There is no shortage of solutions in search of a problem. But when it comes to the internet of things, we have clearly defined many use cases within manufacturing, transportation, warehousing and agriculture, to name a few. Businesses in these industries have already begun to realize the benefits from enhanced asset tracking, predictive maintenance, improved manufacturing processes and even new business models. But what about the consumer side? What about retail?
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Retailers appear to be late to the IoT game, but that’s no reason for them to stay on the sidelines. Over the long term, the retail industry stands to gain the most from the infusion of connectivity IoT-enabled technology brings to businesses and supply chains. Let’s look at the two areas where IoT will impact retail: in the store and on the product.
In the store
IoT is starting to gain traction within physical stores. Companies like Tory Burch and Burberry have experimented with how they can leverage more connectivity within their brick and mortar assets.
- Heat mapping: Real estate is all about location, location and location. The same holds true in brick-and-mortar retail, where the placement of products, displays, open spaces and other items are essential to a store’s ability to move merchandise. Retailers need to understand how consumers and staff navigate the store. Can they do this with sensors and RFID? How about aligning staff and customers’ mobile devices to a connected grid within the store?
- Changing room like a shopping cart: Why didn’t those consumers convert? It’s an age-old challenge for retailers in brick-and-mortar and online. However, e-commerce has a leg up in terms of access and analysis of the digital information hidden within abandoned shopping carts. What if that same level of insight was available to physical stores? With connected merchandise and a connected dressing room, that very information would be available to retailers.
- Customer experience: According to recent data, consumers in the United States increasingly spend more on experiences than they do on actual physical items. Can IoT help bring greater experiences to the physical store? Yes. IoT-empowered stores could begin to create a greater digital connection between the consumer and the store infrastructure. Not only will it create a more seamless experience navigating within a store, but what about smart shelves or displays that could customize content for each consumer? What about adding a layer of gamification via IoT and connected devices?
On the product
IoT is starting to creep its way into more of the product shelves. As the internet of things connects more products to the network, it opens up a myriad of new opportunities for retailers.
- Product visibility: Retailers could improve the business simply by having a better view of overall inventory within a store, including what is in the storeroom. When merchandise is capable of speaking to the network, retailers can pinpoint where product is, what product is doing and where it should be. It makes the process of measuring inventory easier by eliminating the need for manual intervention, opening boxes and frenetically sifting through merchandise. Greater visibility of actual product also gives retailers a better idea of what’s selling, where it’s selling, what needs to be marked down and whether orders can be fulfilled from a nearby store if an outlet sells through its stock. Retailers such as Target, that offer customer-friendly return policies, can turn to IoT-enabled products to “self-identify.” That is, rather than simply trusting a paper receipt or taking the customer’s word for it, the product itself could be tagged with data that shows where, when or if it was paid for. It would make the act of returning an item more seamless for consumers and store associates alike.
- Usage insights: What happens to the product once it gets into the consumers’ hands? Retailers today spend a tremendous amount of money to gather purchase data — POS information. In turn, they know when products are bought but have no visibility into how they are used. IoT-linked products could change that. What if a clothing manufacturer could gain insights into how its new outdoor wear is truly being used? Can it really stand up to the cold as advertised or can the company see that most of their consumers leave it at home during the winter? Are customers making cakes, cookies, omelets, or just throwing that carton of eggs they bought at the neighbor’s house? The more that products become connected, the deeper our understanding of their use outside the store becomes. With that insight, retailers and brands can turn awareness into new services and offerings that go beyond the point of purchase.
The internet of things can shine a light for retailers on what was otherwise dark. Of course, we have to caution that by saying it is a much more delicate balance when dealing with customers. Consumer privacy and the protection of their data must be a top priority for retailers as they embark on this new technology. While the use cases hold much promise, privacy issues will have to be dealt with. Any time IoT — or any technology for that matter — gets closer to the end consumer, there is a delicate dance between privacy and practicality. This is no exception.
All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.