Tens of thousands of convenience stores are about to become intelligent data hubs

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By Marty Wolfe, IBM Vice President & Global Consumer Industries CTO

We tend to think about digital transformation from a 30,000-foot view — the fundamental ways that new technology like AI will reshape the way we live and do business. But what about the 30-foot view? What does digital transformation look like not at the level of a Fortune 500 or a nation-state, but, say, that of a local convenience store? In some ways, that’s a more interesting question. 

By 2025, it’s estimated that 75 percent of all new IT development will occur at the network edge. For retail, that means physical stores, distribution centers, mobile locations, and partners. This represents an irony in some sense: As retailers continue to pivot from on-premise infrastructure to cloud computing, a new focal point for IT innovation is emerging not in the cloud, but back on-premises. It also means, in a very literal sense, that countless brick-and-mortar shops around the world will soon become bona fide data centers.  

This shift toward “edge stacks” isn’t simply about replacing centralized servers with thousands of distributed ones. Rather, it’s about optimizing which tasks are best processed locally versus those better handled at a centralized data center. That might sound like IT semantics, but as the proliferation of 5G edge devices begins to rapidly outpace IaaS capacity, edge computing will become not only an exciting new frontier in retail, but a practical imperative.   

For shoppers, retail edge stacks will usher in a new era of hyperlocal, hyper-timely personalization. In place of static coupons, retailers will begin offering proximity- and location-based promotions dynamically customized in near real-time and delivered via smartphone or other edge device. Cross-vendor loyalty programs will allow consumers to fill up their gas tank, then head inside to spend the reward points at the convenience store, and finally to visit the local home improvement store using those same loyalty rewards. Edge will also vastly expand partner offerings, such as the ability to rent a vehicle at a fueling location. Longer term, edge will help transform the last-mile, laying the foundation for services like automated drone-based delivery and mobile, roving retail stores — fully autonomous vehicles that double as retail locations.

Behind the counter, edge computing will likewise play a significant role in day-to-day retail operations. By moving tasks like inventory optimization to the network edge, retailers can start to integrate localized variables such as environmental data into their shelving strategies. Millions of new 5G-enabled sensors will supply a constant stream of real-time telemetry, helping stores ensure that goods are placed in the best location and expired items are immediately discarded. Stores will begin analyzing their customers’ unique shopping patterns to calibrate product assortments to reflect local demand. And because all of this will be processed in-store rather than transmitted back to a central location, retailers can significantly reduce pricey network transfer costs, one of the major obstacles in the wider adoption of cloud computing for core enterprise applications. 

With the impending wide adoption of data and analysis at the edge, governance will be vitally important. The ability to manage data as it moves through all of these devices while ensuring data integrity and compliance is fundamental to using edge successfully.

As retailers look to deploy these and other capabilities over the next several years, it’s vital that the industry approach this new network topology from a place of forethought and intention. The benefits of edge computing and 5G are predicated largely on interoperability and open standards. If we simply replicate the proprietary walled gardens that define today’s enterprise IT landscape, we’ll only see more 30,000-foot promises. If we want to see real-world benefits at 30-feet, let’s get this right.