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Reward, some risk for retailers in a 5G world

The 5G rollout is expected to have material impact on retail operations, primarily by creating an explosion in IoT devices and sensors — and video, already core to retail strategy, could see its worth expand. By increasing speed and reducing resource drain, video feeds will become increasingly accessible for people or artificial intelligence (AI) applications to utilize.

Moreover, unlike some promising tech that has failed to deliver, analysts seem confident that retailers will capture benefits from enhanced mobile broadband. Because the advance denotes an incremental improvement — rather than a new technology category — it should be easier for retailers to make use of it.

5G use cases
Fifth generation wireless telecommunication technology (5G) supports cellular data, voice, and video networks and features superfast transmission of signals, a capability that will accelerate numerous technologies. “The most important service in 5G applications for retail will be massive IoT,” according to a June 2021 paper published by the Institute of Electrical and Electronics Engineers, Verticals in 5G MEC-Use Cases and Security Challenges.

Another new study, How Technology is Changing Retail, published in the March 2021 Journal of Retailing, reached a similar conclusion. It predicts that 5G will enable many “instantaneous, stable, and real time interactive digital and in-store shopping applications, including those involving other technologies such as IoT, virtual reality (VR), augmented reality (AR), and mixed reality (MR) with AI at the edge.”

Researchers envision multiple use cases. Some are decidedly futuristic, like smart bags that automatically count inventory items and handle transactions, but others are expected sooner. By reducing the power consumption of in-store IoT devices, retailers will be able to access technology like smart labels and other retail enhancing sensors and enjoy better asset tracking with 5G enhanced connectivity.

“It opens several use cases in the area of personalized signage based on proximity of the customer to the sign itself,” according to the authors of How Technology is Changing Retail. “It also has long-term potential for less expensive and timelier ways of tracking product within the supply chain.”

The authors noted that some retailers are testing an in-store technology called Smartdome, which comprises IoT sensors, video cameras, and public address systems. With this type of integrated system, capabilities are easier to operationalize. The researchers said they could envision “smart distancing,” for example, in which shoppers are monitored inside a store and announcements are made when they deviate from social distancing requirements.

Numerous 5G retail use cases revolve around retail consumers, but “on the operations side, there are several 5G retail use cases that will raise the bar for inventory productivity,” according to a Q&A with Ajit Prabhu, a consultant in Deloitte’s 5G and Edge Computing practice. “For example, real time out-of-stock, shelf replenishment, and shrink reduction will be made possible. Use cases will use a combination of intelligent cameras and sensors.”

By reducing latency in video applications, 5G is expected to facilitate the performance of video systems and enhance retailers’ ability to exploit video surveillance to be more productive and provide enhanced customer service.

Will 5G deliver?
There are multiple factors driving businesses to adopt technology, but obstacles do exist. This is especially true in retail, say researchers, where stores often resist new tech because of a lack of perceived incremental benefits, increased financial costs, inertia, higher learning costs, and employee acceptance challenges.

Decisions can be further complicated by needing to choose one technology at the expense of another — and because some technology adoption decisions are irreversible. “Because retail margins are typically low, retailers are typically wary of choosing the wrong technology,” according to How Technology is Changing Retail.

These barriers, coupled with the challenge of successfully implementing innovative technologies, are why some fail to transform retail operations as expected. But these hindrances are not expected to significantly impact retailers’ decision to embrace 5G capabilities, say researchers, because there is already familiarity. Indeed, some of the use cases 5G is expected to deliver are already doable, just made easier with 5G.

The transition from 4G to 5G telecommunication technology is seen as incremental rather than radical. “This classification has potentially important implications for retailers,” say researchers. “Radical technologies might require much greater adoption efforts and change management, especially for retailers who may have to deploy these technologies in multiple dispersed locations.”

Mild headwinds
5G does present challenges, warn Deloitte consultants. First, its value depends on retailers deploying use cases at scale across warehouses and stores, according to Jean-Emmanuel Biondi. “We find that it is difficult to build a business case for 5G and edge computing on one use case.”

There are issues to address with every innovative technology and 5G and edge computing is no different, according to Prabhu. “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 on this network grow, such as sensors, cameras, and Points of Sale, their life cycle, security, data policies, and more will have to be managed by the retailer.”

5G will enable stores to interact with customers in even more dynamic and personal ways than they do currently, but that has strings attached, warn the authors of the report to the IEEE. Data analysis tools help merchants deliver customized shopping experiences but may include data other than shopping habits such as login data, account details, and personal data, increasing the potential for harm should an attacker successfully exploit the connection between a customer and a retailer.

“Thanks to Internet technologies, augmented reality, and face recognition, the shopping experience is becoming increasingly networked, but here, too, stronger networking entails a greater risk of data loss,” notes the study. “Therefore, creating a resilient strategy approach, such as in the banking and healthcare sectors, is crucial for [retail].” LPM

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