Wireless retailing

Local retailers have begun to deploy wireless internet access, or public hotspots, as they look to deliver value added services and boost bottom lines. However, questions remain over the profitability of the model.

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By  Matthew Southwell Published  July 23, 2003

I|~||~||~|While the Middle East’s attempts to create an internet savvy society continue at pace, the adoption of wireless internet access, or public hotspots, has been minimal. In fact, until last month, the only notable attempt to create such an always on wireless environment in the Middle East had been in Bahrain airport. However, as of the end of June/beginning of July, a number of UAE retailers threw their weight behind wireless internet projects and the proliferation of public hotspots appears to be on the rise.

First up was Dubai Duty Free, which embarked upon a weeklong pilot project to wirelessly enable the main public area of its shopping facility. Under the sponsorship of Intel, the scheme was designed to provide free internet access to visitors interested in the vendor’s Centrino mobile technology. However, the trial also fits into the retailer’s long term goal of attracting business travellers and providing them with the tools they need to work while on the move.

“Many of our customers are busy business travellers and the week long pilot scheme, which will provide free internet access from the promotional area, is very much part of the airport’s drive to provide travellers with the latest technology,” says Colm McLoughlin, managing director of Dubai Duty Free.

“Many of Dubai International Airport travellers are business passengers who are highly paid people for whom time is money. If they can download important reports prior to meetings to read on the plane, or while waiting in an airport lounge, the cost savings can amount to hundreds of dollars in just one day,” adds Gilbert Lacroix, general manager of Intel Middle East & Africa.

Following Dubai Duty Free, a number of local cafés also announced the creation of public hotspots within their properties. Foremost among these was More and French Connection. Concurrently, the wireless network connection at Plug-Ins in Deira City Centre entered its second month of operation.

The French Connection solution uses Single Digits software and Cisco Aironet 1100 Series wireless access devices to create the IEEE 802.11b network. Patrons can borrow either IBM ThinkPad laptops or wireless network cards to access the internet, should they arrive bereft of their own wireless enabled hardware.

The hotspot was designed and implemented by Venture Technologies Middle East (VTME) and support comes from a HotSpot technical hotline. “Our system design ensures two things; security and ease of use,” says Xavier Moreau, sales manager at VTME.

“We have combined the encryption and security technology built into the Cisco Aironet wireless systems with the Single Digits Business Class HotSpot software, allowing us to give French Connection the assurance that the network is safe, while allowing customers access in a way that is really simple for them,” he explains.

||**||II|~||~||~|The hotspot has been deployed to encourage more users to the café and provide existing French Connection customers with the internet access they have demanded in the past. “So many people used to come in asking for the internet… but it was the only service we could not provide. So we decided to go for it [wireless internet connectivity],” says Farida Bahar, manager of French Connection.

“We opted for wireless because we don’t want our customers to be forced to stay in one place, using a wired desktop PC like in an internet café. It’s more comfortable and convenient for them to choose where they would like to be,” she adds.

Although the café is not charging customers for using the hotspot, Bahar believes the solution will pay for itself due to the extra patrons it will attract and the additional money they will spend on food and beverages. Furthermore, Moreau predicts that French Connection will achieve a return on investment (ROI) within a matter of months.

“This is an affordable solution because there is no heavy hardware sitting in front of the connection… The entry cost of a solution such as French Connection’s is no more than US$4000, which makes it very affordable for most restaurants and cafés. We have a ROI [model] that says even if cafés provide the service for free, they will achieve a positive ROI in less than three months,” he says.

Despite the enthusiasm for wireless internet access that appears to be sweeping through the UAE’s retail community, doubts over its bottom line dollar value still remain.
For instance, Gartner Group predicts that many wireless installations will fail due to their inability to attract enough users, while Forrester Research believes public hotspots could well be the next dot-bomb.

Forrester’s argument is based on a combination of factors, including the poor penetration of laptops, spotty hotspot coverage, unresolved national and international roaming issues, and the concern WLAN security and standards fragmentation causes corporate IT departments. Furthermore, the analyst house report that 80% of wireless local area network (WLAN) gear shipped so far has gone into the small office/home office (SOHO) market, not the enterprise market.

“With all the hype today about the rollout of WLAN public hotspots, it’s as if the dot-com boom and bust never happened,” says Lars Godell, a senior analyst at Forrester Research.

“We believe that much of the money being poured into public WLAN today to enable access… is being wasted. Simply, basic constraints on the number of devices in use and users’ willingness to pay a significant amount for internet access on the go will limit public WLAN users to numbers well short of planned networks’ carrying capacity. Additionally, the sky-high costs of providing internet backhaul from hotspots will kill many hotspot business cases,” he explains.

Despite this negativity, Moreau is convinced that public hotspots have real commercial value both in the retail space and elsewhere. As he says, “wireless internet access definitely has commercial value because it is bringing in a new source of revenue growth and it attracts new types of customers, while also acting as a differentiator from competitors.” ||**||

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