Out of the haze of uncertainty emerged a new mobile network, and from the new mobile network came new retail applications and experiences, all taking advantage of the faster speed of the technology, and the potential to reduce friction.
So goes the imagined story of 5G, even though the narrative has barely progressed beyond the prologue. The mobile technology is moving from the realm of the possible to the world of the real. While solid use cases and best practices are in very short supply – and will likely remain so for at least a year, depending on what estimates one believes – clarity is emerging about how 5G will impact retail in specific ways.
Much of those specifics are coming from Asia, where South Korea and China are, judging by virtually all reports on the matter, far ahead of other markets when it comes to 5G deployments. (A new report also says the U.S. has moved past South Korea and is roughly even with China when it comes to 5G development.)
5G Retail Deal
News this week from South Korea stated the country’s “SK Telecom and the nation's retail conglomerate Shinsegae Group have joined forces to develop new business models and innovative services in the logistics and distribution sectors powered by 5G networks.” The deal calls for the companies to develop what the report called “5G-based business models that can be applied to Shinsegae's department stores and discount store chain E-Mart as well as various shopping malls.”
That effort will apparently involve virtual reality (VR) along with augmented reality (AR). The plan is to use VR technology to enable consumers to shop via digital platforms instead of inside brick-and-mortar locations, though no further details were immediately available.
That said, the South Korean 5G deal does provide evidence that one of the main promises of how the new mobile technology would impact retail – allowing more use of VR and AR – is indeed on its way to becoming reality. Virtual reality tends to be an immersion experience for the computer – a place where digital worlds are created, including those for retail products, or the placement of products inside the consumer’s home – while augmented reality tends to add digital components to a view of the real, live world.
VR Retail Growth
Both AR and VR – but particularly virtual reality – could help create more intense consumer experiences, which is among the biggest pushes in the world of digital commerce today. A new PYMNTS research report, Virtual Reality in Retail, provides more detail about the promise of the technology. By 2022, the report says, VR will generate $1.8 billion in retail and marketing spend, with revenue from VR retail initiatives expected to increase by 3,000 percent over the next four years.
Many VR retail deployments are likely to be modest, even when backed by new 5G technology, according to analysts. That may or may not be the case with the recently announced South Korean deal, but support for that point comes from the PYMNTS research report.
It found “some retailers are using VR to entice users to take a second look at their brands, deploying it first as a marketing strategy to better connect specific visuals with their brands in consumers’ minds, with sales as a secondary component. Last year saw a boom in brands using VR in this way, including U.K. clothing retailer Topshop, which used it to take shoppers on a waterslide through central London.”
Retail uses of 5G are not all about VR, of course. Various estimates express the commerce- and payments-related stakes involved in 5G deployment, and a recent analysis from Adobe Digital Insights stands as a relatively reasonable prediction at this point: Over the next three years or so, 5G deployment will result in an additional $12 billion in mobile commerce revenue for U.S. retailers. That, of course, “assumes a smooth, scheduled rollout of 5G networks. Nonetheless, it’s a clear statement that when friction is removed from the user experience, people respond.”
Stayed tuned. We are only in the first chapter or two of the 5G retail story, and more deployments and retail endeavors are sure to come in quick order.