The digital future for retail, hospitality and travel.

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1 Digital transformation resets customer expectations. The digital future for retail, hospitality and travel. Technology is fundamentally changing how retail, hospitality and travel businesses operate. Businesses across these sectors are becoming reliant on digital to achieve revenue growth primarily by improving customer experience and to cut costs by introducing efficiencies to back-office functions and the supply chain. Technology is at the heart of new innovations across these sectors. Those that fail to embrace digital transformation will lose out to new entrants using the latest technologies. The most cited examples, of course, are Uber and Airbnb, which have successfully disrupted their markets by cutting out the middleman. Business leaders in retail, hospitality and travel have responded 30% say they have fully implemented digital strategies, compared to 25% across all sectors. And they re confident of their progress so far 13% say the maturity of their digital strategy is excellent, compared with 9% across all sectors 1. But in the fiercely competitive worlds of retail, hospitality and travel, there s no room for complacency and plenty of room for improvement. In this document, we ll explore how the full range of digital solutions from mobile to the internet of things, cloud to big data, video to social fit into the major strategic priorities of retail, hospitality and travel companies. From there, we ll look at why it s critical that these initiatives are supported by robust and agile networks, and what steps you can take to ensure you re ready for the digital age. Leaders in retail, hospitality and travel say that their top three reasons for investing in digital products are to drive revenue growth, streamline and improve processes, and gain new customers 1. 1

2 Delivery of an omnichannel customer experience is at the heart of digital transformation in the retail, hospitality and travel sectors. Why digital matters to your business. Technology improves customer experience Customers want faster, easier and more personalized experiences whether they re shopping in-store or staying in a hotel. And digital is making that possible. With the right digital strategy you can establish more personal relationships, strengthen customer relationships and attract new customers to capture market share. In retail, customers can now avoid lines at the cash register by making payments from their smartphones, or reserve items online for collection from automated lockers. You can alert them to new offers using locationbased beacon technology and digital signage. And shop assistants can give them information on stock availability and take payments from their tablets, without having to walk away from the customer and potentially lose a sale. To reap the full rewards of digital, you need to pursue an omnichannel approach and provide customers with consistent service no matter how they interact with you. That could mean reserving an item online, picking it up in-store, being alerted to an offer via mobile, and making another purchase using a store card, with a loyalty discount applied automatically. 80% of leaders in retail, hospitality and travel say improved customer experience is a critical or high priority for In hospitality and travel, digital is acting as a key differentiator. Operators are offering everything from inroom Wi-Fi, to interactive menus, and mobile ticketing and payment. It can prove the difference between a great or indifferent review on TripAdvisor. 2

3 Better CX = better performance An effective omnichannel strategy will generate customer data that can be used to devise new offers and improve the in-store and online experience. You re probably already collecting more behavioral data than companies in almost any other sector. You may have data on who your customers are, how they shop and how they pay. To analyze all this data, you re reliant on digital. With it, you can probably predict what your customers will buy next or even change the shoppers experience as it happens. Digital transformation can also help you achieve operational efficiencies and cut costs. For example, streamlining the online booking process can reduce bounce rates and increase sales. Mobile solutions and rich collaboration tools reduce both friction and delay in every business process. High-performance cloud platforms are enabling staff working in stores, contact centers and head office to receive the data they need on demand. And big data is improving procurement and forecasting and driving efficiencies in the supply chain. Manage risk You re collecting more customer data and expanding your network edge to include ecommerce solutions and mobile. You need to make sure this data particularly cardholder information is secure. And digital is providing the solution. For example, tokenization and mobile location tracking is combating payment fraud. Digital is even helping to protect your physical stock, using cloud-based asset tracking and connected internet of things (IoT) asset tags and devices. 51% of leaders in retail, hospitality and travel say they ve already implemented cloud, and a further 32% plan to implement it 1. 81% 87% of leaders in retail, hospitality and travel say that revenue growth is a critical or of leaders in retail, hospitality high priority for % say and travel say that better cost reduction is a critical or information security is a critical high priority 1. or high priority for As you become more reliant on digital, the availability of your critical systems becomes ever more important. The cloud, content delivery networks (CDN), software defined networks (SDN) and disaster recovery solutions can keep your systems running in the event of a cyber attack, power outage or natural disaster. 91% of data compromises in retail targeted point of sale systems 2. 3

4 The network is vital to a successful omnichannel strategy. The unsung hero of digital: the network. The network is the backbone of consolidated commerce Take digital transformation in-store: a basic broadband connection isn t going to stand up to the demands of digital signage, and providing Wi-Fi for staff and customers. Tracking a customer s location and sending alerts to their mobile while they re shopping relies on a robust network. If a sales assistants tablet hangs when they re trying to look up stock information for a customer, the experience is no better than the customer waiting at a support desk. And if your network isn t secure and payment card data is stolen, you could lose the trust that customers place in your business. The network is just as important to the customer experience in hospitality and travel. If the network goes down or experiences latency issues, it will affect travel booking systems, air traffic control and rail network routing. That s going to lead to travel disruption and disgruntled customers. It could even put people s lives at risk. The efficiency of your back-office operations also depends on the network. You need a secure and robust network to transmit the huge amounts of customer data you re collecting. And you need a network that can accommodate the compute capacity required to analyze it. In the competitive markets of retail, hospitality and travel, innovation is key if you want to stay ahead of the pack. And how fast you can innovate relies on the network. Without the right level of network performance, security, reliability and capacity, you simply can t meet customer expectations. 4

5 You need an agile network Most retail, hospitality and travel companies know that while the network is critical to the success of their digital transformations, their existing infrastructure isn t up to the challenge. Just under three quarters (71%) of leaders in these sectors say that their legacy infrastructure is a bottleneck. And they re already acting to address this. Half of them (50%) say they re already expanding their network capacity to support digital; another 36% are planning to do so soon 1. But just adding more bandwidth isn t a sustainable option. In the digital age, networks need to be flexible enough to handle peaks and troughs in demand. They need the agility to block malicious traffic and keep critical systems running to maintain service levels. And they need to be intelligent enough to operate without the need for already overstretched IT teams to be constantly reconfiguring them manually. The good news is that there are technologies emerging, such as SDN and network function virtualization (NFV), which can do just that. Culture change is a must Digital transformation requires more than putting in place new cloud, analytics and networking solutions. It means pushing through cultural change. To support the business, IT needs to understand the business. 73% of leaders in retail, hospitality and travel agree that the enterprise network should go beyond connectivity and align infrastructure with the needs of lines of business % of leaders in retail, hospitality and travel say that the network forms part of their competitive advantage % of leaders in retail, hospitality and travel say that poor network quality translates into poor user experience 1. But IT faces challenges in supporting the business. 50% of leaders we spoke to say that the rate of technology change is an obstacle to achieving business goals. And 41% say it s a problem that key staff are focused on other activities 1. So what s the answer? Business leaders already know what needs to be done: 64% say IT staff should spend time working in the business, and 69% say IT projects need clear business-focused KPIs 1. 5

6 Make the right choices. There s no one-size-fits-all for digital transformation in retail, hospitality and travel. The journey you take will depend on your customer base and what differentiates your brand. In retail, adoption of digital will also vary across stores. You re more likely to see the latest mobile interactive technologies in flagship, high-performing stores and that s where you re likely to need the most flexible network solutions. You need to determine what steps you should be taking now to get a lead in your market. Whatever actions you take, having a robust, secure and agile network will be vital to your success. What can you do today to get ahead? If you re not already doing so, take a look at cloud and hosted services as a cost-effective means of improving your data and compute capacity. Solutions like our Secure Cloud Interconnect let you link your business securely to a broad ecosystem of cloud service providers, and offer diversity to reroute traffic to help avoid service issues. Private IP solutions will provide secure and reliable network connections and help you maintain employee productivity and satisfaction. The internet of things is also already delivering huge benefits within your sectors. It s enabling everything from digital signage, guest services and personalization, to asset tracking, employee mobility and smart offices for operational efficiency. References 1 A commissioned study conducted by Forrester Consulting on behalf of Verizon, February Verizon 2015 Data Breach Investigations Report, May Case study Support for explosive growth When businesses are expanding, they need agile network infrastructure that can scale with them. A global clothing retailer with 2,800 stores worldwide needed better application delivery to support its growth. It was expanding rapidly, opening 250 stores each year. As it grew, each new store needed an infrastructure that could support 50 point-of-sale units and comply with PCI Data Security Standards. And each location needed reliable voice services to handle customer calls. We provided a store-in-a-box solution that established predictable lead times when opening a new store. We also delivered a full-store network and communications infrastructure, including IP telephony, managed WAN, firewalls and intrusion security. We help retail, hospitality and travel companies transform their networks and become digital businesses. Find out more Our full report explores the big picture of digital transformation and the future of the network. Find out more verizonenterprise.com 2015 Verizon. All Rights Reserved. The Verizon name and logo and all other names, logos, and slogans identifying Verizon s products and services are trademarks and service marks or registered trademarks and service marks of Verizon Trademark Services LLC or its affiliates in the United States and/or other countries. All other trademarks and service marks are the property of their respective owners. WP /15

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