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Shop ‘til 5G drops

In 2019, 25 mobile network operators around the world are expected to launch 5G services in at least part of their territory, mainly in cities. A further 26 operators should launch in 2020. In the UK, all four operators are planning to launch 5G services between 2019 and 2020.

5G wireless technology will have three major applications:

First, 5G will be used for truly mobile connectivity, mainly by devices such as smartphones. Around a million 5G handsets ­­– out of a projected 1.5 billion smartphone handsets sold in 2019 ­­ – will be shipped by year-end.

In the UK, 5G smartphone shipments may total about 50,000 units, and in 2020 will range between 2-3 million. At the end of 2020, we expect 5G handset sales of 15 to 20 million units – approximately 1% of all smartphone sales – with sales taking off in 2021, the first year in which retailers will sell more than 100 million 5G handsets.

Second,  5G will be used to connect ‘less mobile’ devices, such as 5G modems – of which we expect one million to be sold this year – or hotspots, which are dedicated wireless access devices small enough to be mobile and on the 5G network and connect to other devices over Wi-Fi technology.

Third, there will be 5G fixed-wireless access devices, with antennae permanently mounted on buildings or in windows, providing homes and businesses with broadband in place of a wired connection. In 2019, around a million 5G fixed cellular mobile access devices will be installed.

So 2019 is gearing up to be a tipping point for 5G, but what does that mean for retail and consumers?

Connectivity is the new currency of the digital economy. With nine in ten UK consumers owning a smartphone, it has become the preferred tool not just for searching and sharing information but also for buying products and services. A fifth of all retail now comes from eCommerce, of which, 64% is mobile.

Connectivity is equally critical for businesses. With up to a hundredfold increase in traffic capacity and speed over 4G, as well as lower latency, 5G is expected to enhance connectivity and lead to higher productivity and efficiency. While companies already rely on accessing and transferring information online, the number and complexity of tasks completed digitally is also increasing rapidly. Meanwhile, in the future, organisations are expected to have a more diverse and flexible workforce, and therefore demand for ‘on-the-move’ connectivity will continue to rise. 5G will also help consumer businesses operate more efficiently within their supply chain and manufacturing processes.

How will 5G impact retailers?

Retailers are likely to be among the most affected by the launch of 5G as it is expected to trigger a wave of innovation in the sector that could help boost revenues. For example, 5G may open the door for richer customisation, drone delivery, virtual reality (VR) dressing rooms, and augmented reality (AR) experiences at home or in-store. With 5G, retailers will be able to offer more than new channels, they will also be able to improve the customer experience. A faster connection will facilitate the use of VR or AR in online and physical retail as well as in direct marketing. Imagine walking into a store guided by AR to the exact location of what you are looking for or walking through a virtual store to make your purchase. These new technologies can help remove some of the barriers to online shopping by allowing consumers virtually to ‘try before they buy’. Similarly, ‘quick try’ AR tools, which have already been piloted by in-store clothes retailing, could be used to reduce the hassle of having to use fitting rooms. Alternatively, both AR and VR could be used in pre-purchase marketing to encourage customers to make their next purchase by inspiring them with a real life-like ‘taster’ of new products. The concept of the digital wallet will also evolve and consumers will be able to leave a store without reaching for their wallet as their payment information will be integrated into the retailer’s system. Personalised services in-store and online will become more common through the emergence of faster connectivity. Indeed, more digital interactions with consumers mean more customer data for retailers to collect and use. This will drive the need for analytics to respond to customers faster, and with better-targeted and tailored messages, and personalised, engaging customer experiences.

Over the longer term, 5G will spur further growth in retail as it opens up opportunities to develop new channels for customers and greatly enhance retailers’ interaction with consumers.  In return, this is a chance to increase consumer confidence in a retail brand, improve brand loyalty and ultimately improve the bottom line. Retailers who recognise these opportunities and invest now to respond to the rollout of 5G will be in a strong position to prosper.