Advanced networking technology including reliable, scalable, and secure SD-WANs will help retailers complete the digital transformation of the network edge.

Retail shopping is undergoing a rapid evolution as stores introduce new technologies to improve their customers’ experience—and keep them coming back.

It’s no secret that retailers are in a fight for survival, especially with respect to brick-and-mortar stores that must compete with online alternatives. Technology is fundamental to winning that fight and competing effectively, driving everything from real-time inventory management to leading-edge technologies in artificial intelligence (AI) and virtual reality (VR). Today’s shoppers need a compelling reason to go to a physical location versus shopping online, and technology is at the core of making that happen.

Advanced networks are crucial to ensuring new in-store technologies and applications work as intended, supporting connections between in-store IT infrastructure and far away data centers and cloud-based services where customer data and applications live. These networks must be highly reliable, secure, and scalable. What’s more, retail IT personnel can’t be spending their time managing them— because it steals time from attending to more strategic business needs.

“All retailers are thinking about how to keep customers engaged, capture new ones, and differentiate from the competition,” says Mike Mazza, Executive Director, National Client Group, Enterprise Solutions, Comcast. “Technology is being used to address these issues, and the network is the foundation of it all.”

The New Age of Retail

Research supports the notion that technology is driving change in retail environments.

A survey by the Retail Industry Leaders Association (RILA) found 63% of consumers are interested in personalized recommendations, up from 57% two years ago.¹ It takes technology including AI to develop the shopper profile, forecast preferences and behavior, and drive personalization.

Use of immersive technologies such as augmented reality (AR) is also catching on, with a majority (56%) of home décor and electronics consumers saying they’ve actually used such technologies.²

Another survey of 1,200 consumers and 400 retail executives across the U.S., U.K., and Australia by Oracle NetSuite found the top new technologies that consumers want when shopping are:

• Self-checkout kiosks: 38%
• VR try-on: 23%
• Mobile payments: 15%³

But the study also found in most instances, retailers aren’t keeping pace with what consumers say they want. For example, 63% of retail executives said AR was important to customers, but only 37% are investing heavily in it. And only 11% of retail executives believe their staff has the tools needed to provide customers a personalized experience which is necessary to command a premium. In fact, recent research shows that nearly half of all consumers (42%) and almost two-thirds of millennials (63%) would pay more for improved personalization.⁴

In other areas, there’s a disconnect between what retail executives and consumers see as inviting when it comes to retail. In a recent study, 73% of retail executives said they believe retail stores have become more inviting in the past five years while only 45% of consumers agree, and 19% of shoppers think stores have become less inviting.⁵

Hottest Retail Technology Trends

The technologies with the biggest “wow” factor for consumers include augmented and virtual reality solutions, which can come in many forms.

Tommy Hilfiger was the first major retailer to deploy virtual reality in stores with a 2015 project that enabled customers to don a headset and virtually attend its fall fashion show in New York.⁶ That same year, The North Face debuted a VR app using Google Cardboard that gave customers an immersive tour of California’s Yosemite National Park and the Moab desert in Utah, enabling them to virtually trek landscapes and rock climb.⁷

Fast forward a few years and the headsets are no longer required. Today, facial recognition applications enable consumers to virtually try lipstick and eye shadow, for example. Hardware and paint stores can use AR applications to help customers test paint colors.

Customers need only the camera on their smart phone to see how different colors look in the intended space.⁸

The applications also enable customers to “try on” clothes— and even get opinions from friends or relatives located around the globe. Macy’s and Timberland, for example, are using VR-enabled smart mirrors that enable customers to see how an outfit looks while eliminating the inconvenience and time associated with fitting rooms. “This technology caters to one of the in-store shopping experiences consumers still enjoy: seeing how products fit them personally,” according to a report by PYMNTS.com.⁹

Other hot technologies include chatbots and AI. They make the shopping process more conversational and can point customers to products they may like based on past purchases—the kind of personalization the RILA survey respondents said they wanted.

Mobile wallets that enable customers to order and pay for products and services via a mobile app instead of waiting in line are also popular. They can be tied to retailer loyalty apps to further simplify the checkout process.

Behind the scenes, Internet of Things (IoT) technologies including radio frequency ID (RFID) tags and shelf sensors help retailers implement real-time inventory management applications that simplify the job of tracking inventory and managing supply chains. Shelf sensors, for example, use weight or light to detect when products are added or removed, and can alert store staff when products are sold out.¹⁰

Building the Technology Foundation

Implementing all these technologies requires retailers to enter the next phase of their digital transformation, what the research firm IDC calls Digital Transformation 2.0 (DX 2.0), by transforming the network edge—where retail stores live.

“Transformation will require a new network architecture that integrates flexibility, reliability, and analytics, going beyond fast interconnectivity,” IDC says. “This new architecture will be underpinned by software-defined and virtualized network services, hybrid connectivity, and increased reliance on broadband Ethernet for direct access to the cloud.”¹¹

Technologies such as AI are used to expand the role of analytics and achieve the goal of autonomous, self- configuring networks, which is important because most retailers have no full-time IT personnel in their stores. Companies that adopt the tenets of DX 2.0 to drive network strategy and achieve their business goals are considered “disrupters” by IDC—and it puts retailers in that category.

New Retail Network Requirements

Disruptive retail companies are heavily invested in all types of networking technologies but are moving to software-defined wide-area network (SD-WAN) technology to capture the benefits of cloud services, according to IDC.¹²

Like other software-defined network applications, SD- WAN decouples network hardware from control functions, placing the management plane and traffic management functions in a centralized controller. SD-WANs make possible a network overlay function, where a network can make use of the most appropriate underlying service for network bandwidth, including Internet connections. SD-WANs are application-aware, meaning they can be configured to send lower priority traffic over more cost- effective connections and latency-sensitive traffic over higher-speed links. Retail locations can also use physical or virtual appliances to support SD-WANs, rather than the traditional switch/router.

SD-WANs enable retailers to ensure their networks address three key requirements:

Reliability, to ensure applications work as intended; SD-WANs make it simpler to build redundancy into a network.

Scalability, to address growth and new applications as they emerge, and adjust with seasonal demand.

Security, to protect confidential customer data in an environment where breaches are costly both in terms of dollars and reputational damage, and where companies must comply with industry regulations including the Payment Card Industry Data Security Standard (PCI DSS).

To address these requirements, the push is on among retailers for networks that support ever-higher data rates and a scalable architecture. They are leaving behind older legacy technologies like MPLS and private lines.

“The days of installing and replacing routers every few years will soon be gone,” Mazza says. “Retailers now have the option to use universal appliances that last much longer and enable virtual network functions to be loaded on top.”

Managed networks are likewise attractive to retailers that Comcast’s Mazza would rather spend time analyzing the business intelligence that the network helps collect than managing network assets. They still need to be aware of what’s happening in the network, however, so require a centralized dashboard.

Partnering for Success

What retailers need is a network provider that can deliver solutions that fulfill all of these retail requirements, to bring DX 2.0 to their stores as well as inventory centers and other locations away from HQ.

It starts with a sound approach to SD-WAN. The offering should combine application-aware routing, secure virtual private network (VPN), and a firewall—all in an integrated solution that’s easy to operate and maintain.

Support for emerging gigabit broadband services is another SD-WAN requirement, to offer distributed retailers a way to bring broadband to the network edge along with the power of virtualized networks.

Such a solution brings a number of benefits, including:

Improved performance: Intelligent routing and application visibility helps reduce latency and application response times.

Centralized management: Retailers will have greater flexibility to push network changes across sites via software, shortening IT deployment cycles and eliminating the need for truck rolls to deliver new services.

Tighter control: Simplified VPN, network segmentation, and policy enforcement increase the chances of retail locations remaining secure—and avoiding unwanted headlines.

Optimized investments: Reduced reliance on expensive hardware and leased lines can help retailers save on both capital and operating expenses. Hybrid WAN solutions that combine multiple network services are also possible, to preserve existing MPLS investments while building a path to the future.

Partnering with a provider that offers an array of services enables retailers to customize a solution that fits their specific requirements. They should include low-latency virtual and physical private Ethernet services that scale from 10M to 10Gbps.

Many retailers will also benefit from an array of managed services, including managed connectivity, Wi-Fi, security and voice. Managed security services can likewise ease a retailer’s burden, including virtual private networks (VPNs), unified threat management (UTM), firewall, distributed denial of service (DDoS) protection for Ethernet, and as managed PCI.

Retailers need a provider with extensive reach, meaning one that offers services in the locations where stores are located. Forty to 45% of all U.S. retail locations (and growing) fall within the Comcast network footprint, for example. And Comcast’s relationships with other Tier 1 cable providers extend that reach to 75% to 85% of all locations.

What’s Next?

Retail has always been a low-margin business where every penny mattered, but these days retailers are in a fight for their lives against each other and a few online behemoths. A few trailblazers are proving that the effective use of technology is a winning strategy to earn customer loyalty— and return visits.

As IDC says, it will require a transformation at the network edge, which for retailers means individual stores, to support these new technology initiatives. To realize that transformation, retailers need to partner with a provider that can offer all the necessary building blocks—including an array of network connectivity options, SD-WAN and managed services—to take them down the road for many years.

^[1] “More consumers than ever want retailers to personalize service,” RetailDive, Sept. 7, 2018.

^[2] Ibid.

^[3] “New Study: Hey Alexa, 95% of consumers don’t want to talk to a robot when shopping,” Oracle Netsuite, Jan. 15, 2019.

^[4] Ibid.

^[5] Ibid.

^[6] “Tommy Hilfiger Introduces Virtual Reality Headsets for Shoppers,” The New York Times, Oct. 20, 2015.

^[7] “The North Face brings virtual reality to retail,” Digiday, March 12, 2015.

^[8] “Sherwin-Williams AR App Takes Hassle Out of Choosing Paint Colors,” VRScout, April 30, 2018.

^[9] “Virtual Reality In Retail: 2019 and Beyond,” PYMNTS.com, Jan. 2019.

^[10] “Beyond Amazon Go: The Technologies And Players Shaping Cashier-Less Retail,” CBInsights, Oct. 9, 2018.

^[11] “Creating a New Network Edge: The Next Stage of the Journey to Digital Transformation 2.0,” IDC, Oct. 11, 2018.

^[12] Ibid.