Times are tough for the world’s major retail names. From North America to Europe to Asia, those in the retail and consumer goods sector are battling rising costs and price deflation, hostile acquisition bids from competitors, an increasingly complex supply chain, tighter regulation and wildly fluctuating consumer and demographic trends. For those still operating on the high street, internet shopping continues to bite. It is no surprise that retailers are hungry for partnerships that can help them introduce greater flexibility into their business processes, achieve economies and explore new channels to market.
Many carriers, with competitive challenges of their own, are finding the retail sector a lucrative vertical to hit with a range of solutions. Some carriers are addressing retail as part of a process of verticalising their enterprise divisions, while others are redefining their wholesale businesses to include new types of intermediary service offering. In either case, expertise in connectivity is the carrier’s obvious calling card, differentiating them from others in the business transformation game. A traditional retail business is made up of physical branches that require lots of connectivity between them, as well as links to head office and warehouse.
Within individual stores there is also a role for the networking specialist in maximising yield through a better and more connected understanding of store dynamics and customer footfall. SingTel, Singapore’s largest carrier, has taken this one stage further, teaming with cyber surveillance specialist KAI Square to launch a video analytics service for retailers. IP-based cameras connect via the internet with a cloud-based analytics service that can track customer behaviour in-store.
The solution, claims SingTel, marries sophisticated analytics and cloud power with affordable hardware and existing broadband connections. Other carriers are working with retailers over a wider area than the shop floor, helping them to better manage online digital transactions by streamlining links between store and data centre, using experience of ultra-low latency connectivity gained through their work in the banking sector.
Omni-channel experience
Some carriers, such as Orange, TeliaSonera and BT Global Services, have built a whole practice out of addressing the connectivity and technology needs of retailers, both at store level and across their business estate.
One of the prime tasks for these carriers is to help the retailer meet demand for a so-called omni-channel experience, whereby customers are able to check what a retail brand has to offer either in-store or online via their tablet, smartphone or PC. The typical modern consumer wants to control their own seamless retail experience regardless of channel, expecting the retailer to enable that control.
Omni-channel initiatives have not always been a success for retailers, with some experiments ending with separate stock control systems and processes for each channel, and a disjointed mess overall. With help from carrier partners they are now looking to create a complete view of the customer across all sales channels. “As a market leader in our region, we have a lot of customers in the retail business, and we work with them to ensure they can transform successfully,” says Magnus Leonhardt, director of enterprise strategy and business development with TeliaSonera Sweden. “It’s about helping them to cover store, e-business and online in a unified way.
Retailers need to ensure an equally good in-store and online experience, optimising both aspects. This means we need to provide a combination of professional services and technology, including next generation technologies to help make the retail experience more interactive. We work on ways to integrate all aspects from voice to social media.” Competitive edge in retail is all about speed to market and agility of thought and action, says Leonhardt, meaning some very short lead times between initial idea and working solution. It also necessitates work at the cutting edge of what today’s technology can achieve and the occasional counterintuitive leap of imagination: “We have worked with various other third party organisations here in Sweden, such as the former Post Office,” he explains. “With them, we’ve developed the ability to ship goods to places other than the customer’s home address, maybe to their place of work or to the boot of their car. We’ve worked with car manufacturers on that.”
For retailers with a traditional storebased business, the ever present challenge is retailers with an online-only presence, a sector driven by the likes of Amazon and Alibaba. Shahar Yaacobi, head of internet of things (IoT) marketing at software vendor Amdocs, believes that cellular services offer a potent counterbalance to this threat if the traditionally-minded can adapt: “The retail store of the future will be experienced as a concept store through mobile devices,” he predicts. “We are seeing considerable innovation happening across the market, focussed on the retail customer journey, with internet of things solutions addressing optimisation of inventory management and merchandise layout, delivery of personalised in-store promotions in real time via mobile or store screens, tracking of customer in-store journeys, automated checkout and more.”
Leapfrog the competition
IoT is a powerful weapon for the communications service provider looking to help retailers move from the physical to the digital world and leapfrog the competition, he believes. “Together, service providers and retailers can enhance the retail customer experience in a non-intrusive way, driving sales and revenues,” says Yaacobi. “In the case of personalised promotions, for example, retailers today are serving content and ads through self-owned and publisher apps, using them as distribution channels. The promotions are personalised, based on data generated by social networks, IoT-based in-store data, third party data and customer data provided by the service provider.”
Mobile network operators are not the only players at the cellular cutting edge. Tim Ensor is head of connected devices with Cambridge Consultants, the lead engineer on a recent IoT and robotics warehouse project for retailer Ocado. Ensor specified a system based on 4G telecoms technology deployed in the unlicensed 5GHz Wifi band to meet Ocado’s goal of coordinating thousands of fast-moving machines to within a fraction of a second. “Ocado wanted to develop a warehouse automation system for their distribution network,” he explains. “One of the challenges was to control and orchestrate the warehouse’s robots to achieve the right efficiency and scale. They both wanted to grow their own business in the UK, and provide a logistics and fulfilment system for other retailers to use. We took our knowledge of 4G and repurposed it to create real time control for the robots.”
Ensor says a 4G solution was the only option, once it was apparent that Wifi was not the right technology: “With 4G you’ve got the ability to divide radio resources for different tasks, and its reliability was important too,” he says. “The system can talk to 1,000 robots 10 times a second. When 5G comes, it will drive so much more in areas like high density deployment and real time control.” Although not a network operator, Ensor believes that what Cambridge Consultants achieved shows the way an operator could go: “I can see that for network operators, this might not seem like a sufficiently large market for them to go there today, which is why Ocado came to talk to us,” he concludes. “But it’s one for the future.”
Customer in full control
In future, IoT solutions are likely to be as important in-store as they are behind the scenes. Already they can bespoke the retail experience to a point where the customer feels in full control, down to the level of the reading of a customer’s emotions.
The Memory Mirror allows customers to record, share and compare the trying of an outfit before they buy it, and includes facial recognition and emotional analytics that can decipher the customer’s mood. “Soon, any retailer not including this type of solution in their digital strategy will risk not only disappointing customers, but most likely losing customers entirely,” believes Hubert Da Costa, vice president EMEA with networking product vendor Cradlepoint. But even the latest and best innovations can be undone by avoidable security failures. At all points, says Da Costa, the ability to process payments is dependent on the network connection and therefore on the network service provider: “But while a connection is vital, it also needs to be secure and Payment Card Industry (PCI) compliant,” he says. “Some 80% of retail financial data breaches occur in small stores and pop-up shops, because these retailers are lax in terms of using an existing Wifi network, rather than their own dedicated network.” Instead, he says, retailers should be using a parallel network, physically ‘air-gapped’ from other networks, to maintain a high level of security when processing card transactions: “This is an opportunity for carriers and wireless network providers to deliver a separate, wireless network to complement an existing broadband network.”
The technology has long existed for retailers to capture customer data at the point of sale. The next wave of carrier-led solutions will do a lot more, including the analytics of customer insights in real time, the enablement of personalised experiences and the forging of a more understandable link between marketing and sales. With the right carrier-driven back end solutions and front end data capture abilities, retailers will enjoy smarter solutions, benefit from happier customers and start to envisage how the store of the future will function.
The risks and rewards of A2P mobile services
Application to person (A2P) mobile services are an important tool that many retail brands have come to rely on, giving them a link to the consumer that is as direct and effective as it is inexpensive. But A2P comes with challenges that affect both the mobile service provider and the retailer they are supplying with the service. Poor and insecurely managed A2P services can cause big problems, with consumers left waiting for important notifications, such as emergency bank balance alerts, and can even put them in danger of falling foul of spam and phishing attacks.
For the operator, the prime risk is grey routes that leverage A2P but with no termination fee. “The A2P market is going to be worth $60bn this year, and is a very important technology for retailers as much for their operator partners,” says Simeon Coney, CSO of network protection specialist AdaptiveMobile. “We sit on the carrier network analysing every route. Those exploiting grey routes have a lot of methods at their disposal to avoid paying, creating problems for both retailer and operator.”
Coney says that when an operator blocks the origins of grey traffic, it can be a sledgehammer approach that blocks legitimate traffic too: “There can be a lot of side effects, not just in reduced revenues,” he suggests. “A2P, unlike spam, is something the consumer wants, and confusing or denying the consumer is not what the retailer wants to do. Grey routes and spam can both taint the customer experience of a brand. Beyond that there is account hijacking where credentials and credit card information can be taken online. Another bad scenario is grey activities that route sensitive details through countries with a bad security reputation. These are all challenges that the network operator can and must fix.”
