enable the rapid development of new and innovative services, including: analytics on customer behavior, artificial intelligence, smart beacons, Internet of Things and virtual and augmented reality.

Retail companies must also be swift and agile as they modernize their IT infrastructure and develop new services. To do that, they must increasingly leverage cloud capabilities, while keeping IT and network costs under control in a world of tight margins.

The challenge: speed

The main challenge for long-established companies is to move with sufficient speed while managing legacy technology. From an infrastructure perspective, most share a common problem: They have a traditional IT infrastructure inside an old data center in a remote location. That means when it comes to increasing bandwidth capacity, improving internet performances, or adding connectivity to multiple clouds, the cost and lead-time for additional network circuits can be prohibitive, and that hampers the rollout of new projects.


To address those challenges, companies must create Interconnection hubs where they can easily interconnect with all the providers they need. Equinix has already helped dozens of businesses who have adopted an Interconnection-first approach called an Interconnection Oriented Architecture™ (IOA™) strategy.

An IOA approach is focused on enabling Interconnection between people, locations, clouds and data at the digital edge, where commerce, population centers and digital ecosystems meet. This is where the various parties that retailers need to connect to – customers, digital payments firms, financial institutions, etc. – are doing business. An IOA framework brings them all closer together for superior connectivity and efficiency. By deploying offerings such as the Equinix Performance Hub, Cloud Exchange and Data Hub on Platform Equinix, companies can connect to networks, clouds and partners with high bandwidth, low latency, flexibility and lower cost.

Steps in digital transformation

This first step in the digital transformation journey for a retail company is making sure it can consume cloud services easily, as well as deploy them quickly to react to market trends. A hybrid IT model enabled by Equinix is a great option here, as it offers the best of old and new technologies, with predictable performance and strong security.

Once they have this footprint inside an Equinix data center, companies can continue to modernize their IT, benefiting from the hundreds of network and cloud providers available directly. Thanks to Equinix Cloud Exchange, hybridization between legacy systems and the cloud and cloud services (IaaS, Storage, SaaS) becomes a reality, with the guaranteed high bandwidth and low latency of private Interconnection. Following a tailorable IOA framework, they can also use a Data Hub to locally store data or migrate their existing servers.

Location matters

While retailers know location is a key component in the success of a shop, they are now realizing that has also become true for IT. They must be in a highly interconnected place if they want to continue to compete and develop their business.

Read the Interconnection Strategy Guide to learn more.

And check out the IOA Playbook for more detailed information on an IOA strategy.