The 5G Gap

Thanks for joining today, our webinar, The 5G Gap: What Leading Retailers Know That Others Don't. We're excited to have you today. I have Didi from Ericsson's going to join us. And Lee Holman, as always, is going to join us towards the end in terms of Q&A. Thanks again to Ericsson for making this research possible. This was independent research that we did with Chain Store Age magazine, and we just cut the data. Based on 5G and networking to see how that all popped out. And what you're gonna get is the information on that. On the inflation data, this is from Truflation. For those of you that follow the US government inflation data, there is a piece that is delayed that greatly inflates what the inflation data is. That's 6 months behind and it's what they think you can rent your home for. So we like to use Truflation, which is more like a Nielsen Ratings looking at Market baskets and what's really happening in inflation in real time. They have inflation at about 1.98% today. That's not necessarily what we're seeing at the stores. Obviously those prices are higher in many categories, but overall when you factor in shelter as well as medical, business services, all that stuff, they've got it at 1.98%. Overall, the data is above trend. It has been for quite a while. We were starting to drop and then we had this war pickup that is jumping us back up again. So we've literally been running at about a 4.1% since 2020 as an annualized trend. So customers are feeling it. The good news is gas prices are down a little bit. Of course, this can fluctuate day to day. We're down about 20% from where we were 2 weeks ago. And, and this, like I said, can go up or down. If you're in a dark blue state, you're paying about $2 less a gallon than if you're in a bright red state. Here today when it comes to that. So obviously regionally that has a major impact on consumers. We really are in a gas-driven world still, even though we've got a, a big improvement in increase in electric cars. My advice to you is any time the government gives you money or gives out money back to consumers in terms of trying to incentivize the economy or protect people, buy oil stocks. They seem to take 30 to 40% every time the government gives out money. Here we had these greater tax refunds that spurred retail, and we're seeing benefits of that. And yet right now, 58% that was given out in additional tax returns is actually going into gas and fuel cost. And that's a big problem when it comes to the consumer and what's going on. So what's crazy though is consumers continue to spend. And so far, and the April up 5.7% year to date. These are real credit card receipts where the data is showing that we've got this strong improvement. In March, we were up 7%, really strong data. The consumer is still starting to spend. The reality though is we've got about 2 more weeks before we start to see a dip because that those funds are now running out. What's interesting about things is there's actually this GLP-1 effect in clothing that is now starting to hit retail clothing here. Discretionary purchase is up huge if you look at this year's numbers. This is incredibly strong as well as you go down to the bottom in sporting goods, hobby, music, and bookstores. That as well is really strong. So here we're seeing the, the added tax returns, this stuff coming into play where when it comes to retail. However, this is really bifurcated. We really have top income folks, the top 20% that are driving most all of the spending right now. And the bottom 80% continue to suffer more as a result of these oil prices and what's happening in the, that part of the economy. This is the part that I want to really highlight when it comes to those large higher incomes is they tend to have stocks and we've seen a rapid increase in stocks this year. As people have invested in the AI boom, particularly the energy boom that goes along with that. And quite frankly, some of the lower incomes don't have a place in stocks, and thus they're not enjoying that same growth of what's happening. So keep that in mind as the rich get richer, and that's having a, a positive impact on retail to date. However, that being said, CNBC and Moody Analytics kind of showing the consumer the gas bill increase and how that has grown this year and how that is now— how this has sucked up the tax refunds. Okay, so we just went past the average tax refund in terms of extra gas spending. So this is going to start to impact retailers as we go forward. The resilience of the US customer going forward, once again, we're starting to see this impacting earnings per share in retail. And this is where I really want to highlight this. We are— when we gave out money for COVID, the sales growth was, was more than the profit growth. That is no longer the case right now. If you look at the largest retailers, and we said this a year ago, President Trump out there talking about 10% tariff, 30% tariff, 50% tariff on clothing, all those sort of things gave permission to retailers to raise prices. 'Cause in the mind of the consumer, they're thinking a 10% raise in price or a 20% price is what I'm expecting when I go in into that retail environment. The reality of that is the retailer's actual tariff cost is about 2.5%. So your actual tariff cost were on the, the actual product at cost level, not at retail level. So being able to raise the prices has greatly increased the EBITDA growth. This could also be AI adoption. We know that these retailers generally are further ahead than other retailers in terms of adopting AI, and we can start seeing that impact that is happening again. So overall, 2.3 times earnings growth for the largest retailers compared to their sales and profit growth this year. And that leads us into our topic today, the 5G dividend. So now we want to talk more on the technology side and what's really going on. So once again, we thank Ericsson. For this. And what we're really seeing here now is we're at an inflection point. We have a lot of retailers that have networks that were built for 2017, 2018. And yet now we've got all these connected devices. The typical supermarket, I laugh at 20 devices per 1,000 square feet with electronic shelf labels now coming on board, edge devices, digital signage, all that sort of stuff. The computer vision cameras, the loss prevention devices, we're seeing way more than 20, 20 devices in there, but we've got all of these different things that are happening that are driving network traffic. And there's a need to update the network along that way. And we really are seeing a dividend of the people that have deployed 5G in particular and how they're seeing things when it comes to specific metrics and KPIs. So the people that are already using 5G saw 70% higher profit growth in 2025. They're expecting 45% higher sales growth for 2026, and they're investing 102% more on AI as a percentage of their budget than anybody else in the industry. So the dividend is measurable that we're seeing with 5G. And you hear the press talking about AI as well, not showing real results right now. That's crazy for anybody that is really involved. We are seeing 50 times improvement in some of our workflows there. But as an aggregate economy, it may not be showing up yet in a nice, clean, defined situation. Well, 5G is one of these technologies that's making this work for a lot of these retailers. So the dividend is measurable. That's clear in the data. It allows compounding as well because you can have items that are on your network or not on your network. And DeeDee's gonna go into some of the enhancements that allow that to work as well. And it's a way to quickly augment your network without having to replace all the Wi-Fi and everything in there to quickly get up to speed so you can start doing some of this AI at the stores and help with particularly those customer journeys that are store fulfilled, but necessarily are not about somebody just walking in the store and picking something off the shelf. And we really have a dividend that is timed. This gap is growing. It's kind of like me running against Usain Bolt. I've used that narrative a lot of times. He's not only further ahead on one step, he's actually getting further and further ahead on each individual step. And we're seeing the data start to support this with 5G and networks overall. And that is one of the things that brought me to the point of saying 5G is no longer just a networking topic. It's a part of the foundation. Foundational technologies on which these AI roadmaps are now getting executed. There are ways to deploy 5G at the store level to give associates 5G to— or to give associates AI tools that through the traditional stack, traditional network, you may not have been able to do before. And that is a big exchange and a change for a lot of retailers there. So that's our infrastructure gap today. It's still real early with this technology. Only 23% of the retailers in our survey use 5G at the store level today. And in most cases, it's simply used as a WAN backup rather than using it for individual functions within the organization. As I mentioned, it's, it's the gap is wider. We're seeing much more adoption of these key things. So a sales winner is defined as anybody who grew their sales 10% or more. In 2025 or grew their profits, would be a profit winner, grew their profits 10% or more. Literally, we are looking at 32% for using 5G today of the sales winners, only 23% globally. Those people also tend to have a higher level of a single version of the truth with a single data lake, leveraging edge computing at a much higher rate, headless commerce where they've separated the UI from the actual code, and having that flexibility. And then another 50% difference in terms of using microservices, which is the ability to literally just pull the little bits of data that you need into the app when you need them, rather than spinning up or hotkeying into a completely other application. So 7 signals your store network is about to break. These are the things that are actually showing that you've got network issues. And quite honestly, Your store associates are calling up and telling you, we need more speed. We need the, uh, it's like Scotty in Star Trek. We need more power. That is the reality of what is happening here with a lot of companies right now. So self-checkouts are freezing or they're dropping their sessions when they're in the, that like 4 to 7 PM on a weekday or on the weekend. Price updates are arriving late, uh, for the shelf labels. Mobile POS losing the connection. That's a really a disastrous situation. When you're in an assisted selling situation where the associate doesn't have access to deal with things, whether it's doing the actual point of sale or whether it's line busting at the time. Computer vision is almost nonexistent if you've got a bad network. The latency there when it comes to looking at things like self-checkout and how long it takes for that image to get processed and where that is processed is a big issue there. The BOPUS orders are a major problem. Because so much of the separation in terms of the leaders versus the laggards comes down to, can you efficiently fulfill focused orders at the store level? Retail media screens. Now, retail media is another complete revenue stream for retailers to sell to the CPG companies when they can deploy it. Obviously, you've got to have the network that can support that. This is one of those areas where 5G can be exceptional. Because you can have these completely separate from your store network if you choose to do payment terminals. Obviously you've got all kinds of issues there that this is like the non-negotiable. You've got to be able to have your payment terminals work with that. So that's my lead-in. I'm going to now bring DeeDee back on and to talk a little bit about some of the enhancements of things that are going on with 5G. So DeeDee, take it away.

Sure. Thank you for that, Greg. That was a great setup for what we're doing. So just to provide a little background about who I am and the company I represent. So DeeDee Paré, I've been with Ericsson for over 6 years. It's the division of Ericsson that we're in is called Ericsson Enterprise Wireless. The wireless WAN portion of Ericsson Enterprise Wireless used to be known as Cradlepoint, but we were purchased by Ericsson about 5 or so years ago. And we even include enterprise wireless private networks as well. Most of the material I'll talk about today is about the wireless WAN portion of it, but at the same time, everything that Greg was just talking about has some applicability to the private network side as well. Greg set this up perfectly because AI and digital transformation have really changed the status of the network and network resilience is now not just in your hands and your concerns in terms of making sure that it's mission— your mission-critical network is up and running, but now it's even a board-level priority. And so Network World has this quote here saying that 91% of leaders are now treating it as a strategic priority. It's up there like security has been in the past. And so with the resiliency, how do you reduce net downtime for your network. It's something that obviously is top priority. We've had a conversation for years talking about the fact that WAN link diversity is one of the, the most important ways that you reduce downtime and you improve resiliency. We've been talking about the fact that if you have two wired connections as your primary and your failover, that is kind of, you know, it's putting all your eggs in one basket. And so we've been talking about for at least a decade now about how cellular can run the store in a failover scenario. But in a moment, we'll even talk about how it works as a primary connection. But really to reduce downtime and to improve resiliency, you need to even look beyond just having two links. Things to consider is making sure that you don't have everything with just one service provider. And we'll show in a second how you can really build in more than one service provider into your network as well. We're even saying that we're past the point of having terrestrial networks. You need to have the diversity of having non-terrestrial networks as well. And making sure that you have multiple carriers, multiple options, and even utilizing satellites going forward as really what you need to have in place to make sure that you're keeping your networks up and making sure that you don't have the downtime for your mission-critical traffic. So I've been talking a little bit about resiliency, but 5G is something that has also worked with many of you as primary connections. And so we say wireless first, of course, But at the same time, if you're thinking about a primary connection, really our routers can be multi-WAN. So it's something you can have wired, you can have wireless, and even satellite, as we'll go into in a few slides as well. But the idea is you can utilize, there's a lot of agility reasons, there's a lot of connectivity, and also coverage is part of the reasons. When wires don't work, we definitely have a scenario for your retail stores and retail locations to run on cellular and beyond. But beyond that, we've been very popular in some smaller footprint locations with an all-in-one device that provides just everything, Wi-Fi, LAN switching, security, everything. But at the same time, we also have the options for full-stack branch. So that way you can add on and add additional capabilities as you need in especially larger footprint locations. But where we've really done a great job and really provided a lot of utility has been in deployment flexibility. So for example, in large big box stores, they've also had smaller retailers who you don't want to get onto the production network. So we've been providing for those smaller retailers that are store-in-a-store scenarios so that they can run their entire business isolated from the big box. Also seasonal pop-up networks as well. You may have a seasonal pop-up for a certain season and then you tear that down and you can move to another location and set up and have the same configurations and have everything work, but at the same time It's just ups and it just works. But the other parts of it as well, day one connectivity has also been something that we've been discussing. The fact that it does take wired a while to get to a location. We have studies that show up to 120 days, but if you have power and permits, you wanna get in and you wanna start generating revenue. And so you can operate on a cellular router for that amount of time and then you can plug in the wired connection, or you can redeploy the router to just be something for failover only. And then Greg set it up quite a bit. It's some of the IoT scenarios. So the, you don't want to have your digital signage or you don't want to have your media capabilities all on the same production network. So you have the opportunity to utilize these routers and run off of cellular instead and have it be completely isolated from the rest of the network. So we were, those are some of, that's how the current state has been. This is how everything has been operating using cellular till now. And even in discussions and preparing for what we were going to say today, we were talking about what about 6G? And what I wanted to make sure is everybody understands that 5G is still very much evolving. We're about midway in kind of the life cycle of 5G. And up until now, everything has been on standalone, or it's a combination of the 4G core with 5G infrastructure. And we are about midway. We're starting to roll out— our carrier partners are rolling out 5G standalone, and that's where the magic really is starting to happen with 5G. And so the first thing that we can talk about with 5G Standalone is network slicing. And I was really excited because the last year and this year, we're really starting to see a lot of network slicing examples coming out there as well from the North American carrier partners as well. And what network slicing is, it provides in a wireless scenario kind of MPLS predictability. And then that way you can have set policies using different slices. And the offerings we're seeing from carriers right now is a single network slice, but Ericsson has been able to utilize URSP and now we can offer network slicing examples that are even multiple network slices. And so what would happen in that particular scenario is if The carrier provides you one 5G SA link, and you could have one slice that would be for your mission-critical traffic, which obviously is point of sale. You can have that low latency, have it be ultra-reliable. You have it like an ambulance in a crowded street where everything moves aside and lets this traffic go through. Slice B, you might have a different prioritization, and then that way you can have inventory management beyond that slice. But from that same link, you could also have a best effort for guest Wi-Fi. And so that way you set things up in terms of what is needed in the store and what issues you're trying to solve. Another thing that is new with 5G Standalone is this new capability called Dual SIM Dual Standby. And that's part of the standard, but I wanna back up a little bit and maybe start at the bottom of the diagram on the right-hand side. And that's really talking about some of the things that we have in place to be able to, from Ericsson, being able to deploy more rapidly and without needing IT staff on site. And then the dual SIM, dual standby comes into play when with managing overall. And so if you think about it, more and more of our products are coming out with eSIM. And so you can load up to 7 carrier profiles onto an eSIM. Now, remember we were talking about in the resiliency, you need to have carrier resiliency. So eSIM is one way of really helping bring that about. So that way you can have multiple carriers. In North America, or at least in the US, we have 3 carriers, so 3 or 4. And then you can add all of those carriers, or you can add additional ones as well, just to have it as your standard product that you ship out. But the idea is by having that capabilities, it's much easier to shift between data plans and making sure that you have the right carrier for that moment. And so we have something called Carrier Selection Intelligence on our platform as well. So you can compare between two different carriers remotely. And you can, you know, even though the device has been shipped and is on site, you don't have to have IT staff there. It's something that can be running with the staff on hand who can just turn it, power it on, and get it up and going. But the person who is managing it remotely can do carrier selection intelligence, compare between two different carriers, and understand what the best performance based on your performance requirements. And you can select that right there, even though it's— you're far away from where that location is. And then back to the dual SIM, dual standby. What happens also, this is really putting the resiliency in place, is the fact that one of the SIMs eSIMs is active, and then the other one is standby and latched. And so what that means is instead of having failover be about 3 minutes, because you have to bring, you have to erase the settings that are on and then reload a new one, basically it's ready to switch over. So that, that way it's something that probably won't even be felt as you're switching between the two. Capabilities. But really, ultimately, the idea is all of this is being put in place so that your mission-critical traffic can stay up and active even no matter what the conditions come in your way. And then one, another thing that is coming in the standard in 5G SA is more interoperability with LEO satellites. Now Ericsson has taken this one step further. Because Ericsson is now able with our devices, if a LEO satellite modem is plugged into one of our either routers or adapters, it can auto-detect if that is LEO satellite traffic. And we've been working with satellite over the years and SD-WAN vendors have also worked with some of the satellite, but what has happened is that they have been blind to what traffic type that is. And so Ericsson has made the integration possible so that way we can auto-detect LEO satellite traffic. And we use some of the intelligence that we've had in place for cellular over the years, such as understanding the health of it, what's the latency, having all those kind of signals, being able to understand data plans and things along those lines. So now we are able to perform, once you're able to ingest the telemetry from LEO satellite, everything that you would have if you had a cell phone and you were standing next to the satellite modem and being able to manage from that perspective is something that you can bring into our Ericsson NetCloud. And then that way it can be brought together as something on an enterprise scale. So that way you can have the visibility and the analytics that, and treat it much like you're managing your wired connections, much like you're wire managing your cellular connections. You can now, with the data that we can get from the LEO satellite vendors, be able to bring that into the network. And over time, we will be able to add more and more capabilities in terms of policy management and being able to help with troubleshooting and also be able to apply policies and bonding, things along those lines. So that way, a few things happen with this is we help with the orchestration of your entire wireless portfolio. And then the second thing is that you have a better path to understanding and having that resiliency and having the confidence that it will be there in the time that you will need it. So in talking about other capabilities, or may not be as applicable for retail, but there's obviously 5G redcap, which is reduced capacity. This is especially important for as carriers are investing more and more in 5G, they are disinvesting more and more in LTE. So some industries, especially IoT, need low data use cases. So this is a way of helping them stay on 5G, but at the same time, not having to have the payment or it's a lower cost, lower data scenario. So it's something that works for them. Something that's being discussed, it's not necessarily near term, but 5G slicing for private networks is also something that is in the potential as well. So much that we saw, we were talking about private networks a little bit in some of the same areas that Greg was talking about. And so there is discussion about possibly having 5G slicing in private networks, but that's something that's still on the roadmap as well. And then also something that will be coming today, we are on 3GPP Release 17. That's something that was recently released and That's what Ericsson's building our wireless WAN capabilities on Release 17. But the next release, which is Release 18, is when 5G Advanced comes in. And across all networks, whether it's handheld or whether it's business case scenarios, it's really bringing AI and machine learning into how the networks are managed, the big infrastructure networks. And so managing beams and data streams and things like that. Another thing that is, is also important and coming with 5G Advanced is building better coverage in terms of propagation through concrete and things along those lines. And so making it easier for you, for 5G signal to penetrate in buildings as well. And then for handheld devices, it's how do you, they make batteries run faster because they're using AI into the network so that you're not having to ping the cell towers as often. It uses AI. AI to understand how much you're needing to change towers and adjusting so that way it really preserves battery life. So AI isn't something that's also at the big Ericsson infrastructure level. It's also something that we apply into our wireless WAN capabilities. So we have something called— we have generative AI today, and this summer we should have agents as well. So agentic AI built into that and AI ops, and all of this is really helping network admins understand what's happening on the network and being able to troubleshoot and come up with different ways that they can understand what's happening on the network and then sharing that information. So with that, I will turn it back over to Greg and he can finish discussing more about the intelligence.

Yeah, thanks so much, DeeDee. That was really educational to know what's going on. Let's go through now. Let's say, what is the Windows signature as we go forward here? On almost every benchmark, every financial metric that we had in there, the people that were using 5G already were outperforming those who were not using 5G. So our average sales growth was 6.5% in our study for 2026. The people already using 5G, 9.5%. For profit growth, the ones not on average, 6.3%, 10.7% overall for those using 5G. But when you look at the AI spend growth, and this is where things start to really heat up, the spend growth in terms of those using 5G already, 45% higher spend growth for what they're doing with AR. So we get to this race and we get to this lead again where things start to take off and we've gotta watch that. So the performance premium extends even beyond the P&L as well. Those people who are leveraging 5G are opening 41% more stores. In 2026. The, we already mentioned the higher AI budget allocation there. The, and they're more likely to say they're early adopters of technology. And why that's important is there's a difference in profitability for early adopters versus non-adopters and particularly laggards when it comes to technology. The average profit, once again, we said was 10.7% versus 6.3% for people that were using 5G. As well as the more likely to, it permeates the entire organization as to moving to that tech forward. There's a group of retailers that in 2018 saw that they were in a tech race with Amazon because Amazon released for the first time that they were profitable for their, their systems for retail, not just AWS driving all the profitability. And there was a group of retailers that got religion at that point in time and said, Hey, we're in an IT race here with Amazon, not just a retail race. And they started to invest at a rate of about 40% higher than others. And when you have 40%, down to 40% on top of 40% growth, you're now seeing a consistent investment level from technology. And that's really starting to play out in terms of profitability across the entire landscape. So the network really is the foundation at the store. And when it comes to AI, gosh, things are not slowing down. Our first quarter AI webinar, our AI Pulse webinar. We're going to do another one of those in the second quarter. We've already had 150 install announcements of what different retailers are doing with AI just really in the first 4 months of this year. So if you follow our Retail Reality Check newsletter, if you're not on it, we're happy to add you to that, but we're tracking tons of AI installs. In retail and what they're doing. And there's really about 7 or 8 categories where those things are starting to play out in a lot of ways. And that this network, it really is the foundation to making this stuff available at the store level. So when we look at what people are doing, if you've already using 5G versus not using 5G today, edge devices, they're 97% more, single data lake, 226% more likely to be having a single data lake, 186% more likely to be using computer vision. 615% more likely to be using electronic shelf labels. And then RFID, 95%. That's even way higher when you get into the fashion side of things. And using geolocation for marketing, being able to send out offers to consumers, offers through the app when somebody's local or near a store, 1537% more likely to be doing that if you're using 5G at the store level. And that's really one of those enablers. That are helping that work. So when somebody's nearby, send them an offer, send them something that gets them into the store. So that is a key data point that is driving additional revenue there. You're driving by the ice cream shop and you get an offer to come into the ice cream shop, or you find out that the fashion retailer has a sale going on as you were going by. Those things are driving incremental sales, incremental vision. Visit and great profit increases as a result. We mentioned shelf labels already, a key correlation there. This is the network overall. The basically those who are making the LAN/WAN their top 26 priorities are 4 times more aggressive on self-checkout as well, and 3.5 times more likely to be committing to edge computing. The network is a bottleneck and they know it, and there's a lot of investment that is happening. In this area to improve the networks overall. And that cost of falling behind is getting really significant there. And I don't have these side by side, but if you remember correctly, our average was 6.5% sales growth. For everybody else that's not, it's 5.3% for, for things. And so as we go forward and looking at the profit growth, there is a significant difference that is showing up in terms of expectations and what we're seeing already. In the numbers so far in 2026. As well, other technologies that are coming online at the same time, point of sale hardware updates, software updates, mobile devices, these all make sense for things here. But this network, just the ability to have it, is a huge incentive to make these other investments, and they're absolutely crucial. Almost all of these things have an AI component. In some manner. And AI is really becoming the differentiator that is separating retailers from others. And it's the ability to do that, having clean data and access to that data at the point of decision. So the sales winners, the connected stores, as I mentioned earlier, 5G is essential to getting BOPUS optimized within your store. What we have found in previous research is there's a 25% increase in net promoter score if the customer shows up and the person that's greeting them at the car or at the station does not have to leave their presence to get the items. If they're able to use a communication device like 5G or a walkie-talkie, it's a 25% higher net promoter score. And what we mean here by BOPUS being fully optimized, let's face it, retailers are optimized for customers to walk in and take the items off the shelf. And anything that deviates from that is an added cost to the transaction. So how do you get optimized to the most effective way of getting the items to the customer at the lowest cost using BOPUS while keeping the prices exactly the same as what you've got for a walk-in shopper. That is very difficult. And what we're seeing is the winners are 5, 5.5 times more likely to be optimized for that. As well, about 100% more of their revenue comes from BOPUS than the average retailer when they do that. So Focus is another clear differentiator between the winners and those. These guys are also really likely to have optimized their local delivery as well. This is where 5G comes in directly for these things because you have the opportunity to also enhance that experience for the customer, showing like the pizza tracker, where is my order? We were talking about this yesterday at an event and how people just literally look at the Amazon thing 'cause they live in a city and they literally are trying to time the actual delivery of the Amazon package so it doesn't get stolen from their front porch. The ability to do that with 5G technology is a huge situation there. And it's really starting to show in the data. This is just a repeat of that information here as well, but side by side, you can see where we are versus those people who are using 5G today and how that plays out into optimizing those journeys. Other technologies, as we've mentioned, get a lot more investment and a lot more involvement when doing this. And I just want to highlight the second one here, the retail media networks. Once again, this is another revenue stream opportunity for retailers and the ability to not only run that on an alternative network, so it's not eating up your terrestrial network, is a key opportunity with 5G. And we're seeing rapid adoption of that. And we're actually seeing consolidation happening in the C- store segment, the gas companies are now buying up the retail outlets after divesting years ago because they want to have access to that data so they can have a retail media network at the pump and in the store that they can capture as well the loyalty data on the consumers and sell that back to the manufacturer. So that added revenue stream, 5G is really a technology that helps that get adopted. But it's not just the one place you see this. The emerging, uh, moves here and how the early adopters are ahead on all of these different technologies as well. So what's the framework? Literally, you've got to build that foundation, that private 5G network, your wireless WAN, your LAN network. We're not in the same store that we used to have in terms of the different technologies. And I think it was interesting when Didi said, hey, you've got some things that just need 4G or LTE type of connectivity. Your freezer doesn't need 5G connectivity. Your freezer just needs to have a cellular connection that you can get to understand whether or not it's operating at peak thing, if there are any issues, is it at the right temperature, et cetera. That doesn't have to be a high-speed 5G network. So the ability to have split networks is a big deal. Resilience, as we talked about, failover. With everything right now, we literally ran into in this webinar, everything's working great. And as soon as I started to talk, every, all of my stuff went off. I don't know if Erickson's working with AT&T, maybe that's the issue here at the house, but in the man cave for this webinar, but that's, that resilience is critical. The transaction security, the security itself, zero trust, secure with the private networks there. This is becoming all the more concerning with AI and with just the sheer number of devices at the store level. The attack vector has grown exponentially at stores. Now you start adding these AI tools like Mythos that are now coming into the wild there. The opportunity for the bad guys is greater than ever, and yet you have this threat matrix, the threat plane that is larger than ever in retail stores. So having a technology that is secure is absolutely crucial there. And then on top of that, the AI level or the application level to be able to handle those AI workloads. Is a key piece of this. And those are the 4 stages. You can't skip any of these stages. You have to start with the foundation and that's the clear part of that. So as we talked about, this is a repeat of some of the same things, just in a different format here. This really is, each phase unlocks the next one. So they build on each other and allow you to get to that AI level that we're talking about there. And that window's narrowing. There, as we mentioned earlier in the data, the people that are already using 5G are seeing a 45% higher sales growth. 70% higher profit growth, and they're spending literally twice the amount of their budget, IT budget, on AI now because they have that foundation for the network. That's the final piece of our slide. So I want to invite Lee back on and Didi back on, and we'll do some Q&A now in the chat. And once again, if you're online on LinkedIn and you want to participate in the in the Q&A, go to that link that's in the comments section and you'll be able to participate through that link there. So with that, go ahead. Full disclosure, hardwired LAN here in my house and I've got fiber that comes to the house. Same. All right. Off the bat, Greg, it's about tariffs, inflation, economic uncertainty. What does the data actually tell us about how the US consumers holding up in terms of retail sales? Remarkably thus far, but I think there are cracks that are starting to happen. I think we really have this war. I think we got about 2 weeks to wrap this up, whether it's opening the— in terms of the opening the strait, or we're going to start seeing the real impacts on retail spend. And it also has to do with, once again, the top 20% are driving all the spend. So as long as Micron stock is going up and AI stock is going up, it's funny, Jensen said Marvell, he just says, flippantly said Marvell is going to be the next trillion-dollar stock and their stock went up 28%. Today Union Pacific was talking and Andrew Ross Storkin said the president might be buying their stock. I better get in there now type of thing. But the reality of it is the people that aren't exposed to the stock market are really hurting. They're already really hurting and they were hurting going into this and they got a little bit of reprieve. Yet where the energy cost for the higher incomes is maybe 10 to 15% of their budget, it's an inconvenience. It means they don't go out to a sit-down restaurant. Maybe they go out to a fast food restaurant. For the lower incomes, it's 40% of their budget. Yeah. Is their transportation to and from work. And those people are out of money from the government and they're really starting to hurt. So the dollar stores, the Walmarts, the Aldis, et cetera, even though they're getting that trading down customer from higher incomes, they're gonna see their core customers even be tighter if we don't get this thing settled. Yeah. Switching gears a little bit. This is for both of you. Is it just about connectivity speed or is there something deeper happening in how 5G-equipped retailers are building out their tech stack? Is that for me or Dee? Both of you. I'll let Dee handle that one.

I'm sorry, could you repeat that?

Sure. Is it just about connectivity speed or is there something deeper happening in how 5G-equipped retailers are building out their tech stack?

In a sense, I think it, part of it is 5G, but I think what it is their overall investment in all technologies. I think that they're utilizing 5G as advertised. They're making sure that they, especially in locations where wires don't work, they're putting it in place. Examples, we'll have some retailers be in one part of the mall and then because they are on a cellular network, they can just pack up and move to the other part of the, the mall. So it's like they're using it for arbitrage situations like that. They're also just knowing that the network is their most important resource next to employees, of course. But at the same time, they're making the investments, they're making sure they're using it for resiliency, and they're leveraging everything just because they're running their business as well. So Greg, anything that you can see from the data that really—

Yeah, I think you hit on it. Yeah. Yeah, I think you hit on it, DeeDee, is these guys have been investing for a long time, and the part that I'm most excited about is the satellite connectivity inside the cellular activity used to be that the gas stations had that big satellite dish, and if it was a cloudy, rainy day, credit cards didn't work anymore. That doesn't have to be the case anymore. And you have as well the ability to have that 5G direct land-based network as well as the satellite for that particular case. And as well, because of the bandwidth, you are now adding, you're adding more functionality into those environments. You think of that store, what was the possibility prior to satellite and 5G? Of being able to offer a retail media network at a pump. You couldn't do it if their fi— fiber wasn't out there. You're not gonna try to do that on a DSL line. You might be able to get a cable line out there. So these rural places, particularly as we've gone to this ex-urban thing after COVID where people move farther and farther away and people have put in more gas stations and more networks there, but they necessarily haven't put in landlines and the fiber buildout hasn't hit there. This is a real opportunity.

Okay.

I guess this is for both of you also. What retail use cases show the biggest value from 5G and AI together? 5G and AI together, I think on my side looking at it, you could use 5G technology, particularly private 5G technology when it comes to computer vision situations on the edge, the communication to the edge. Their very quickly without having to put in all of the access points that are necessary. That's one that is an AI-specific use case. But I think really it plays out into the retail media networks, the ability to use things like demographic to figure out Lee is walking through the door instead of DeeDee walking in the door. And as a result, serving up the right image for that. We saw Amazon showing some things in cosmetics and based on the demographics of the person coming in, they literally were able to change the ads in the cosmetic aisle to be more reflective of the person that walked in and the ability to do that with device from a brand. This is L'Oréal or somebody doing this rather than that being Walgreens or Ulta Beauty doing that, that those are the kind of things where you really start to see it play out.

Absolutely. And I would even add, you have the example of electronic shelf labels, anything that requires dynamic interactions from their applications. That's something where especially private networks will help complement or help with making sure that you don't have lag in the network as well. The other things I would just say, BOPUS, if you're doing anything that has to leave the store and it's out of the range of Wi-Fi. I think BOPUS is another application where 5G can really help because you're outside of the store network or even buy online, pick up, pick up. Some of the locations I know during COVID especially, like it would be a couple blocks away from the actual store itself where the actual delivery happened.

And so, yeah. And I would add to it, one that also is in play related to BOPUS and click and collect is like the Waze type of approach in the store is now happening for the people that are picking items at the store level. They're seeing there's congestion in this aisle. This is the best route to be able to do that. Geez, ideal for that sort of thing. I guess this will be our last question. How has the physical store environment changed in terms of technology demands? And what does that mean for networks that retailers are running today?

I think it's the agility factor. It's, that's one of the things about that 5G is especially good because you're not having to locate your network wherever it's convenient to have a wired connection. So that way, if you're redesigning your store, you just pick up and move your equipment accordingly. And then, or arbitrage, as I mentioned before, if you're Finding a better location in the mall, you, your network doesn't have to be completely, you know, it really takes away the lag time of needing to move the wires and then thus you can just basically turn off your network wherever it location is, pick it up, move it to the other, the new location, turn it back on and it should be operating roughly how it was in its previous location. The agility factor.

Yeah, I think, yeah, I would add to this is the one thing that hasn't changed is the reach Retailers are still struggling to get the labor for the stores, and thus they're using technology as the arbitrage to do more with less. And we're seeing that drive even more now with AI tools. But it's something that has been a base problem for retailers for really the last 6, 7 years, not getting enough people to work their stores. They don't have enough to work now. So how do they continue to grow their footprint when they're struggling to get enough employees to work there? And the only way they can do that is leveraging technologies like electronic shelf like different mobile devices, et cetera, and then AI tools that allow people to do more for each shift, so to speak, as a result of that. I was at an event yesterday and just the ability to manage the tasks for retailers and how the AI can now be used to prioritize the task, not over what necessarily was the next task on the item list, but really what is, has the best revenue or most impactful revenue impact for the retailer. And it reshuffles the tasks in real time for that associate as to what they can get accomplished. And it's the most profitable and best for the customer experience rather than just the, it's on the to-do list. Yep. All right. We're 5 minutes after, Greg. All right. Hey everybody, thanks so much for joining us today. We really appreciate your time, taking the time out of the day and your input on the chat and the questions. We will get you the slides as well as the underlying research report later today. That'll be out and you'll be able to download all of this information. With that, our next webinar is gonna be on June 18th. It's gonna be on self-service and kiosks. So we hope you will be able to join there. We'll send you an invite to that one. And we're so grateful for that and grateful for Ericsson for making this content available to you. I hope you guys have a wonderful weekend and enjoy. Thank you. Take care, guys.