Stores Are Proving Grounds for Innovation and Digital Transformation

As the spirit of reinvention sweeps across the retail landscape, stores have emerged as proving grounds for technologies that blend the digital and brick-and-mortar worlds. Inspired by consumer expectations and competitive pressure, stores have evolved into gateways of innovation and digital transformation.

Many retailers are pioneering the use of mobile devices for associates, omni-store services in the cloud, endless-aisle ordering of products unavailable on shelves, pick up and return of web purchases, magic mirrors, RFID, location-sensors and mobile POS. All of these technologies, and more, are part of a retail revolution that has put brick-and-mortar stores on the front lines of an industry-wide shift to a digitally transformed future.

It is worth noting that all of today’s disruptive and advanced technologies have one thing in common: they are dependent on the store network for success.

This is good news and bad news. The good news is many technologies have proven benefits and use-case examples demonstrating a path to value if deployed correctly. The bad news is the benefits won’t materialize if performance is degraded by store networks not designed to accommodate increased workload.

While many retailers are making smart investments in new store technologies unless they have realistically assessed the network readiness in their stores they could deliver post-implementation disappointment or outright failure. These outcomes are not uncommon when retailers discover too late they have unreliable WiFi coverage in stores, insufficient bandwidth to handle new applications, or inadequate network control to ensure that high-priority bandwidth is available for key applications.

Store Infrastructure Today

In this RIS Targeted Research report, we explore the status of store networks today and where they are heading in the near future, as well as the context surrounding the important changes that are occurring.

The complete report is available for download by clicking here. Key findings include:

• Store networks, like infrastructure in general, are only noticed when they fail. As long as the network is up and running, few executives pay attention to the need for constant maintenance, service and upgrading. This out-of-sight and out-of-mind mentality is probably why 58% of respondents say security is adequate for current and future workloads.
• It may also be the reason behind the 70% say WiFi for managers and associates is adequate. These numbers are why it is critical to do a realistic assessment before launching into a store-level IT project.
• Fortunately, about half of retailers recognize store-level WiFi is inadequate for customers. This recognition may drive some necessary in-store network upgrade plans. Of this group, 24% say their current WiFi for customers is inadequate and another 24% it is inadequate for future plans.
• The key elements in store networks today include: WiFi (88%), ethernet (64%), cable (42%), and fiber (42%). Software defined WAN (SD-Wan) is only available in about 15% of stores.
• The cost for in-store networks is estimated to be $3,900 per store per year. This figure includes hardware, software, monthly fees, maintenance, and staff.
• For a retail chain with 100 stores, the cost per year is $390,000. For a chain with 250 stores, the figure is $975,000. For larger chains the figure easily goes into the millions of dollars.
• In a worst-case scenario, limitations in store networks can force the IT team to postpone adding a new application or system to avoid performance failure. This has occurred for more than a quarter of respondents (26%).
• More than half (51%) say their next store network upgrade will occur within the next 18 months.
• Top upgrade technology areas are fiber, POS (hardware and software), SD-WAN, and security.
• The biggest challenges retailers want to solve with network upgrades are security (58%) and insufficient WiFi bandwidth (36%).

Conclusions

As stores become laboratories for advanced technologies attempting to blend the digital and brick-and-mortar worlds, they also become testing grounds for what store networks can and cannot do.

But there appears to be a disconnect between the long list of applications retailers plan to roll out and ability of the store networks to support them. 

Fortunately, the disconnects uncovered in the study may be just an issue of timing, because one of the major findings in the study is that a majority of retailers are planning to make a store network upgrade within the next 18 months These upgrades should go a long way toward solving current limitations and enable stores to become customer-driven gateways for innovation and digital transformation.

To download the complete study, with a comprehensive list of charts and analysis, click here.