One of the most popular buzzwords right now in the technology space is 5G. Technology companies around the world have been making rapid strides in 5G mobile technology, promising it to be the next big revolution.
But how will 5G redefine the retail industry?
Simply put, 5G is the 5th generation of mobile internet connectivity. It is a combination of various technologies as well as mechanisms expected to make its way into future networks to fulfill maximum capacity and performance demands. With 5G, retail companies can help drive new, innovative technologies with more speed and reliability, gather more data, and ultimately help build a long-lasting relationship with customers.
A decade ago, we witnessed SMAC technologies driving digital transformation with Social Media, Mobility, Analytics and Cloud providing the foundation. The new decade will take this to the next level of digital transformation, where the industrial revolution will be powered by both established and emerging technologies, including the Internet of Things, advanced data analytics integrated with artificial intelligence, robotic process automation, robotics, edge computing, virtual and augmented reality, 3D printing, digital twin and so on.
Statista 2020 provides information on retail e-commerce sales worldwide from 2014 to 2023. According to Statista 2020, in 2019, retail e-commerce sales worldwide amounted to 3.53 trillion US dollars and e-tail revenues are projected to grow to 6.54 trillion US dollars in 2022. This reflects the traffic coming through online and mobile channels and the ease in online shopping with offers. It also proves that consistent experience with interactivity has resulted in lower footfalls in mall visits, thus transforming the conventional shopping experience and enhancing the experience of purchasing online.
The retail industry has been witnessing a staggering rate of store closures in the last couple of years with more than 9,000+ stores closed. Retail spending is increasingly moving online. The declining footfall in stores, especially malls losing their popularity, and people preferring online shopping to ‘store’ shopping led to the closure of stores. There are several factors that contributed to the conventional retail apocalypse, like the rise of e-commerce and the continued trend of purchases online. Consumer behavior and purchase patterns have also been changing and customers now enjoy the freedom of shopping online.
As challenges and trends push retailers to reinvent and redefine their position and strategy to be relevant, the run up to 5G technology provides the necessary thrust to retailers with a new strategy in digital transformation. 5G brings value by rendering several channels and overcoming the connectivity challenges across the Stores, On Field and Warehouse:
- At the Store, there are challenges with poor and unreliable connectivity leading to a loss of business. Implementation of new age AR/VR use cases remains as a proof of concept due to lack of bandwidth.
- At the Field, assisted resolution and debugging need high resolution imagery and video.
- At the Warehouse, applications, new-age video analytics and robotics, all need adequate network capability and bandwidth.
Thus 5G will help overcome many of the challenges related to network and bandwidth but for the business, it is critical to understand what more 5G can offer that will be a game changer and justify the ROI with regard to the investment.
5G as catalyst for digital transformation in Retail
According to ‘2020-The future of retail technology’ report, 89% of retailers rely on technology to improve customer experience and 96% invest in technology to improve operational efficiencies. Thus, Customer Experience and Operational Efficiency continue to be a key focus for retailers in their digital transformation journey.
5G will catalyze the following use cases for Retailers.
- Immersive experience with Augmented Realty, Mixed Realty and Virtual Realty with 5G to enhance the brand-customer interaction – Immersive technologies like augmented, virtual and mixed reality demand a considerable amount of processing power and mobile data. Leading retailers are bringing immersive experiences by which prospective buyers can experiment different styles, sizes, colors, seek real-time SME opinion and so on.
- In Store experience Augmentation – The future of In Store experience will bring in new customer experiences (such as Magic mirror) that help in the search for latest apparel and provide recommendations and customizations, notify the sales people or robots to fetch different items and even easily allow posting it on social media. 5G can enable face-to-face virtual assisted shopping with in-store AR enabled customer care who are able to access graphic-rich product information and support the consumer.
- IoT Solutions –Some aspects of IoT solutions enabled with 5G :
- IoT-based facial and object recognition solutions can provide retailers with demographic data on who is in the store and provide sentiment analysis on the products offered.
- IoT solutions can track assets and report the handling of an order and delays, proactively address the route, location, environment, handling of shipments etc., thereby providing smart optimized supply chain management.
- IoT can help identify shoplifters and use facial recognition and CCTV video feeds to provide alert notifications and track suspicious behaviour or transactions.
- IoT can help in smart energy and facilities management with areas like smart lighting, water conservation etc., thereby running the stores at optimized energy cost.
To address the above IoT solutions, 5G can enable the IoT devices from the warehouse to the store shelf, including tracking shipments in the warehouse and provide a real-time view of the stocks. It improves the operations because every product is tracked and traced with the massive machine-type communication feature of 5G with status in terms of location, perishable goods or pharma products in real time. Thus, the ultra-reliable, low latency communications of 5G will enable retailers to explore new product delivery options like drones or with autonomous vehicles to deliver products to the consumer.
4. Integrated Advanced analytics with AI, IoT and 5G for real-time insights & recommendations. Retailers can improve consumer labeling, provide extreme personalization to consumers targeted with right products and experience that will ensure sale. This requires retail analytics technology to collect structured and unstructured information of a specific shopper and translate into an actionable insight to provide recommendations. The data-driven insights provide customized and relevant services to the consumers such as real-time shelf displays, predictive inventory, and real-time integration of external data sources.
5. Next generation digital commerce with 5G – 5G will facilitate shoppers with the right purchasing and satisfaction, enabling brands to engage in an automated fashion with the consumer after a sale and support them in using the product. The real time price and product feed with rich content needs bandwidth and responsiveness, further IoT can support different types of payment systems with wearables and eliminate point-of-sale (PoS) terminals.
Get started with run-up to 5G
Retailers will require a two-fold strategy as they embark on the digital transformation journey. This includes a strategy and roadmap in the run-up to 5G and further implementation with 5G connectivity. Retailers need to focus on the following aspects:
- Business viability and validation – Retailers will be clearly required to understand the market, consumer segment and above all new products and service innovations that 5G will enable, that will provide business case for investments. It requires an advisory approach where the retailers will need to put a strategy that will focus on outcomes of the products and services that 5G supports to deliver. To design a comprehensive 5G strategy, retailers must define the roadmap based on the three dimensions viz. Engineering, Intelligence and Monetization.
- Customer Journey – The value of 5G will be driven with consumer behavior and buying patterns. Retailers will be required to define and position their products and services aligned to the customer journey and offer them a seamless omnichannel experience. This will be the foundation that will enable re-design of processes and products. 5G will facilitate consumer-retailer interaction to offer consumers great experiences while engaging with the retailer.
- Network strategy – Many retailers may face practical challenges in getting basic connectivity in the stores and 5G may be a farsighted view. In reality, the run up to 5G should be the opportunity to design the new network strategy that can ensure close collaboration between technology and business leaders. Retailers’ strategy should ideally focus on:
- Increasing their bandwidth to drive new applications and do more in their stores leveraging existing and new investments when 5G is ubiquitous. The 4G LTE and LTE Gigabyte-class cellular networks can address some of the use cases with emerging technologies and continue to be used for offloading network traffic and failover for years to come. Retailers can continue to use these networks even as they move down the path toward 5G.
- Enterprise private network or SD-WAN (Software Defined Wide Area Network) as one of the enabling technologies to deliver a high-quality network experience tailored to the retailer while managing the transition to a complete end-to-end 5G infrastructure delivery.
- Network slicing for different retail groups for extreme personalization and targeting products or services
- Carrier partnership with retailers allowing telcos to install 5G antennas inside stores for new services, and, in return, telcos provide access to anonymized location data of the consumers in their store.
- Coexist along with pre-existing retail network infrastructure that includes RFID, NFC and Wi-Fi.
- Mobile Edge Computing (MEC) Infrastructure strategy – Edge computing strategy will play a critical role for retailers in 5G. Systems like analytics and AI will process data and provide insights in real time to the consumer on the move. It will create more outcome-based business models in product purchases. The MEC can complement 5G infrastructure in areas such as shopping malls. 5G and edge computing will remove the bottlenecks that exist today and widen the pipes in dense environments for information to flow in real-time.
- Cybersecurity and Legacy modernization strategy – As we see customer journeys getting redefined with 5G, one of the areas of focus will be modernization of architecture and applications in the IT landscape of the retailer. It will be important to understand the current maturity of the IT landscape and have a roadmap- for example, exploring a hybrid approach to cloud native architecture and applications. Cloud-native methodologies bode well for a retailer to streamline the existing processes and operations and pursue new revenue streams. The consumer’s identity management and protecting of personal data will be one of the key areas of focus in customer experience. It will require a proactive approach to identify the vulnerabilities keeping 5G in mind. The strategy should include the 5G audit and remediation plan to ensure compliance to country-specific data privacy laws.
The retail industry is dynamic and with the advent of 5G, retailers will require a clear strategy in the run up to 5G. It will require a roadmap to get started to remain competitive and explore areas of business disruption with innovative products and services. 5G will provide retailers with uninterrupted business, a reliable network that handles peak time traffic, extreme personalization, AR/VR shopping experiences, fast access and real-time, streamlined operations, access to central systems and ease of tracking of product, price, inventory and customer information.
5G in Retail is a journey. Retailers should make investments in 5G and Gigabyte LTE technology, invest in PoCs that can create new revenue streams, closely align with carrier rollout plans, and above all, have a partner ecosystem comprising system integrators, network partners to test new technologies on the existing platform.
1. 2020-future-of-retail-technology-report sponsored by JABIL
2. The CIO’s Guide To 5G In The Retail Sector by Forrester
3. The Impact of 5G Report by WEF (www3.weforum.org)