The Internet of Things (IoT) is beginning to have a major impact in many industry sectors. IoT is a network of connected devices with embedded sensors othat can communicate, analyze and share data over the cloud. So far, the Retail sector has been slow to embrace IoT but it’s beginning to happen. Buying an Apple Watch just proved that to me.
Let me explain. Recently I was in a store. I took my purchase to the counter and, instead of handing over cash or my credit card, I simply ‘tapped’ my new Apple Watch and the transaction was complete. Simple. It’s a truly great customer experience.
Then two things struck me. First, I thought about how few stores have that capability today. Like all modern disruptive technologies, you know that the majority will have it within a year. Secondly, I realized that what I had just experienced was the very tip of the Retail IoT iceberg. That POS system can be connected to any number of other physical and digital systems to drive supply chain efficiencies and heighten customer experience.
This made me curious so I did a little digging and, to my surprise, I found that the term Internet of Things was coined by – you guessed it – someone within the Consumer Goods and Retail sector. Kevin Ashton was working for Proctor & Gamble at the time and he meant for it to address issues in logistics, supply chain management and inventory management – all things that are pretty central to a Retailer’s operations.
If the term started in Retail, why has the sector been slow to see its potential? The answer, from current research, is that it hasn’t. A recent study into Retail sector found that 70% of Retail decision makers globally are ready to adopt IoT. The key reason cited was to improve customer experience but it’s clear that the technology also offers huge potential to restructure supply chains and create brand new revenue streams.
5 ways IoT will revolutionize Retail
For me, there are 5 key areas where IoT will shortly begin to have dramatic effects in Retail:
1. The connected customer
Retailers are striving to deliver the omnichannel customer experience. Retailers know that customers check store pricing and inventory levels from their cell phones. Connected devices like iBeacons, digital signage, smart mirrors and kiosks creates an ecosystem connecting physical devices and the digital world to enable two-way real-time customer interaction. With the data gathered, the Retailer can now understand the context in which individual customer make their buying decisions – and can proactively reach out to help the customer in the way that they will be most receptive to.
2. The smart store
According to 2017 research, three quarters of Retailer will know when specific customers are in store by 2021 – 79% believe they will be able to customize the store visit for every individual. The connected devices within an IoT network allows for location-based targeting. You know where the customer is instore and where they are spending most time. In fact, one retailer is already using heat sensors to track the ‘hot spots’ within its stores. Using video, RFID and WiFi devices, you can not only better serve the customer, you can improve instore security and inventory management such as reducing shrinkage.
3. The smart warehouse
IoT offers the potential to integrate supply chain operations with customer buying behavior. You can use online and instore demand to drive robotics and automation within the warehouse. RFID is hardly a new technology for Retail but can be used, as part of a IoT network, to improve inventory management to move beyond ‘track and trace’ to create a more dynamic warehouse operation where aisles and shelves are replaced by automated pallets and perhaps even drones!
4. Smart logistics
The way in which you supply the customer is an increasing focus area for most Retailers. Research suggests that 65% or Retailers are currently exploring innovative delivery services with 90% of companies saying they will have implemented buy online, pick up instore by 2021. By combining GPS with sensors that can monitor every part of the logistics exercise, you have the ability to introduce predictive maintenance for vehicle, climate and atmosphere controls, complete traceability and route optimization. As importantly, you are able to make this data available to your customer so that they are able to track their purchases in real time.
5. The smart home
Today, the concept of the smart home revolves around central control of entertainment, heating, lighting and security systems – all driven by IoT devices. IoT is already adding sensors to other home appliances to deliver services such as automatic replenishment as you fridge monitors your product usage and expiration dates. One visionary Retailer has already developed a ‘smart home hub’ that can communicate with any IoT-enabled device in the home – adding a new level of convenience for the customer. This gives the potential to create and deliver a whole range of new revenue-generating products and services to Retailers that understand the power of IoT.
Three enabling technologies you’re going to need
IoT in Retail is still in early stages of adoption. However, it’s impact is likely to be so disruptive that a ‘wait and see’ approach doesn’t appear to me to be sensible for Retailers. Those who exploit IoT quickly will protect their market share and gain competitive advantage. There are three technologies you’re going to need:
Big data and IoT are inseparable. With IoT network, you create more and more data at ever quicker rates. You need sophisticated analytics to make sense of the data and turn it into actionable insight. Research suggests the 75% of Retailers will have implemented predictive analytics to gain a clearer understanding of their customers by 2021. The emergence of AI-enhanced analytics – like OpenText Magellan – allows retailers to better understand their customers and their requirements.
Customer Experience Management
Turning insight into action means being able to take the data and automatically use it to inform your customer experience. Once you know the when, where and why of each individual customer, a Customer Experience Management solution is required to turn this instantly into highly targeted and personalized marketing and promotional messages that can be fed back using the correct channel – whether that’s the customer’s cell or strategically placed digital signage.
To effectively combine customer experience with supply chain operations, you require a solid B2B Integration platform to deliver end-to-end control and visibility. If IoT was developed to address logistics and inventory management then B2B Integration is a core component to ensure that all the partners involved in your key business process can connect and collaborate together.
All Retailers need to be working on their IoT strategies now. The proliferation of low-cost connected devices and the need to continuously deliver better and better customer experience means that you have the opportunity to create a special, individual experience wherever and whenever your customer requires. If you think that still sounds like science fiction, ask yourself if you thought you’d be using a watch to pay for groceries five years ago.