Reinventing Retail: Solving the Interconnection Problem

Retailers face soaring raw materials prices, razor-thin margins, and intense competition. It makes innovation a critical advantage.

Which is why retail is becoming a test bed for new innovation. One that is grabbing headlines is augmented reality (AR). Meanwhile, retailers are trialing virtual reality (VR) and artificial intelligence (AI) applications.

A recent CDOTrends Digital Dialogue Series, sponsored by Equinix, looked at retail challenges in driving innovation. Entitled the AR Revolution: Why interconnection is your secret weapon, it saw leading senior IT leaders from Hong Kong sharing their lessons and discussing the need to rethink their digital architectures.

AR Goes Deeper

For many of the attending participants, AR was about improving the consumer experience.

“It is a matter of finding out how we can use these to enhance the consumer experience,” said Kelvin So, general manager - Information Technology, Swire Resources.

Li & Fung is forging ahead with AR and VR and using it to improve their B2B business model. One area that they are investing in is sample development.

“So, customers can look at the virtual sample and select the right patterns and colors. We can then develop the physical samples later based on their preferences,” said Dennis Fung, vice president-IT, Li & Fung Trading.

Li & Fung is also extending the AR/VR experience to the physical showroom. “We can develop hybrid showrooms, where half of it is projected from another showroom elsewhere. This is an area we are experimenting with now,” he explained.

One of the biggest challenges to using emerging technologies like AR is latency. Shuttling data between the consumer location and the server is difficult.

"AR/VR companies are looking to see how they can scale and host their content in different regions. Gaming is a good example, and we see it as one of the fastest growing markets. These companies need to be at the edge [of the network]. If there is too much latency, the player experience will not be there,” said Alex Henshaw, senior manager - Solution Marketing, Equinix.

Cloud, the Double-edged Sword

Many retailers understand this. It is one of the reasons why many are migrating to the cloud. They see cloud platforms offering the scalability and cost efficiency they need for AR/VR applications.

Yet, retailers' move toward cloud has not been smooth. The biggest issue is realizing the cost benefits the platforms first promised.

“We understand the benefits of the cloud. But how do we get there and keep to our PnL,” said Thuy Dung Do, general manager of Information Technology Services, Li & Fung Trading. She also added that the vendors are making the picture complex by offering their on-premise solutions at steep discounts.

It also needs a different approach to rationalizing costs. “Clouds need us to calculate our bandwidth and capacity differently -- something we did not do with on-premises,” said Jacky Leung, chief information officer, Bluebell Group.

Local data regulations also need companies to work with different cloud platforms. It makes cloud management more complex and costly.

“For example, we face some challenges when operating in China. So, we cannot stay with a single platform for both regions. Connectivity and latency become major issues. The China Cybersecurity Law adds additional constraints on what platforms we can use,” said Swire Resources’ So.

Security also drove Jameson Yam, head of IT, MTM Lab Japan to take the hybrid multicloud path. “Our customers have a lot of private information in our system. So, we are always looking to protect their data. Right now, we are using hybrid cloud.”

Closing the Interconnectivity Gap

Participants agreed that multicloud is probably the way forward for the industry.

For many, the answer lies in hybrid multicloud environments. “Right now, we are building a multicloud architecture. Each cloud has its own benefit. Our strategy is not to limit to one platform, so our applications can always leverage the best functions and features from each cloud provider, and they are all interconnected with low latency,” said Danny Chok, head of Infrastructure Development & Info Security, Lane Crawford.

Yet, they face another major challenge -- interconnectivity. Retailers want to be able to choose the right platform for the workload. This flexibility requires interconnectivity across different platforms.

"I get the point when you use a cloud, you need to have a plan to move to another cloud. We need to think ahead when you start using the cloud,” said Christina Lee, APAC IT director, Kering Asia Pacific.

“I think it will be good to look at interconnecting the different clouds. We had to build our own connections with the China office. So an interconnection solution is important to streamline our infrastructure,” added Jeff Yeung, head, Information Technology, City Super.

Equinix’s Henshaw highlighted that it is an area that Equinix is heavily investing in. “Many people are finding out that some clouds are good for certain things. You need to first look at the workload and see which cloud works. We are working with a lot of enterprise solution providers to build cloud adjacency and interconnectivity to different clouds.”

Henshaw cited a major regional airline as a strong example of interconnectivity. He noted that Equinix helped the airline deploy two private clouds with a management layer in the public cloud. “The management layer offers a single pane of glass, allowing me to provision the workload where I want.”

Responding to the earlier queries about interconnectivity with China, Henshaw noted that Equinix also has a gateway in Hong Kong to Alibaba Cloud [also Aliyun in China]. “So, you can route the traffic through Alibaba cloud which is residing in China. This gives you the connectivity and speed with the data residing in China. Another advantage is that all the major China telcos are POP-ed in Equinix in Hong Kong. So you can negotiate the best rates.”

In the end, Henshaw urged participants to focus on infrastructure agility as they adopt new data-hungry, latency-sensitive technological solutions like AR. He noted that interconnectivity could be a competitive differentiator.

“Today’s digital business requires real-time interactions. We are already seeing business ecosystems in data centers that no longer use the public internet to connect with each other. So, we need to rethink how we architect and interconnect together from the onset,” he concluded.