Overcoming the Challenges of Retail Wi-Fi
It sounds like a simple proposition for retailers: provide Wi-Fi for customers and employees to use with their smartphones and tablets inside their stores.
Shoppers are coming to expect it: in a recent survey by SapientNitro and GfK Roper, 63% said free Wi-Fi would enhance their shopping experience. And even though some will use the service to compare prices online, more and more retail chains are offering Wi-Fi service to customers. In the 2012 holiday season JC Penney Inc Target Corp. and Saks Inc. joined the ranks of other chains that had offered Wi-Fi in previous years, including Macy’s Inc., Sam’s Club and Nordstrom Inc. Wi-Fi also offers opportunities to improve employee productivity and customer satisfaction–for example, by allowing a sales person to check the stockroom without leaving the floor, or even to complete a sales transaction in the aisles.
There are more than 80 million unique Wi-Fi networks in the US. How difficult could it be to put a few into stores?
Very difficult, it turns out. In fact, Bain & Company’s work with retailers finds that rolling out Wi-Fi to a network of stores is among the most capital intensive and complex projects IT departments will tackle this decade. That’s true in other industries as well, whether it’s a cruise line installing Wi-Fi in its ships or a large company rolling Wi-Fi out among a network of offices.
Much can go wrong. At one chain, IT managers planned for enough bandwidth to stream instructional videos, only to discover later that employees’ devices were too slow to run them. At another store, installers disrupted shopping when they dropped access points from 50-foot ceilings. One retailer had to convince its competitor at the other end of a mall to allow a network connection to pass through their store. Another was shocked to see its original planning estimate of a few million dollars balloon to more than $100 million over just a few months because its IT department lacked the experience to gauge the real costs, not only of hardware and connectivity, but of managing different building and electrical codes, varying regional labor laws and the full impact of business disruption in stores.
As that retailer learned, putting Wi-Fi into a large commercial environment involves a series of complex design decisions and requires more planning and coordination than many IT departments realize. Only by investing time early in the process to understand the requirements can CIOs and their companies avoid unpleasant surprises, long delays and costly overruns.
First among the big decisions: get a clear picture of what Wi-Fi will do for the business. This will require input from other departments beyond IT. What reward will a company reap for its efforts? Hotels and airports, which can charge customers for Wi-Fi access, have an easier time answering this question. It’s more challenging for retailers who typically provide the service for free and must accept the risk that customers will use their Wi-Fi to shop for and buy a product elsewhere. Executives must weigh the tradeoffs in higher levels of customer satisfaction and employee productivity.
Second, IT should approach the design of the Wi-Fi networks with a clear understanding of the ways that customers and employees will use it. Does the company intend to provide enough bandwidth to allow customers to stream video so that they could watch instructional or marketing videos – or will they find their networks bogged down when parents let their toddlers stream videos to distract them while they shop? Should they instead offer only enough bandwidth to allow them to look up information on products? Do they want the ability to locate employees or to track shopping patterns – a potentially rich source of data in planning future displays and store layouts?
CIOs also need to allow enough time to plan the project carefully. Wi-Fi projects require much coordination among departments. In addition to working with business and functional leaders, they may involve store operators, real-estate managers, data center personnel and a small army of vendors across the country who will actually install the equipment. Many of these projects require retrofitting buildings of various sizes, ages, and configurations to perform under 21st -century expectations.
Store surveys also have to be undertaken, to understand the layout of the retail space as well as the underlying infrastructure of electrical and communication networks and barriers such as concrete or steel structures. Determining connections from the telecom operator to the store or through a mall can sometimes be more complex than expected.
Finally, pilot programs can help identify problems before they roll out to an entire chain. At one retail chain, for example, installers placed access points in locations that they decided were more convenient than those indicated on the plan – a shortcut that created gaping holes in coverage that were costly to fix later.
Retailers may believe they need to provide Wi-Fi for the time being – but that alone isn’t a sufficient reason to install it. Only with a clear plan of the benefits that Wi-Fi can deliver, and with a well thought-out plan, can retailers launch Wi-Fi rollouts that make sense.
Shoppers are coming to expect it: in a recent survey by SapientNitro and GfK Roper, 63% said free Wi-Fi would enhance their shopping experience. And even though some will use the service to compare prices online, more and more retail chains are offering Wi-Fi service to customers. In the 2012 holiday season JC Penney Inc Target Corp. and Saks Inc. joined the ranks of other chains that had offered Wi-Fi in previous years, including Macy’s Inc., Sam’s Club and Nordstrom Inc. Wi-Fi also offers opportunities to improve employee productivity and customer satisfaction–for example, by allowing a sales person to check the stockroom without leaving the floor, or even to complete a sales transaction in the aisles.
There are more than 80 million unique Wi-Fi networks in the US. How difficult could it be to put a few into stores?
Very difficult, it turns out. In fact, Bain & Company’s work with retailers finds that rolling out Wi-Fi to a network of stores is among the most capital intensive and complex projects IT departments will tackle this decade. That’s true in other industries as well, whether it’s a cruise line installing Wi-Fi in its ships or a large company rolling Wi-Fi out among a network of offices.
Much can go wrong. At one chain, IT managers planned for enough bandwidth to stream instructional videos, only to discover later that employees’ devices were too slow to run them. At another store, installers disrupted shopping when they dropped access points from 50-foot ceilings. One retailer had to convince its competitor at the other end of a mall to allow a network connection to pass through their store. Another was shocked to see its original planning estimate of a few million dollars balloon to more than $100 million over just a few months because its IT department lacked the experience to gauge the real costs, not only of hardware and connectivity, but of managing different building and electrical codes, varying regional labor laws and the full impact of business disruption in stores.
As that retailer learned, putting Wi-Fi into a large commercial environment involves a series of complex design decisions and requires more planning and coordination than many IT departments realize. Only by investing time early in the process to understand the requirements can CIOs and their companies avoid unpleasant surprises, long delays and costly overruns.
First among the big decisions: get a clear picture of what Wi-Fi will do for the business. This will require input from other departments beyond IT. What reward will a company reap for its efforts? Hotels and airports, which can charge customers for Wi-Fi access, have an easier time answering this question. It’s more challenging for retailers who typically provide the service for free and must accept the risk that customers will use their Wi-Fi to shop for and buy a product elsewhere. Executives must weigh the tradeoffs in higher levels of customer satisfaction and employee productivity.
Second, IT should approach the design of the Wi-Fi networks with a clear understanding of the ways that customers and employees will use it. Does the company intend to provide enough bandwidth to allow customers to stream video so that they could watch instructional or marketing videos – or will they find their networks bogged down when parents let their toddlers stream videos to distract them while they shop? Should they instead offer only enough bandwidth to allow them to look up information on products? Do they want the ability to locate employees or to track shopping patterns – a potentially rich source of data in planning future displays and store layouts?
CIOs also need to allow enough time to plan the project carefully. Wi-Fi projects require much coordination among departments. In addition to working with business and functional leaders, they may involve store operators, real-estate managers, data center personnel and a small army of vendors across the country who will actually install the equipment. Many of these projects require retrofitting buildings of various sizes, ages, and configurations to perform under 21st -century expectations.
Store surveys also have to be undertaken, to understand the layout of the retail space as well as the underlying infrastructure of electrical and communication networks and barriers such as concrete or steel structures. Determining connections from the telecom operator to the store or through a mall can sometimes be more complex than expected.
Finally, pilot programs can help identify problems before they roll out to an entire chain. At one retail chain, for example, installers placed access points in locations that they decided were more convenient than those indicated on the plan – a shortcut that created gaping holes in coverage that were costly to fix later.
Retailers may believe they need to provide Wi-Fi for the time being – but that alone isn’t a sufficient reason to install it. Only with a clear plan of the benefits that Wi-Fi can deliver, and with a well thought-out plan, can retailers launch Wi-Fi rollouts that make sense.
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