As telecom providers lay more fiber and roll out new 5G-enabled phones, the fifth-generation wireless network is coming closer to mainstream reality. The increased bandwidth and speed could enable retailers to drive new efficiencies across the spectrum, from increasing visibility in the supply chain to enhancing the customer experience through things like augmented reality.
While there are reports that the spread of COVID-19 may delay the deployment and adoption of 5G, others say it could speed it up as social distancing measures have increased the demand for bandwidth.
Whether a mainstream rollout of 5G happens sooner or later, retailers need a plan for how they’ll capitalize on the technology. That includes assessing current operations, identifying possible applications with a strong ROI, and having a system to pilot and roll out new 5G initiatives.
Faster speeds, greater bandwidth, more devices
The fifth-generation wireless system, more commonly known as 5G, uses long term evolution frequency ranges to boost the capabilities of the existing 4G network. As the technology relies on shorter wave lengths, it will be able to support more than 1,000 devices per meter and speeds of up to 10,000 Mbps. That’s multiple times faster than the average 60Mbps most broadband consumers have in their homes and would enable a mobile user to download a full movie in only a few seconds.
While 5G will offer consumers a new level of speed and convenience, it will also propel many industries “to the next level” of connected performance, says Michele Dupre, group vice president at Verizon Business Group. As of March 2020, Verizon had rolled out 5G in more than 30 markets, installing new towers and laying fiber cables to support the growing system.
Consumers are also growing more aware as new 5G-enabled phones and devices hit the market. To take full advantage of the increased speed and bandwidth, most will need to upgrade to the latest phones with 5G-enabled chipsets, Dupre says. Roughly half of consumers are now aware of the coming fifth-generation wireless system, according to a survey and report by PwC, and 62 percent find the increased speed and performance “very appealing.”
The improved and more responsive wireless system, and its ability to support real-time actionable analytics, is expected to drive more than $1.2 trillion in additional global economic retail industry value by 2035, according to a report by the World Economic Forum. Much of that growth will not come from directly from 5G itself but all the new applications it will sustain, says Dan Bieler, principal analyst at Forrester Research.
“It’s not really about 5G per se but about all the customer engagement activities and operational efficiencies it will support,” Bieler says. “There will be significant benefits in the retail industry.”
A retail game changer
Many retailers are already expressing interest in how 5G might enable greater connectivity and improved efficiencies in everything from manufacturing and supply chain to ecommerce and the in-store experience. The Wall Street Journal reported in March that Walmart and Verizon were in talks to equip stores with a 5G network this year to enable new digital health services to support real-time medical data and video sessions with doctors.
“I would imagine all big retailers globally are already looking at the 5G opportunity,” Bieler says. “They may not have a press release about it, but it’s an important technology for customer engagement.”
There are several areas where the retail sector will make use of 5G, says Jean-Emmanuel Biondi, principal at Deloitte. The network itself will serve more as an infrastructure and enabler to support many applications retailers have been working on for years but have yet to fully deploy across their operations.
For instance, advanced video applications, robots, virtual reality, immersive experiences and inventory tracking will run so much smoother, Biondi says. “Currently these are things that can be used but can better be leveraged by retailers at scale with 5G. It’s when we’ll see many of these things come out across the store and across retail as a whole.”
While 5G offers faster speeds and low latency, one of the most important aspects is that it lets more devices be connected in a small area, Bieler says. Superseding the performance and reliability of 4G, the new network will provide the infrastructure to support millions of devices and tags in warehouses and stores and transmit near real-time data, he says.
In the area of customer experience, 5G will supercharge and enhance the capabilities of machine learning and artificial intelligence to support new applications in the store. One technology that is ripe to thrive with 5G is voice, says Sebastian Jimenez, founder of RillaVoice. Its system, which can only work with 5G, uses powerful AI to analyze verbal customer interactions in real time and provide sales associates with the most optimized responses.
For example, if a customer asks for a product that is not in stock, the store associate gets an instant notification on their phone and in their headset, prompting them to make a recommendation or alternative. That eliminates the need to leave a customer to check a computer or stumble around a device.
“Imagine this is happening thousands and thousands of times every minute in the same store with hundreds of store associates,” Jimenez says. “5G will enable that.”
5G will also support edge computing and digital transformation to help retailers create an endless aisle that blends physical and virtual channels and better digitize the in-store experience.
As its rollout coincides with the proliferation of IoT devices and sensors, 5G will enable retailers to acquire precision sensing that can measure the location of a smartphone within 30 centimeters, Biondi says. Being able to instantly connect in-store inventory with phones and smart devices in consumers’ homes could drive a new era of retail.
“It could be in the store to increase productivity,” Biondi says, “or simply improve the customer experience, even at home.”
As telecom companies increase the pace of infrastructure development, retailers can expect to see a much broader footprint of 5G networks over the course of 2021 and 2022, Dupre says. Many believe 5G will be a business-led transformation with some of the first major retail deployments being in malls and grocery stores because they tend to have a large number of SKUs. Full-scale adoption will happen over the course of the next five to seven years as retailers build upon successful applications, then test and roll out new ones.
However they proceed, retailers will first need a clear customer engagement strategy to determine if 5G will benefit them more than existing 4G or 4G LTE services. By focusing on the outcomes of the services 5G can support, they can ensure close cooperation between teams and business leaders to deliver on objectives.
Retailers will also have to align their data analytics strategies with their 5G strategies, Bieler says. “Once you know what you want to achieve, you need to decide if there are alternatives to 5G,” he says. “If not, you need to consider the total cost of the solutions, the device network and other additional costs.”
Finding a solid and quantifiable return on investment will be key as retailers strive to capitalize on 5G rollouts and the new opportunities they will bring. There are several areas retailers should consider from an ROI standpoint, Biondi says.
One is everything related to customer experience, including the connected store and the remote engagement where data and connectivity will help drive product customization and personalization. Precision sensing will also offer new opportunities in personalized promotion, digital signage and other things related to the customer experience.
Another area with a strong potential ROI is in inventory and production, Biondi says. Using 5G-enabled sensors and video analytics, retailers will be able to attain real-time and more actionable information to optimize inventory.
5G will also better enable edge computing abilities and AI to reduce costs and improve efficiency in the workforce. One application will be the greater use of more advanced cashierless checkouts and better deployment of labor so retailers can ensure associates are being used in the areas where they are most needed.
“We see retailers trying a number of use cases whether in DCs or in their stores,” Biondi says. “That’s where we see the tests. I believe that we have retailers who are trying to figure out how to get started and where to start. It starts with a couple of use cases.
“From there you can see the ROI and understand how to move forward and create a roadmap of how to put 5G in your retail environment,” he says.