5G and IoT: The turning point in disruptive retail

In Canada, more than 200,000 businesses have closed due to COVID-19, and this has been a troubling trend. Companies such as Pier 1¹ and Roots US² are just examples of retailers that have filed for bankruptcy in the last 15 months citing operational challenges and increased competition from online competitors.

However, as the population reaches higher vaccination rates and our marketplaces begin to open up, there are positive indications a return to physical retail is starting to emerge. In the United States, Target has seen increases in foot traffic of 8%³ in March as compared to pre-pandemic levels, with similar data from other retailers, particularly in the grocery segment.

2020‒2021: How is retail changing near the end of lockdown?

At the height of the pandemic amid full lockdown restrictions, analyst views around retail evolved from full demise, shift to digital only and now to a hybrid model. In April 2021, the Texas Rangers filled their stadium with 40,000 people as fans returned to sporting events, and states like Florida are returning to normal as COVID-19 restrictions are lifted, resulting in retail stocks like the GAP hitting a 52-week high back in May 2021 from customers’ pent-up demand. Even though shoppers have embraced omni-channel and digital during the pandemic, as purchases over mobile have increased from 30% to 39%⁴ (2020‒2021), a survey from PwC, Canadian Consumer Insights, indicates physical retail is returning to almost pre-pandemic levels (although segmented by type of retail, such as grocers and malls).

For example, Gen Z and Millennials, who represent almost 50% of the Canadian population, have embraced digital and omni-channel more so than Baby Boomers, but does this lessen the importance of brick and mortar stores? Absolutely not!

These segments still have a desire to return to stores, but they’re demanding service integration, more experiential store concepts, sustainable brands and safety-focused policies. And brands are responding to these expectations. West Elm implemented in-house coffee shops to encourage patrons to dwell longer in store, Samsung launched an experience store in New York City to immerse customers in its smart home and mobile technologies and VANS launched House of Vans, extending its brand with an underground skateboarding park and events space in London.

So where do IoT and 5G fit in?

New technology investment has centred around enterprise resource planning (ERP) systems and the development of better smart supply chains. This makes perfect sense, as customers prioritize fast delivery and product availability, both of which are enabled by these solutions. ERP forms the backbone for digital integration of applications and data, unifying execution and delivery of goods to end customers. New mobile technologies such as 5G and WiFi 6, while blending Internet of Things (IoT) technologies to ERP, create new business efficiencies through massive data access that reduces the cost to implement monitoring solutions with high-level automation.

However, as retail foot traffic begins to accelerate and the population is becoming more comfortable with returning to public spaces, we’re at a turning point as network, application and platform together can bring new store experiences. Our next generation of shoppers (such as Gen Z) has indicated a return to stores would require enhanced shopping experiences (40%), personal shopping experiences (22%) and new innovations (17%).⁵

New solutions focused on innovation and engagement are being implemented by leading retailers globally, including:

• Wayfinding and geolocation: Understand traffic patterns, product location, staff engagement
• Augmented reality and virtual reality (VR): Use VR to try on clothes, makeup or new hair styles
• Digital endless aisle: Enables stores to sell products without onsite inventory through touch pads or kiosks
• Wireless self-checkout: Scan and checkout, avoiding lines at the register
• Advanced stock replenishment: Shelf sensors and cameras monitor inventory and alert staff for re-stocking
• Engagement applications: Artificial intelligence-based engagement for shopping preferences, recommendations and discounts, where messages can be sent directly to consumers’ mobile devices for targeted advertising

At H&M in Berlin, staff wear bracelets connected to the Azure cloud to take requests from customers looking for help in fitting rooms or expediting the cash desk.

Sobeys, a leading retail grocer in Canada, started a proof of concept (PoC) in June 2021 for a smart cart where customers can scan, weigh and pay for items through a self-service checkout scanner, completely avoiding payment lines, which are one of the largest customer experience issues for grocers.

Walmart announced a test in two stores with Verizon to deploy 5G, integrating engagement applications to perform auto check-in to its new medical clinics and pull more shopping data behaviours.

So what's the hesitance?

We’re at a stage where wireless, applications, analytics, end points and edge computing are orchestrated to deliver new capabilities and insights through data automation that will optimize the shopping experience beyond traditional marketing strategies. This will create greater awareness and understanding of customer preferences and habits, producing superior engagement, pricing and inventory management that will bring unique journeys to every customer.

The above are just examples of new customer-facing innovations that can radically impact experience and provide invaluable sources of data, but these types of deployments are few and far between, outside of small PoCs, due to key hurdles:

• Data privacy: Data privacy continues to be a concern, along with how data is captured. But data can be anonymized, opt-in policies can be established and new beacon technologies that don’t have access to personal data are all options that can be applied as part of the data governance strategy.
• Solutions complexity: Ecosystem technologies and solutions build-out can be complex, especially as we look at data-intensive applications that involve multiple ecosystem partners such as cloud, device and network connectivity.
• Data return on investment (ROI): Retailers still struggle with what data to collect, what insight it really brings and the automation process of collection. For example, customer geolocation data may not seem valuable by itself, but combined with shelf inventory statistics or dwell time around promotion areas, it provides insights to ROI of new marketing campaigns. This can be automated through sensors, edge networks and data orchestration, building logic through multiple data sources to form new decision-making insights.
• Customer segmentation and their unique journeys: Retailers will struggle to understand customer segments and their expectations post-COVID-19, as behavioural data is constantly changing. Price vs. quality, innovation vs. availability, each segment is prioritizing expectations of their physical experience and looking at new digital integrations to bridge value unique to them.

Moving toward your next-generation store with 5G and IoT

Daniel Newman notes in a Forbes article that 86% of customers will pay more for great customer experience.⁶ Retailers and brands must become bolder and more innovative in how they address the in-store experience considering our next generation of shoppers, and this can be enabled through next-generation solutions, including 5G and IoT.

• Reimagine the journey: What is the life cycle of customers between demographics and stage in the LBGUPs (Learn, Buy, Get, Use, Pay, Service) process? What solutions can bring this to life? And how is their journey changing as we look at digital and omnichannel impacts?
• Invigorate the brand: Stock and competitive prices aren’t differentiators—they’re the minimum standard and expectations for customers. What is your brand’s North Star, and how does the store experience bring this strategy to life? Experiential stores, promotion of new social mandates, and premium and personalized services will become critical differentiators in the store experience.
• Rethink talent: Automation will require digitally upskilled staff and transitions to new productive roles. You’ll need to consider moving cashiers to customer service, expert product education (think Apple’s Genius Bar!) and allocating staff to shelf management to improve stock availability. The store model is shifting, and we need to think about an agile workforce and the right organizational structure to adapt.
• What data is key: Customer relationship management (CRM), basket size and attach rates are well defined and readily known key performance indicators (KPIs), but new sources of data are available and can be captured to enrich our understanding of customer behaviour. Geolocation and wayfinding will improve planograms and optimize sales campaigns, inventory sensors will ensure stock is on shelves, dwell time will provide data on product interest areas…however, orchestrating data from multiple sources to drive new levels of insights is where the power begins for retailers to become more personalized and relevant.

5G and IoT are enabling a new set of capabilities, bringing mobile infrastructure with fast computing power and customer-centric applications to enable real-time analysis of massive data inventories and create differentiated experiences and engagement models at the point of purchase that will increase revenue capture and loyalty.

_{1. “Bankrupt Pier 1 becomes a walking zombie,” Jordan Valinsky, CNN Business, July 31, 2020, www.cnn.com/2020/07/31/business/pier-1-new-owner/index.html.}

_{2. “J. Crew Files for Bankruptcy in Virus’s First Big Retail Casualty,” Vanessa Friedman, Sapna Maheshwari and Michael J. de la Merced, The New York Times, updated May 14, 2020, www.nytimes.com/2020/05/03/business/j-crew-bankruptcy-coronavirus.html.}

_{3. “Retail foot traffic rebounding faster for some than others,” Jennifer Marks, Home Textiles Today, May 24, 2021, www.hometextilestoday.com/retail/retail-foot-traffic-rebounding-faster-for-some-than-others/.}

_{4. “PwC’s Global Consumer Insights Pulse Survey,” March 2021, www.pwc.com/gx/en/consumer-markets/consumer-insights-survey/2021/gcis-2021.pdf.}

_{5. “Canadian Consumer Insights 2020,” PwC Canada, July 2020, www.pwc.com/ca/en/industries/retail-consumer/consumer-insights-2020.html.}

_{6. “4 Actionable Customer Experience Statistics For 2020,” Daniel Newman, Forbes, June 23, 2020, www.forbes.com/sites/danielnewman/2020/06/23/4-actionable-customer-experience-statistics-for-2020/?sh=cbf44f41a846.}