Take 5: 5G in retail has been saved
Take 5: 5G in retail
Part of the Take 5 on 5G article series
Jean-Emmanuel Biondi and Ajit Prabhu, leaders from Deloitte’s 5G and Edge Computing practice, share their perspectives on five key questions around 5G in retail.
1. How will 5G and edge computing affect the retail industry?
Ajit Prabhu: With 5G as a catalyst, we are entering a period of hyperconnectivity and anticipate continued proliferation of connected devices. 5G, together with edge computing, will provide a platform for retailers to engage with customers in new ways, as well as drive operational efficiencies.
Jean-Emmanuel Biondi: While the customer experience in-store today is still very similar to the experience a decade ago, we’re on the verge of disruption where the in-store customer experience and retail operations will be vastly different. 5G in retail will serve as an accelerator for numerous technologies, such as Internet of Things (IoT) and augmented reality (AR), that will improve the in-store customer experience in terms of personalization and engagement with products. It will also serve as a catalyst for operational efficiency improvement, including inventory, store operations, and labor productivity. This is especially relevant today, as the COVID-19 pandemic has affected traffic patterns and customer engagement in stores. Looking ahead, adoption of 5G in the retail industry will accelerate over the next couple of years, even before all consumers are equipped with 5G-enabled mobile devices.
2. What are some key 5G retail use cases?
Jean-Emmanuel Biondi: There are numerous 5G retail use cases centered around the customer. One area that will be positively affected is the in-store customer experience. For example, touchless and contactless checkouts, using AR for product or brand information, and wayfinding in the store will be enabled by 5G and edge computing. Another area is personalization, where retailers will be able to use advanced artificial intelligence (AI) and machine learning (ML) to personalize pricing and promotions in-store.
Ajit Prabhu: On the operations side, there are several 5G retail use cases that will raise the bar for inventory productivity. For example, real-time out-of-stock, shelf replenishment, and shrink reduction will be made possible. Both of these use cases will use a combination of intelligent cameras and sensors. Workforce and store efficiency are other areas where 5G and edge computing will have an impact. This will include use cases such as planogram design and compliance, associate training with virtual reality (VR) and AR, and augmented safety.
3. Who should be thinking about 5G in retail?
Jean-Emmanuel Biondi: All retailers should be considering the impact this technology will have on their operations and 5G retail experience. We’re starting to see retailers with heavy customer traffic and high SKU count, such as grocery retailers and mass merchants, start down the 5G and edge computing deployment path. Pharmacy drug store chains, convenience stores, hard goods stores, and electronics are likely to follow. For discretionary soft goods like footwear and apparel, the technology required is more complex and will therefore be further down the road.
Ajit Prabhu: 5G and edge computing will affect the front office, back office, and operations, meaning executives responsible for information technology (IT) and operational technology (OT) will need to collaboratively envision next-gen infrastructure enabled by 5G and edge computing, architecture, and applications.
4. What obstacles might retailers face as they explore 5G for their organization?
Ajit Prabhu: With every new technology, there are new issues to address, and 5G and edge computing is no different. For example, within stores, a 5G network option is a private network that is owned and operated by the enterprise. As the number and types of devices (e.g., sensors, cameras, Points of Sale) on this network grow, their life cycle, security, data policies, and more will have to be managed by the retailer. This competency may not be available in-house.
Jean-Emmanuel Biondi: Proofs of concept are relatively easy to envision and execute. However, the value to retailers is in the deployment of use cases at scale across their stores and warehouses. We find that it is difficult to build a business case for 5G and edge computing on one use case. Developing a compelling business case requires an end vision, inclusive of multiple 5G retail use cases that will benefit from a common base infrastructure.
5. What should retailers be doing now to get started?
Jean-Emmanuel Biondi: First, digital transformation initiatives that are in flight or being planned must take into account where and how 5G and edge computing capabilities can offer benefits and address financial and operational challenges. In parallel, retailers should consider future possibilities for customer experience and store operations that can be enabled by next-gen digital infrastructure, including 5G and edge computing. To get started, begin with proofs of concept to test impact, cost, and technology readiness, and use the data gathered to build the business case for transformation at scale.
Ajit Prabhu: There are several options emerging on the supply side for the 5G retail experience. For example, the permutations of private versus public 5G and private edge compute versus public create alternative cost, performance, and extensibility trade-offs. Now is a critical point in time for retailers to begin evaluating supply-side technology options, gathering a short list of suppliers, and testing with a set of predefined 5G retail use cases.