With major changes to consumer spending, retailers have had a challenging year where physical stores have begun to open and online shopping habits continue to proliferate. In this Retail Industry Guide, we look at the digital transformation trends that are happening in retail that are bringing about practices for Smart Retailing.
2021 Retail Industry Guide Digital transformation to excite your customers
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Table of contents
Introduction
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6
Moving to Smart Retail
Transforming the in-person shopping experience
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Expansion of digital selling
9
Operation excellence with supply chains often located in China-APAC
11
Efficiency gains with Drones and Robots
12
Upgrade CX with In-store WiFi
13
Inform better with Digital Signage
14
Enhance stores with VR and AR
15
Enable anytime, anywhere Retail Chatbots
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Use cases from across the retail industry
17
Conclusion
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About China Telecom (Europe)
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“As we enter a new era of digital transformation, retailers have the
opportunity to utilise the latest and most exciting technologies to enhance customer experiences and increase operational efficiency.”
RobinWoolner European MNC Sales Director
“Only by utilising the latest technology, China Telecom can keep abreast with customer demands and ensure businesses continue to prosper in an Omni-channel way both online and in-store experienes.”
Moti Khan Solutions Team Leader
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Introduction
The retail industry has undergone major changes in recent years, but none more significant than those driven by the changes in consumer behaviour that have been accelerated by the COVID-19 pandemic. Retailers are taking advantage of the latest technological advances to find new ways to attract customers and to keep pace with their competitors, and their customers’ expectations. Despite the move to seamless online and offline ‘Omnichannel’ engagement, analysts still regard traditional bricks & mortar stores as the primary way for retailers to attract customers. How can firms increase efficiency and reduce overheads to keep their physical operations competitive and profitable?
To target their customers effectively, especially through digital marketing, retailers need to collect information that goes beyond publicly accessible demographic data. They also need to understand their customers’ shopping habits, including their responsiveness to promotional offers to understand the customer experience (CX). How can retailers gather this essential data effectively and legally? Regardless of whether they are small, medium or large-scale multinationals, retailers are addressing their challenges
using the latest technologies. From enhancing their customers’ in-store
experience, to collecting valuable customer data. And from optimising their sales process to increasing efficiency and reducing costs in their supply chains. How can you put those technologies to work in your business?
New technologies that are revolutionising retail:
Drones and Robots: Both in-store and in warehouses
In-Store Wi-Fi: To improve customer experience and analytics
Digital Signage: 3D signage, smart mirrors
VR&AR: For an enhanced visualisation experience
Retail Chatbots: To provide automated, enhanced customer support
New technologies are revolutionising retail
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Retailers expect to spend more on business intelligence
63 of retailers expect to invest more on business intelligence and data analytics.
of retailers expect to spend more on AI. 1 35
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1 Gartner 2021 CIO Survey
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Moving to Smart Retail
Companies with Omnichannel customer engagement retain 89 of their customers, compared to 33% of companies with weak Omnichannel customer engagement. 2 The shopping experience is being redefined by a world where lockdowns, re-openings and new protective health measures are regular occurrences. Digitally savvy retailers are exploring and implementing the reinvention of the in- person shopping experience, the expansion of digital promotions and selling, and the optimisation of operations that depend on trends in different markets. Omnichannel nirvana has been the penultimate goal for many years across the retail industry. Now, many retailers are looking for radical innovations to transform themselves into ‘ Smart Retailers’ , in whatever form that may take for their target customers, rather than just looking at their online-offline shopping preferences.
Retailers cannot create smart shopping experiences without first gathering data and analytics from their customer base online and in-store, clearly defining individual customers’ shopping habits and understanding trends in consumer behaviour. Technologies such as AI (Artificial Intelligence) and ML (machine learning) are rapidly being adopted by retailers to gather and take advantage of this data, and they’re using their new insight to re-engineer their businesses to engage customers more effectively and so generate more revenue. It’s clear that online won’t simply replace all physical stores, but will merge with the bricks & mortar experience to give customers more informed choices.
UK Daily retail footfall in 2021 is of the same week in 2019. 3 85
2 Aberdeen Group, 2020 3 ONS, June 2021 Data
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Transforming the in-person shopping experience
of U.S Malls are expected to close within 5 years. 4 25
Is the shopping mall dead?
It’s apparent to even the most infrequent shopper that shopping centres have passed their heyday. There are no longer packs of shoppers dashing from store to store searching for the lowest prices or the hottest trends. High-street stores and entire shopping centres are closing down as they find themselves unable to make the profits they used to enjoy.
Over 8,700 UK chain stores closed their doors across the UK in the first half of 2021.
Increasing numbers of shopping centres are closing their doors
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4 Local Data Company; CNBC
Bringing new life to in-person shopping using digital means
In the United States, retailers such as Walmart and Target have already installed QR code payment systems in store, allowing instant cashless payment for our increasingly cashless society. Self-service checkouts have been a familiar feature in most supermarkets for over a decade, although the customer still has to manually scan their items. Now, retailers are innovating to make the experience even more convenient. Amazon Dash Cart automatically detects exactly which items have been placed in the shopping cart using a system of sensors, cameras and computer vision algorithms. When the customer leaves the store, their linked payment information automatically deducts the price of the goods – with no need to queue at any stage of their visit.
Instead, smart retailers are discovering new ways for their customers to experience their brand in person, with the help of technological augmentation. As well as reinvigorating their stores, this is improving the profitability of their physical locations and keeping them competitive in a world increasingly dominated by online sales. One example is the increasing use of in-store QR codes. Now that almost every consumer has a smartphone with them at all times, scanning QR codes are a quick, easy and fun way to provide detailed product information, offer discount coupons and share customer support information.
In-Store QR codes enhance the customer in-store experience
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Expansion of digital selling
In South East Asia 62 of consumers learn about new products and brands via social media. 5
Influence buying with social media rock stars
For many years, people discovered products from traditional advertisement placement in newspapers, television and radio. Now, no matter where your customers are located, there is a burgeoning community of social media influencers and original content creators who are amassing followings on Instagram, YouTube, WeChat and other international and local platforms. Retailers have seen this as a new opportunity to reach their target customers. They are partnering with these influencers to reach a different kind of audience, especially in the China-Asia Pacific region where ‘Key Opinion Leaders’ (KOLs) are dominating the market landscape.
KOLs are influencing buyer behaviour
China’s ‘WeChat’ has over one billion active users monthly, acting as a combination of Instagram and Twitter, but also serving as a payment platform. 6
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5, 6 Facebook and Bain & Company; SEOAgency China
Greater use of e-commerce platforms
Shopify, one of the largest e-commerce platforms, allows retailers to begin operations with fees as low as 29 USD a month. Social media platforms such as Facebook allow people and businesses to use their existing profiles to sell and resell goods and services, simplifying the experience of starting a new business. With many barriers to entry lowered or removed, modern retailers find themselves seeking new ways to stand out in an over-saturated and hyper- competitive market.
E-commerce platforms are becoming more sophisticated and better integrated with other solutions and niche platforms. It’s no longer necessary for an online retailer to design their own website and shopping platform from scratch (or hire an expert), and a difficult and costly barrier to entry has been removed. A myriad of ‘E-Commerce Shopping Platforms’, purchased as subscription products, allow retailers to get their stores up and running online quickly and easily. These platforms can merge the logistics of the retailer’s online and offline presences and manage products, inventory, payments and shipping.
E-commerce platforms are becoming an established supplement to store-based retailing
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Operation excellence with supply chains often located in China-APAC
Gaps in supply chains
The reliance on physical labour for manufacturing, transport and warehousing is a serious headache for global retailers. Automation, especially in factories and warehouses, can reduce the capital spent on labour and limit disruption caused by sickness or local restrictions. No wonder organisational investment in warehouse automation has surged.
The COVID-19 pandemic has been a harsh lesson to retailers who relied on just-in-time supply chain models. By keeping stock levels that worked for more normal times, many found themselves running out of basic goods as panic buying and supply issues began to bite. Retailers with poor oversight of their supply chain operations were particularly likely to suffer. They’re now exploring new technologies, such as machine learning, that will provide themwith better intelligence for smarter stock control, including risk evaluation tools that can predict potential geopolitical and health crises. Such technologies can also reduce ‘dead stock’, where valuable warehouse space is wasted on unwanted or outdated products piling up and expiring on the shelves. IBM’s ‘Watson’ supercomputer, which uses machine learning algorithms, is already helping retailers make real-time decisions regarding inventory management. The pandemic continues to affect different sectors and countries with varying degrees of severity and predictability, so challenges remain for retailers. Global shipping container shortages are leading to delays in delivery times and a huge rise in costs. Local lockdowns are causing delays and port closures in global supply hubs.
Oversight of your supply chain is key
By 2026, the global warehouse automation market is estimated to surpass 30bn USD. 7
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7 G2.com
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Efficiency gains with Drones and Robots
How drones and robots are changing stores and warehouses
Mostly, robots are still working alongside people. They connect and collaborate with human staff to improve operations and customer experience. In-store robots help out by alerting staff to potential hazards in-store such as spills or shoplifters, or notifying stock control employees when a shelf is empty in real time. They can welcome customers and direct them to their chosen product, so that human employees can dedicate themselves to more complex responsibilities. The warehouse is where robotics is producing a real revolution for retailers. Smart forklift robots, moving robots, sorting robots and picking robots are substantially increasing efficiency rates in warehouses and simultaneously reducing accidents. They have the added benefit of being able to work 24/7, delivering a rapid ROI for the retailer.
In the last decade, robotics technology has become increasingly sophisticated. New advancements in big data, artificial intelligence and modern materials are creating smarter robots more capable of complex tasks. Large scale retailers have tens of thousands of robots fulfilling orders in warehouses worldwide, backed by fleets of drones that enable same-day delivery for their impatient customers. As economies of scale in robot and drone manufacturing lead to lower production costs, many smaller enterprises are now finding ways they can apply robotics at smaller scale to their retail operations.
Drone shipments to retailers will total 122,000 units worldwide by 2023.
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Geek+ partners with China Telecom (Europe) to provide integrated warehouse solutions
of retailers plan to deploy AI by 2021, with warehouse robotics stated as the main use case. 8
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8 Gartner, 2020
Upgrade CX with In-storeWiFi
It’s not only promotions that can be targeted. Advertising can be adjusted to ensure maximum effectiveness by reflecting the customer’s past shopping habits. A strong Wi-Fi signal also allows
How in-storeWi-Fi delivers smart analytics and connectivity
Physical stores are finding newmethods to improve the in-store customer experience. Whilst ‘In-Store Wi-Fi’ hardly sounds revolutionary, it is unbeatable for gathering shopping-related data and customer metrics packed with insights – assuming that customers choose to use the store providedWi-Fi network. That’s much more likely when retailers offer a strong, stable connection that handles many users easily. It’s not just about excellent speeds. Customers need to feel their information is safe, and to know that the retailer is complying with GDPR and other local regulations. Without partnering with an expert who understands these regulations, retailers risk fines and other legal ramifications for not handling customer data correctly. Used well, in-store Wi-Fi can detect returning customers and immediately offer them promotional deals that previously- collected data shows will interest them. In this system returning customers benefit from the technology provided in-store, and the store benefits too.
retailers to provide a more intuitive and enjoyable in-
store experience. For instance, interactive store maps provided in real time can show customers how to find the products they’re looking for and flag things that might also interest them. Customers get to what they want quickly, without having to find someone to ask, and employees become more efficient by focusing on their main tasks in-store.
83
In-Store WiFi for better customer experiences
of consumers in the United Kingdom still prefer to shop in-store if possible. 9
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9 ONS
Inform better with Digital Signage
How customers learn and navigate using digital signage
Now as shoppers trickle back onto the high street after lockdowns, many physical retailers are using the latest digital signage to draw consumers back into their stores and away from online-only shopping. Digital display allows retailers to roll out new advertisement and promotional campaigns immediately to every store, without the costs and effort required to produce, deliver and install traditional printed point of sale and display material. Sales announcements, infomercials and videos, animations and directional signage can make any physical retail environment more inviting. Interactive displays can help customers to choose products and find information, for in-store gaming and sign- ups for email subscriptions, and, in larger shopping centres and stores, with interactive maps and product directories.
Digital signage is being adopted rapidly in a variety of environments. In bricks & mortar stores of varying scales and in urban centres, it’s coming into its own as an engaging method of transmitting news and information in real time. Digital signage refers to display technologies, including screens and signs, used to show ads, messages, alerts and other information. In-store, LED walls and video displays play videos, and showmenus, marketing slogans and digital images. Holographic signage, with three-dimensional displays that also have soundtrack and voice-over capabilities, is becoming more widespread. Eye-catching and highly branded displays have always been must-haves to enhance in- store marketing.
84
of U.K retailers believe digital signage creates significant brand awareness. 10
Digital signage reduces perceived waiting times at checkout by as much as 35%. 11
Digital signage adds an upswing in overall sales volume by 32%. 12
Digital signage enhances spaces
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10, 11, 12 Digital Signage Today
Enhance stores with VR and AR
Furniture retailers are also benefiting, letting customers virtually place furniture in their homes using AR. Allowing consumers to see how something fits within their surroundings and colour schemes increases their confidence when making the purchase – and has the obvious added benefit of reducing returns. Perhaps one of the most well- known examples is Amazon’s “View in your room” option, where Amazon users can furnish their room by placing several selected products simultaneously.
How VR&AR are revolutionising the in-store experience
VR (Virtual Reality) and AR (Augmented Reality) are used to create or enhance a customer’s viewing experience. AR is used to overlay graphics onto real surroundings, whilst VR creates a completely new environment to surround the viewer. Whilst VR requires expensive upfront hardware requirements and, with its space- age looking headsets, can be intimidating to many customers, AR can be supported by a mobile device, which billions of users already have. AR allows consumers to visualise their purchases in advance. This is particularly useful when selling clothing and accessories. Customers can instantly see how clothes appear on their bodies without trying them on, so they can shop for clothes they already know suit them, saving them time and shortening those familiar long lines at changing rooms. Makeup and other cosmetics can also be virtually applied before purchase, reducing waste and the worry of contaminated samples, and giving customers the chance to try before they buy with friends at home.
AR tranforms buying experience
of online shoppers see AR as improvement to their shopping experience. 14 63
The ARMarket is projected to be worth $18bn by 2023. 13
13 Statista 14 eComDash
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Enable anytime, anywhere Retail Chatbots
How AI Chatbots are supporting customer interactions 24/7
That reduces the number of customer enquiries that need to be escalated to human customer support agents, which allows for better delegation and reduced costs, and gives the real life agent more time to resolve the trickiest issues. Queries such as returns and refund statuses can be handled by AI chatbots with ease, and they can also be programmed to provide offers or relevant post-sales information automatically to upsell or cross-sell to the customer. The benefits are clear. Retailers chatbots free up staff, provide always-on customer service and communicate across multiple platforms including WhatsApp, WeChat, Facebook messenger and more. And, when used with analytical tools, they can be an invaluable source of customer insight.
Retailers are getting used to dealing with customers who expect instantaneous responses, 24/7. Waiting for a reply to an email or holding patiently on customer service hotlines is no longer enough for impatient, “want-it-now” consumers. To provide the level and speed of support their loyal customers demand, retailers are introducing Artificial Intelligence into their support mechanisms to resolve issues and answer questions within seconds. AI conversational capabilities are enhancing customers’ retail experiences across many sectors. AI chatbots using platforms such as WhatsApp can handle increasingly complex queries.
Global Retail spend on AI technologies will reach $7.3bn by 2022. 15
AI Chatbots are evolving into more complex queries
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15 Juniper
Use cases from across the retail industry
Omnichannel, and truly Smart Retailing, means building the very best customer experience, offline and online. How has China Telecom (Europe) supported retailers to improve their customers’ experience?
Content Delivery Network (CDN)
How China Telecom (Europe) helped a European retailer’s website feel like a local site
Almost every retailer has an online presence. For multinational retailers, this means operating and maintaining content-rich multilingual sites that feature a variety of bandwidth-intensive videos and product photos. Slow speeds and unreliable service are a constant issue even on a local level. But the problems are exacerbated when content is hosted on a server in Europe, but users are accessing it from China and the APAC region. The long geographic distances can lead to slow page loading speeds, high bounce rates and, in many cases, content not loading at all. A multinational European retailer had recently expanded to mainland China and was suffering from exactly these issues. The website loaded content inconsistently and the uptime was just 51% – providing a very poor customer experience. The retailer approached China Telecom (Europe) (CTE) for help to resolve these issues. As China experts, CTE knew exactly which solution would meet their needs.
CTE provided the retailer with a CDN node close to their customers in the APAC region, as well as a CN2 internet bandwidth
to help optimise the traffic between Europe and China.
By hosting the content closer to the end-user, the loading times increased to be 15 times faster and the availability rate improved to 99.5%+.
China Telecom’s global infrastructure backbone of
terrestrial and submarine cables, as well as globally distributed PoP sites, serve our customers in any region. CTE’s expert knowledge of global rules and regulations ensures that retailers are fully compliant with GDPR and the rules and regulations that apply in other markets such as mainland China.
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SD-WAN and branch connectivity
How China Telecom (Europe) made sure purchases were prioritised
A world-famous retailer was struggling to access applications and services from AWS, Microsoft and Azure in their HQ and branch offices in China. They had already partnered with a service provider, but were suffering from poor latency, data packet losses and were unable to optimise their traffic usage effectively. With all the retailer’s platforms running on the same network, there was no prioritisation between a customer purchasing goods or streaming a video on their website. They needed to be able to prioritise traffic in real time so that purchases would always take precedence. The retailer required managed broadband and SD-WAN that could be deployed quickly, so they could improve their service and monitor the network in real time. As they operate in the Chinese market it was vital their partner could ensure they complied with the complex rules and regulations for multinational firms.
China Telecom (Europe) (CTE) stood out as an ideal partner. CTE built a private data tunnel for the retailer and thanks to China Telecom’s dedicated global backbone networks, the retailer was able to:
Reduce their average latency by two thirds
Reduce jitter/packet loss to near zero Monitor their network data in real time and prioritise the traffic accordingly Reduce IT overheads significantly as network problems could be solved remotely SD-WAN from CTE is a high quality and reliable solution for a business needing to connect with multiple branches and customers, especially in the China and APAC region.
CTE solutions ensured optimal traffic prioritisation
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Conclusion
The retail space has had a lot to deal with recently. Global pandemics have driven lockdowns and the temporary closures of physical locations, while customer tastes and behaviours have changed at a record pace. Customers continue to drive change in the retail space, with many retailers struggling to keep up with the latest trends. New technologies are transforming in-store experiences and the way we shop. As we look to the future, with hope for a strong economic recovery, physical retail is fighting to stay relevant as a tool to improve the customer experience, using innovative ways to keep customers visiting and provide convenience and reassurance.
In its favour is the rise of the environmentally-conscious consumer who wants to shop locally. But a constant challenge is the increasingly-demanding consumer who expects exemplary service both online and in-store. Technology will continue to shape and enable the retail space. Retailers will always need to find partners to ensure they stay ahead of the market and satisfy their customers. And as the uptake of technology increases, retailers who successfully undergo digital transformation will surely enjoy more success than those who fall behind.
1 2 3 In short, 3 key takeaways are...
Regardless of the size of your business, choose trusted technology partners to help modernise your in-store experiences. Understand that even when ROI may take years, giving your customer the best retail experience is imperative to stay ahead. Lead the way by adopting new technologies that optimise costs and efficiencies and create customer loyalty with unbeatable service.
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About China Telecom (Europe)
For retailers who want to grow their businesses or establish a presence in China, or for Chinese retailers that wish to expand overseas, CTE provides integrated telecoms and communications services. CTE is a wholly owned subsidiary of China TelecomGlobal (CTG), the international arm of China Telecom. CTE’s unrivalled knowledge of the Chinese-APAC market, and regional offices across Europe, make CTE an ideal partner for European and Asian businesses, including European multinational enterprises, Chinese enterprises in Europe, carriers, telecom service providers as well as Europe-based Chinese consumers.
CTE seamlessly connects your global retail business to the world’s largest single marketplace. Our European-Asia Network has more terrestrial and submarine routes than any of our competitors, and domestically China Telecom owns the largest digital network in China. This results in superior lower latency, greater diversity and improved resilience when accessing business applications to and from China. CTE can bring all your international communications needs under one global contract, and give you the peace of mind that comes from knowing you’re in the safe hands of industry experts.
We are your Digital Silk Road to China - APAC markets China Telecom (Europe) is here to ensure your Retail business has the right technology to build the best customer experiences locally in Asia. We are your regional telecommunications partner that can provide you with the solutions mentioned in this Retail Guide and more.
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