With fast mobile broadband, low latency, edge computing and the Internet of Things about to become a reality thanks to 5G, what this mean for the retail sector?
Silicon spoke with Craig Lodzinski, Chief Technologist for Developing Technologies, Softcat, one of the UK’s leading IT solutions providers to find out more.
How 5G will disrupt the retail sector?
We need to address the nature of 5G. 5G is broadly split into two categories: firstly, the standard mobile space, which is an evolution of existing cellular capability, building upon what we already have in mobile. Secondly, we have the millimetre wave spectrum that introduces a huge shift into high bandwidth, low latency communications over the cellular network.
For retailers, we will see a similar shift we saw with the arrival of 3 and 4G in the cellular space, which is to say, consumers accessing apps and websites faster and the ability to deliver rich media to the consumer. With each generational improvement, we have more bandwidth and capacity to deliver rich media. The ‘catwalk’ videos of ASOS are a great example of this potential.
However, as physical retail becomes more experiential, the ability to deliver great content over the wire allows for a change in what we can achieve in popups etc. Being able to build a rich media experience space for a short period of time, using services in the public cloud, without the need to run fixed-line communications, is a potential disruption factor. When we look at tying retail experiences to sporting events, short-lived experiences like London Fashion Week or The World Cup, retailers can bring flagship experiences that blend digital and physical to locations without having to worry about network considerations.
With the continued struggles of the traditional high street, the ability to use 5G networks to provide data services to POS systems, digital signage, in-store experiences etc. absolutely has the potential to disrupt what we consider to be the traditional store environment and build out new consumer touchpoints in the retail sector. Nonetheless, as with other technology transformations, 5G is a platform, and its disruption will be most significantly affected by what retailers and brands make of it.
Will 5G do more than simply accelerate the development of omnichannel retailing?
Personally, I think the impact of 5G on omnichannel is overblown. Omnichannel is here to stay and is increasingly an imperative for most retailers. Equally, the challenges of areas such as reverse logistics will not be solved by 5G. The adoption of mobile technologies depends far more on cultural factors than on technological factors. When you consider Alipay/WeChatpay etc. the Chinese technology culture is far more significant than the network, wherein the data volume can be handled perfectly fine by 3 or 4G.
However, as I mentioned earlier, the ability to spin up a retail environment without fixed line communications could have a very significant impact on how we build physical retail. We know already that bricks and mortar retail are under threat in a variety of ways, and 5G networks will only exacerbate the impact of technology to change this mode of operations.
From my perspective, 5G networks will increase the blending of physical and digital retail environments. By removing bandwidth and latency restrictions from the physical retail environment, brands will be able to create a seamless brand identity across all touchpoints. If brands can then merge smart, context-aware technologies in the retail, out of home, digital and physical space, those who take advantage will be able to reinforce further a seamless identity, rather than to split the digital and bricks and mortar presence.
As 5G can, in effect remove latency from the communications shoppers’ experience, are faster apps etc a game changer for retailers?
Much of this impact depends on individual habit. We know for sure that slow load times impact bounce rate in the web environment, both for retailers and other providers, but of course, given that retailers often have rich media in their web environment, there is a more significant impact.
However, given that many retailers still have terrible apps, faster networks won’t make their apps work suddenly. Understanding the customer, building better funnels, providing tailored, microtargeted content, engaging at the right touchpoints are all far more significant.
If you are a retailer who has content ready to roll but can’t deliver the killer content because latency and bandwidth are pushing your bounce rate up, then absolutely, 5G can change the game. If you haven’t yet figured out how to use mobile as a sales channel, how to bring physical retail closer to the consumer, how to blend digital and physical, then a technology shift like 5G won’t change the game at all because you’re playing a different game.
5G is very much a platform. It’s a technology that is what you make of it. It can be a game changer to a retailer if you have the correct combination of forces to make it work for you. Those who expect it to suddenly just make things better are barking up the wrong tree.
Will 5G deliver new revenue streams to retailers?
If you sell phones, absolutely. I know I’m banging the same drum, but 5G is a platform, it’s not a panacea. We’ve had mobiles for a while now. We’ve had the internet for a long time. Any new technology is what you make of it. It’s not a silver bullet. If you sell 5G enabled hardware and services, then yes, you’ve got a new revenue stream and given the declining replacement rate of mobility hardware, that’s important to telecoms and IT hardware sellers.
But if you sell clothes? Food? Cars?
It’s a feature change. If you sell cars, 5G enables feature changes like L3/4 autonomy that may well dramatically change the replacement rate. If you sell clothing, you can modify your mobile strategy to take advantage of the increased bandwidth and lower latency. If you are a gaming bar, you can stream games rather than having on-premises hardware but, fundamentally, the shift still depends on what your product and proposition are. A different network isn’t going to transform your product unless you sell networks and network accessories.
Does 5G offer the speed and security to make m-commerce central to retailers’ services and provide a retail channel that will eclipse e-commerce?
The technology will remain secondary to the user experience and culture. In the west, consumers’ habits of shopping at bricks and mortar stores will not be dramatically impacted by 5G. Equally, subsegments will be far more affected by device type than by network type. For example, fashion retail in specific segments has the issue that even with folding devices, the larger high-resolution screens of tablets and PCs, that generally connect to fixed-line networks, will remain the dominant consumption method. This is largely due to the screen size affecting the decision process in that many consumers ca n’s make effective decisions on a five-inch panel.
In spite of this, the general trend away from the traditional PC model does lean towards m-retail. The nature of both the modern workplace and the contemporary lifestyle dictates that the desktop and laptop PC is rapidly becoming irrelevant for a wide range of consumers. For many individuals, the home computing environment is becoming a single source environment of mobile, or a blended environment of mobile and tablet.
5G is more an enablement factor, accelerating the transition from home PC to a mobile-only home computing environment. As individuals increasingly move away from a dedicated computing device or the environment at home, the effect of mobile networks and technologies will become more pronounced.
Retail is such a blended technology environment that individual technologies, even ones as significant as 5G, will (or rather should) not have a dramatic transformational effect on retail strategy. Retailers who understand the effects of 5G and adopt the technology as part of their communication and transaction blend will be the ones that see the most significant benefit.
5G is just tech, and my god, tech isn’t going to save retailers who are bad at selling. Like most things in technology, 5G will lower the barriers to entry into retail markets, therefore limiting the ability of incumbents to derive revenue from a brand rather than quality.
5G is more of a bellwether that reminds retailers that without close attention to the needs and requirements of their customers, retailers will continue to wither on the vine. No longer can retailers rely upon position and barriers to entry to sustain their revenue figures. Further removing the restrictions on how brand owners get a product into the hands of consumers will lead to a more competitive retail environment, with technology often the differentiator. We have seen that as an enablement factor behind the scenes in the rise of Inditex et al., and on the front end with Amazon, Taobao etc. 5G is another technology shift that will further compound this.