Spread the love
Andrea Sangalli IDC

Andrea Sangalli
Associate Research Director, IDC Retail Insights


giulio raffaele IDC

Giulio Raffaele
Senior Research Analyst, IDC Retail Insights

Read full bio  @GiulioIdc

Telefonica Smart Retail enables Store Digital Transformation

In October 2016, Telefonica hosted industry analyst for its annual Industry Analyst Day in Madrid. During the event, they presented how they are transforming the vision and step outside their comfort zone and traditional business lines into areas less familiar to them. This new vision is based on a highly specialised, vertically oriented offering based on four pillars: Communications Services, Cloud, IoT and Analytics as a Service – all under a Security umbrella and supported by a central network capable of responding to the demand that the new services and offerings place on the business infrastructure.

These four pillars play a key role in Telefonica On The Spot Services, a subsidiary 100% owned by Telefonica Group, to evolve products and services that help digitalize physical spaces. We had the opportunity to discuss about that with Carlos Marina Civera, CEO of Telefonica On the Spot Services, and Alvar Edo Gonzalo, Head of Smart Retail (as well as during Smart Retail Breakout Session), to get a clear understanding of how Telefonica envisions, plans and enables digital and immersive customer experience from the outside to the inside of stores.

Telefonica, first of all, identifies four main store-related challenges that retailers are facing:

  • Where to position a new store (and manage store network optimisation)
  • How to drive more traffic to the store
  • How to increase conversion rate and average spending
  • How to manage opt-in and privacy compliance.

In order to address these challenges, Telefonica has built up its Smart Retail business unit that leverages and combines IoT, Big Data (thanks to their newly launched proprietary Big Data platform LUCA) and digital solutions. The process that Telefonica mainly follows to implement and continuously enhance its solutions goes from identifying an early adopter retailer, work with the selected Company on one or more use cases in order to identify best practices and then industrialise the solution.

On a high-level view, Telefonica aims at achieving success in customer experience by leveraging key actions as for example providing solutions and not just products, transforming store associates from sellers to advisors, enabling data-driven real-time decisions, creating 360 customer profile and deep personalization and making processes seamless and digitised. In order to do this, Telefonica wants to become a digital transformation partner able to provide proprietary solutions, 3rd party solutions integration and advisory services. Thus, for Telefonica assuming this role means to offer solutions and services in Applications, Analytics, Hardware (as an advisor), Security, Cloud and Worldwide Operations. This vision of retail offering clearly resonates with the major strategic objective – stated by the Chairman José María Álvarez-Pallete during his event kick-off speech – of delivering value to Industry players and their final users by becoming a Platform Company.

With a more detailed view on how Telefonica wants to transform the store experience, the Company identifies 6 milestones of the customer journey, and for each of these, they propose a selection of technologies sourced internally (including start-ups acquired during the past years) or from 3rd parties.

The first milestone is “On the go”: here Telefonica aims at attracting clients and potential clients to the store via mobile, by making use of the Smart Steps application part of LUCA. Smart Steps analyses in real-time data of mobile users and leverages solutions provided by the startups Jetlore (focused on automated marketing for personalised content in emails) and Inbenta (focused on AI-Powered intelligent search for customer support and e-commerce) in order to engage consumers.

The second and the third milestones are respectively “Attract” and “Track&Customize”: in the first case, Telefonica provides Digital Signage solutions placed on store windows with the aim of engaging walking shoppers and inviting them to visit the store. The second case leverages people counter and face recognition solutions in order to adapt the store experience by connecting to other in-store solutions (for example store music can be automatically changed on the base of which visitor gender is predominating in the store in a certain time frame).

The fourth and the fifth milestones are “Connect & Enjoy” and “Discover”: the first one aims at providing what could be called “soft experiences” as free WiFi connection, smart music and digital directory. The second one aims at providing to clients an interactive and immersive experience by leveraging solutions as digital tags, smart fitting rooms and virtual reality headsets (to be highlighted that Telefonica is implementing this kind of interactive solutions with leading worldwide retail players). After the attraction and engagement milestones, Telefonica then places the last one “Check out” for which the Company is mainly pointing in mobile connection for payments.

IDC Retail Insights believes that Telefonica is structuring an offer that encounters some relevant needs of retailers regarding the enablement of a consistent customer experience in the store, with the most important aspect being the capability to increase footfall thanks to contextual and personalised content. Over the next three years, a significant opportunity to take for Telefonica could be becoming an omni-channel commerce platform provider: taking as base their Data Company and store capabilities, the Company could expand into four main omni-channel capability areas represented by customer experience management, single commerce engine, order fulfilment and content optimisation.

If you want to learn more about this or related topics, please contact IDC Retail Insights analyst Giulio Raffaele .