Verizon Announces Tesco Win, Talks Retail Challenges, Opportunities

The Target data breach was Ocean's Eleven–level sophisticated, said a panelist during a Verizon event on the challenges retailers face.

Verizon Communications, alongside a major National Retail Foundation convention in New York City Jan. 13, hosted a retail-focused panel discussion on how to build trust in an increasingly mobile, connected (and vulnerable) world. It also announced a major retail customer win.

Verizon will be consolidating, centralizing and converging Tesco's worldwide infrastructure, it said in a Jan. 14 statement.

Tesco has 6,784 stores worldwide, more than 530,000 employees and brings in approximately $99 billion in sales annually. In addition to its grocery sales, which are tied to 32 million Clubcard members, Tesco offers online service in nine countries, hosts 6.6 million Tesco Bank accounts, supports 3.5 million Tesco Mobile subscribers and has begun offering mortgage services.

"Verizon is providing secure connectivity to link Tesco's suppliers, partners, customers and colleagues in 12 countries and around the globe," Verizon said in a statement.

"Importantly, the new network infrastructure also offers a solid foundation from which Tesco can deliver key business applications consistently to all stakeholders. This will enable Tesco to roll out new technologies and services more quickly and effectively, while also achieving significant cost efficiencies."

Retail in a Connected World

Like other markets, retail is being transformed by mobility, and its participants are still learning how to juggle the spoils and the challenges of their new insights.

"It's a fun time to work with retailers, but a scary time, too," said Phil Burroughs, vice president of hospitality and retail at Verizon Enterprise Solutions. "There's a crazy amount of information available—we've never been in a place like this before. … We have to take these technologies we have and enable them intelligently and securely."

The recent data breach at retailer Target was front-of-mind for Burroughs, whose tone turned somber and respectful each time he returned the topic.

"It's been a rough few weeks for those of us who care about retailers. … As retailers or folks serving retailers, we have a huge responsibility to secure [customer] data, and it's getting tougher and tougher [to do that]. The bad guys are getting smarter and smarter. … I would challenge the industry and say we have to come together. This is an industrywide problem … this is not a competition."

Greg Buzek, founder and president of IHL Consulting Group, likened the level of sophistication and coordination involved in the Target break-in to the heist movie Ocean's Eleven.

"It's one of those things where the game just got brought up to a whole other level," said Buzek.

Still, the group maintained that retailers are bullish about growth—according to Buzek, 60 percent have plans to add new IT staff—and about embracing mobility, online and in brick-and-mortar stores.

In December, Apple joined retailers like Kenneth Cole and Macy's in deploying mobile beacons in its stores (iBeacon, in the case of Apple), a solution that pairs a mobile app with detailed location technology. A customer who launches the app in store, or enables an app to activate when she enters a store, can be offered coupons—even at an aisle-by-aisle level—in-store guidance and ideally an improved shopping experience.

Buzek added that retailers are struggling to figure out how to offer in-store the same degree of personalization, and the tremendous inventory assortments, that shoppers are accustomed to online.

Mark Donovan, chief operating officer of Thinaire, a company that makes a Mobile Engagement Management Platform that uses Bluetooth and near-field communications (NFC) technologies, said there's a new opportunity to really engage with consumers in retail stores.

"Online it can be a little creepy when you do a search for something and then suddenly all the ads around you are for that thing. … In stores, there's an opportunity to get a relationship going" and turn what has been two monologues into a conversation.

The question then becomes, he continued, what's the level of engagement while a customer is shopping, and then after he or she has left the store?

"We used to talk about how online is going to kill retail, but that's not happening. … I think we'll see a shift back," Donovan said. "Instead of technology being on our computers [encouraging people to shop from home] it now comes with us into the store."

When asked which of the mobile payment solutions vying for mainstream popularity is likely to win, Buzek immediately dismissed NFC as the "single worst technology," saying it slows everything down.

"Who's going to win? It's the one that speeds the transaction and makes it cheaper," said Buzek. "If they can make the transaction even 2 cents cheaper, they will win."

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