Digital disruption in retail

What’s on the digital agenda of retailers? There’s no shortage of innovation across all areas: improving the customer experience, optimizing processes, and using AI, mobile communications and immersive technologies to enhance brands. 

But many brick-and-mortar retailers find digitalization overwhelming. Integrating networks, cloud solutions, data analytics, and IT security into an end-to-end system is complex. Add the new EU General Data Protection Regulation (GDPR) and increasing cyber-crime, and it’s no wonder that a recent Forrester Consulting Study found that only 49% of firms are offering the individualized customer experience they say they want to achieve. 

However, just because of these digital growth pains, which affect all industries, there has been a growth in managed service providers. Some not only provide the underlying technologies and networks, but also help firms navigate compliance and cyber security.

For example, our subsidiary T-Mobile Czech Republic runs an IP Virtual Private Network for Tesco, which connects over 1,000 stores across the Czech Republic, Slovakia and Poland. The network is the backbone of Tesco’s mission-critical data applications, including payment transactions as well as supply chain and employee information systems. In addition, Tesco receives data center collocation, dedicated Internet access, voice and SMS services with a guaranteed quality of services and support. The centrally managed services, running on Telekom’s super secure networks, ensure the stability and homogeneity of the ecosystem across all the company’s outlets.

So what is the “digital promise” for the retail industry?

1. From brick-and-mortar to brick-and-click

Digital innovation not only allows physical stores to extend their presence online, but also, online stores to develop physical stores. Amazon, for example, is investing heavily in physical stores because they believe that consumers are looking for a combined digital and physical experience. The endgame is for retailers to give customers a seamless, technological journey from online to physical store. 

2. Virtual reality and augmented reality 

Experts predict that AR and VR immersive technologies will take off in 2020. AR and VR give customers a mixed real-life/virtual experience both online and offline. For example, retailers can use 360° videos, AI-powered marketing platforms and VR movement in stores to create a story around a brand. Enter also, the virtual store: a simulated, 3d version of the real thing. Shoppers can “walk” around a store, look at products, and even talk to “assistants”. With one click, products can be ordered and paid for. 

3. AR and VR to improve purchase choices

Ever brought a piece of furniture that didn’t fit in your living room? AR enables customers to visualize whether a product is going to fit or is going to work out. IKEA offers such an app. And Audi is testing VR to give customers a real-life feel for their cars in a digital showroom in London.

4. Voice Assistance  

Imagine the frustration: You are in a mega DIY store and can’t find an assistant? Using a voice assistance technology, retailers can develop apps to answer customers’ questions or even, call an assistant. 

5. Convenient payment 

Have you ever paid by swiping your smartphone over a payment device? Retailers are increasingly looking at ways to optimize mobile communication and this is one of them. Electronic price tags will enable smartphone payment at the site of the product. And then there is the self-checkout machine.

6. Facial recognition software

The futuristic vision is that sensors can identify a customer by face. Theoretically, you could stop at a shop window and be greeted by name, with a digital display suggesting customized offers. 

7. The cloud optimizes business processes 

Retailers are increasingly using open cloud services to improve efficiencies. For example: to rapidly prototype business ideas, to improve business analysis by consolidating all KPIs into one “data warehouse”, to manage resources across multiple online channels, and to optimize stock through synchronizing supply-and-demand, reducing overall inventory, and lowering costs for logistics, warehousing and purchasing. 

8. Exploring IoT 

The increasing ability of everyday devices to communicate with each other opens untold opportunities. Imagine, for example, a smart fridge able to inform a grocery store that milk is low. That store can then send offers to the owner of the fridge. In another application, some stores are equipping shopping carts with Bluetooth to plot customer movements and interact with electronic price tags. 

9. Increased AI investment

Until now, brick-and-mortar retailers had few avenues to collect customer data. Digital tools mean they can now capture that data, and feed it into AI and machine learning. For example, in-store sensors can work out which areas of a shop get the most traffic, or allow stores to test lighting, ambience and sound. 

10. Putting on the brakes: GDPR

The EU’s data protection regulations restrict certain uses of customer data, especially third party use. GDPR can, however, be positive, if it helps build customer trust.