5G will usher in a new era of shopping for both consumers and retailers

Two females choosing bags in shop

The past decade has not been kind to brick-and-mortar retail. As customers shift to online purchasing and private equity firms strip legacy retailers of their assets, retail chains have gone through a challenging time. However, 5G will transform retail in the 2020s.

With 5G, retailers will have a host of new opportunities for customers to interact with brands and enjoy better shopping experiences. This technology will make it easier for shoppers to navigate stores, use smart dressing rooms (which allow them to instantly order items in different sizes and colors), more closely integrate physical stores and ecommerce and create new opportunities for retailers to generate revenue.

The faster communication speed and long-term cost savings retailers enjoy after installing 5G-friendly equipment mean major changes to both the shopper experience and how retail stores operate behind the scenes. Joe Skirupa of Retail Info Systems says 5G will lead to significant backend changes for retailers including significantly reduced latency and lag for in-store internet connections (which will enable a new generation of high-performance applications) and the ability to use all wireless in-store internet connections instead of the mix of wired and wireless we see today.

I think we’re seeing an effort to get more of the digital connectivity piece seamlessly embedded into the in-store experience.

Scott Lachut, President of Research and Strategy at PSFK

As Scott Lachut, president of research and strategy at trendspotting firm PSFK puts it, “In general, I think we’re seeing an effort to get more of the digital connectivity piece seamlessly embedded into the in-store experience. From a shopper point-of-view, that means connecting the dots between online or mobile and bringing that to life in the physical world in terms of personalization, relevance and convenience. For retailers, it’s having a deeper understanding of what’s happening inside each of their stores through the collection and synthesis of data.”

Personalized marketing and communications

Retailers already have access to sophisticated technologies such as routers, beacons, analytics platforms and backend software that allow them to link the identity of an in-store shopper with their digital footprint more or less successfully. For instance, beacons – devices that transfer Bluetooth signals to nearby smartphones and are used by retailers to estimate foot traffic and customer demographics – were a $1.17 billion market in 2018.

Because 5G can cover the square footage of a big box store with a much stronger signal and much faster speed than previous technologies, in-store customization will become easier to implement.

One of these methods of in-store customization is personalized digital signage. Retailers have already experimented with broadcasting custom advertisements to screens located near in-store customers promoting retargeted products they may have abandoned in their online shopping cart. These advertisements have performed less than ideally in real-world settings due to inaccuracy and high cost. However, 5G’s extra bandwidth will vastly improve ad performance at a sharply reduced price point.

Retailers will also increase the interactivity and usefulness of their mobile applications in the next five years. Major brands like Target and Lowe’s already offer mobile apps that tell shoppers which aisles the items they are looking for are located in. These wayfinding capabilities will become more widespread, with 5G and smart shelves making it easier for customers to see in real-time if a product is in stock or not.

Forrester, a research firm, notes that personalization is one of the most important parts of the retail app experience. Customers want to easily find the items they are looking for and learn about relevant discounts; personalization is the easiest way of connecting them with the information they need.

Augmented reality and virtual reality experiences

a woman using a VR headset while shopping in a fashion boutique

Although retailers have experimented with augmented reality and virtual reality for years, they’ve faced one major problem: AR and VR experiences in stores are hard to pull off.

VR headsets need constant cleaning and recalibration to work in retail settings and customers have traditionally been hesitant to download AR-enabled apps to their phones that are heavy on novelty and light on functionality. And AR and mixed reality headsets such as Microsoft’s HoloLens require a significant amount of user training before use and are better suited to trade shows and special events than everyday in-store use.

However, the next generation of AR headsets are expected to be inexpensive and easier to set up. Because 5G offers so much more bandwidth in retail settings, brands can offer users much more immersive in-store experiences.

Retailers such as Macy’s, Rebecca Minkoff and Ralph Lauren have also implemented smart mirrors and smart dressing rooms at various degrees of roll-out. 5G will make the cost of these smart mirrors and dressing rooms, which allow users to see how they’d look wearing items in different styles and to instantly order a different size or color of an item, within reach of retailers at scale.

But one of the biggest changes will be largely behind the scenes.

Inventory transformation

Workers In Warehouse Preparing Goods For Dispatch and Dealing With Inventory

The data retailers seek primarily covers three areas: The logistics of how inventory gets to stores and where items are physically located, item sales and the habits and preferences of individual shoppers. Retailers generally view data for all three inside specialized analytic platforms in hopes of finding a 360-degree picture of their business. Meanwhile, retailers are searching for this data at a time when the brick-and-mortar and ecommerce worlds are converging.

One of the biggest buzzwords in the retail world these days is “omnichannel.” Roughly speaking, omnichannel retail means that companies integrate their ecommerce, warehouse and in-store experiences. In an ideal situation, this would mean customers can buy the same items online or in stores, employees instantly know where inventory is at any given moment, and that in-store experiences are meant to complement ecommerce sales and vice versa.

However, many retailers still struggle in providing omnichannel experiences. Data is difficult to share across different platforms and something as simple as, say, providing a coupon at the cash register for an item a customer looked at online requires a significant amount of engineering hours.

Smart shelves, for instance, can update inventory in real-time as customers purchase items and can trigger workflows reminding employees to restock items.

Because 5G speeds up the sharing of data, it also makes it easier for retailers to implement omnichannel efforts. Smart shelves, for instance, can update inventory in real-time as customers purchase items and can trigger workflows reminding employees to restock items. Better internet access inside big box stores can allow retailers to quickly send customers relevant discounts by text message or app.

Looking to the future

For retailers, having a more sophisticated technical operation than the competition isn’t just about prestige. It’s about staying relevant and capturing market share.

As Lachut puts it, “[A] holistic view of retail is critical. The shopper doesn’t think in terms of distinct and separate channels. They simply want to shop in a manner that’s most convenient at any given moment. As a result, retailers need to remove any operational and/or information silos that exist and think in terms of how all of their channels can work together to create the best experience for each shopper.”

Over the next few years, several converging trends will continue to advance the retail experience. Advances in video analytics plus 5G’s drastic lowering of retail costs will make it easier for retailers to take advantage of in-store consumer tracking for a range of sales and security purposes. Retailers will have to tread lightly or risk customer blowback over surveillance and invasion of privacy. Meanwhile, retailers will have to see whether customers prefer sales associates helping them in-person in stores or if customers would rather locate items and check prices through their smartphones… and there may not be a one-size-fits-all solution for that.

While the barriers between ecommerce and brick-and-mortar retail continue to disappear, shoppers will encounter a host of new technological innovations. Some will be heavily marketed and promoted, while others will take place largely behind the scenes. Regardless, all come from the same root of retailers offering experiences their competitors simply can’t offer.

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