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Edge Computing Increases Retail Margins During a Profitability Challenge

13-Dec-2022 23:49:00 / by Jaideep Nair


The Internet of Things (IoT) and Artificial Intelligence (AI) are the foundation of the next major shift in the retail technology landscape the intelligent edge. Edge computing allows data to be accessed where it is created and enables business processes outside the core IT environment.  

In 2022, the International Data Corporation (IDC) predicted that European edge computing investments will reach $40 billion in 2022 and increase to nearly $64 billion through 2025, with a five-year compound annual growth rate (CAGR) of 16.4%. 

Edge platforms are crucial to creating connected value chains that can detect and correct issues in real-time to support better decisions. For example, edge devices can monitor refrigeration and energy consumption to improve in-store margins and reduce unnecessary costs. As such, they can mitigate the impact of high inflation and the struggle for profitability.   

The challenge for retail CIOs is to leverage the business value of IoT data by delivering edge platforms that can orchestrate complex workflows.


The Limitations of Conventional Store Management  

In 2022, retailers that use emerging digital technologies to improve their in-store margins will strengthen their resilience in an increasingly uncertain economic environment.  

As such, they need to remove the manual processes and in-store inefficiencies that limit the potential for margin growth.  


Manual tasks: not designed for digital retail 

In the past, retailers were able to handle their in-store processes manually. Inventory counts, customer management, reporting and device checks were all carried out by store employees.  

In 2020, McKinsey identified that more than 50 per cent of all activities in retail can be automated. It is critical that retailers use automation to reduce turnover rates, redeploy their workforce to more valuable tasks and eliminate human error. 

In fact, manual processes drive significant inefficiencies that directly impact margins:  

1) Scatter data across paper-based or legacy systems  
2) Subject to human error, which leads to unreliable data   
3) Carried out by employees who cannot work 24/7  

To reduce margins, retailers must turn to automation to remove unnecessary labour and allow employees to focus on customer experience. 


In-store sustainability: no longer a choice 

Traditional brick-and-mortar stores do not make it easy to operate sustainably. The constant demand for refrigeration, heating and lighting results in high energy consumption that is difficult to optimise with manual approaches.  

In 2022, a report by First Insight and the Baker Retailing Center at the Wharton School of the University of Pennsylvania found 72% of consumers say that sustainability is important to purchase decisions, with only 51% of retailers believing that sustainability is important to consumers.  

Old processes and technology were not designed to reduce energy consumption, so retailers can use edge platforms to support predictive maintenance.

Download our white paper on how retail CIOs can navigate inflation without a high upfront cost.


Topics: Retail, Retail Tech, Business Process Automation, edge computing

Jaideep Nair

Written by Jaideep Nair

Retail Senior Enterprise Architect

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