All the big UK telecoms firms have revealed the launch dates of their 5G networks to great fanfare, but what does it mean for retail?
The UK has become one of the most cutting-edge markets for mobile internet connectivity and the latest iteration, 5G, is already here and will develop further over the next few years.
There is no doubt 5G will offer greater capabilities, but whether they will be evolutionary or revolutionary retailers is still unknown.
Mobile analytics company Opensignal vice president of analysis Ian Fogg explains that the way next-generation phone networks are rolled out means technological advances will be staggered.
Roughly once a decade, telecoms technology global governing body 3GPP develops the standards for the overarching technological framework for a next-generation network such as 5G.
“Every 10 years of so there is a new radio technology for the phone to communicate to the network and this gets branded as a different ‘G’ generation,” says Fogg. “5G is not one standard. You have the initial version that is being launched now, which is really focused around smartphone users, and then over the coming years newer 5G standards will come out.”
The future iteration of 5G will improve ‘latency’ – the delay before a transfer of data on any connected device begins following an instruction to begin.
It is the introduction of ‘ultra-reliable’ and low-latency technology in the next iteration of 5G that will eventually enable improvements to industrial automation.
However, those improvements are expected to be at least 18 months away. In the meantime, the low-hanging fruit for retailers is in the increase to download speeds and greater bandwidth 5G is ushering in.
Mobile commerce boost
The clearest opportunity for retail is the boost 5G will provide to mobile sales. 5G will increase the opportunities for consumers to browse and purchase online. It is expected to make online shopping much more accessible for commuters and rural consumers.
“We will see a lot more engagement with retailers from people that are commuting,” says Deloitte partner Colin Jeffrey. “At the moment, there are still quite a lot of challenges over losing signal. As 5G is rolled out, there will be a consistent, strong and fast download speed. I think people will plan to use that commuting time to engage with retailers and their favourite brands.”
CCS Insight analyst Kester Mann recently tweeted that the 5G speeds provided by EE at London Bridge station, both on the train and in the concourse, were 10 times faster than 4G speeds in the same location.
While 5G networks are launching in major cities, they will eventually be rolled out nationwide and that is likely to provide a boost to rural commuters who are poorly served by mobile internet coverage and fibre and fixed-wire connections.
5G is initially being run on new radio spectrum bands but as of next year, the operators will begin repurposing some of their 3G and 4G spectrum bands for 5G, some of which will be the low-frequency bands best suited for rural coverage, according to Fogg.
“Anything that helps people who live in rural areas be more connected and engage with retailers at the same speed [as city dwellers] is definitely going to be beneficial to retailers,” says Jeffrey. “With a lot of shops closing down in the high street, a lot of rural customers have been disenfranchised about not having the same physical opportunities as people in urban centres.”
The opening up of previously untapped consumers is a potentially big commercial opportunity for retailers, which would be well advised to begin strategising how they can target this new consumer base.
“Those retailers that develop consistent online and offline shopping propositions using digital and mobile are best placed to capitalise on any boost to consumer spending from widespread 5G rollout and adoption,” says Miya Knights, head of industry insights at tech marketing firm Eagle Eye.
Nevertheless, questions remain about how quickly 5G will be adopted by consumers. Fortunately for shoppers, the mobile operators have priced their 5G networks extremely competitively. Three and Vodafone are not charging a premium for their 5G networks, which will put pressure on EE to bring down its prices – it charges extra for 5G after being first to market. That means the only real barrier to entry is whether the consumer owns a 5G-enabled device.
A number of manufacturers have already launched such handsets and Apple is expected to do so next year.
Deloitte forecast at the beginning of the year that only about 50,000 5G phones will ship this year in the UK and it believes mass adoption could take a number of years.
Richer online experiences
Another benefit of 5G will be its capacity to create much richer online retail experiences, enabling retailers to take their digital marketing to the next level.
Augmented reality and 3D video experiences were largely impractical before the launch of 5G because of inadequate mobile internet speeds, Fogg says.
Higher speeds and greater capacity will mean that is no longer the case. 5G could also lead to a huge increase in video content.
“Video content can currently stutter and stall and becomes quite frustrating,” says Fogg. “Because of the greater capacity of 5G, mobile video will be much smoother and less likely to suffer interruptions. Consumers will have richer experiences and this will help categories where shoppers need to see and understand the product such as fashion and home furnishings.”
Consultancy Elixirr partner Brian Kalms believes retailers should be exploring how 5G can allow for even greater personalisation because of the ability to process data more quickly.
“Historically, the gathering of marketing data has gone on in the background, post-event. We should now be in a world where we can send, receive and exchange information so quickly that it can be done much more personally and in real-time,” says Kalms.
Transformation of logistics
The rapid exchange of data enabled by 5G could enhance the in-store customer experience and transform logistics.
Knights advises retailers to talk to network providers to find out what benefits are on offer to enhance both their back-office and customer-facing systems and operations. She believes it could help revolutionise the overall in-store experience.
“It will benefit consumer-facing store operations particularly, by enabling customers to connect to and interact with digital touchpoints such as electronic shelf labels and digital signage, as well as use mobile scanning and payment services, more easily and in places where 4G and Wi-Fi signals find harder to reach,” says Knights.
Fogg says the in-store experience in rural areas could benefit from 5G connectivity in places where stores have traditionally suffered from poor internet connectivity.
However, improved connectivity could prove a double-edged sword because it will make it easier for shoppers in-store to look up what rival retailers are offering online.
“In the short term, because of the frequencies 5G are using, it is not likely to penetrate very well into large department stores or shopping malls, but it will,” says Fogg.
Kalms predicts 5G will provide enhanced control over shipping logistics because of the greater ease with which data can be shared. This will become especially powerful in the future of automated cars and drones.
A potentially game-changing area of 5G is the impact it will have on the automation of warehouses, which will occur with the reductions in latency brought about by the next iteration of 5G. This will enable even smarter warehouses because it can support huge numbers of connected objects such as robots in small areas and with virtually no latency, which will allow much more efficient factories.
The hyper-connected logistics on the horizon that 5G will enable could provide the retail industry with the shot in the arm it needs through an increase in productivity, which in turn is likely to propel profitability.
Kalms believes 5G could have “transformational” capabilities and therefore retailers should make sure they are prepared for it to avoid slipping behind the competition.
“The advice I give to retailers is don’t be caught out by 5G,” he says. ”Create the capabilities to be looking at it and start piloting and trialling things and if they start to show positive results you should scale them very quickly.”