Today's retailers are taking a page from manufacturers' books. Manufacturers have long used just-in-time logistics and IoT applications to optimize assembly operations. Now IoT applications are helping retailers -- brick-and-mortar as well as online sellers -- better fulfill customers' demands.
IoT in retail environments has often included smart lighting and smart thermostats to control energy consumption, however, today big-box retail stores in particular are leveraging IoT capabilities to not only automate restocking, but also enable customers to order online and then pick up their orders at their local store.
Retail IoT applications drive growth in the connected market
The global connected retail market size was estimated at $11.17 billion in 2014 and is expected to reach $53.75 billion by 2022, according to a Grand View Research report. Technological advancements combined with increasing numbers of IoT applications across the retail market will drive that growth.
"IoT is the connective tissue between devices and applications," said Iain Gillott, founder and president of wireless and mobile research firm iGR. "M2M is almost the same, but IoT has intelligence and cloud on top of it."
Millennials' expectations inform today's retail IoT applications
Based on a survey that asked millennials what they think their smartphone will be like in five years, Gillott sees smartphones as the central focus of a range of retail IoT functions. He considers today's retail IoT applications as the basis for more sophisticated retail services that will "anticipate" millennials' requirements.
He said millennials expect their phones to know where they are and why they're there. Phones that learn owners' behaviors can help organize their day as well as pull up location-based shopping lists when they enter stores. Once in store, the phone will communications its owner's shopping tendencies and the retailer will respond with personalized sales information from its database. This IoT linkage can then help customers find specials and other items they may need but had forgotten to add to the list. Millennials' preference for ease of use appears to minimize their concerns about privacy.
Iain Gillottfounder and president, iGR
Walmart's existing smartphone application points to this future of customer-retail interaction moderated by IoT services, according to Gillott. This smartphone app enables the store to learn customer buying patterns. It knows who they are, what they buy and when they tend to reorder items. It also tells customers about sale items when they're in the store and can direct them to the item's location.
"Basically, the phone puts together the building blocks," Gillott said. "It knows what I've bought, what I've got at home, where I am and what the store has in stock." The IoT-enabled smartphone might also know what other nearby stores have sold-out items in stock, or special offers for products on the shopping list and direct the user to that store.
IoT in retail brings multiple benefits
In the retail sphere, IoT supports just-in-time inventory management as well as applications that reduce fraud. It can also help retailers notify customers about special offers, account balances and order status.
Tracking this data can help retailers manage their inventory, Gillott said. IoT applications can send alerts to managers that show when an item's stock is getting low, when the item sells the most volume and when it will next get restocked. The presentation of all this information allows managers to quickly assess if a special order is necessary or if there's enough inventory to last through the next scheduled delivery. Although some inventory management systems allow stores to manually gather this information today, IoT integration automates the process.
IoT can also help retailers reduces losses from fraud by integrating their customer credit profile data with customers' buying patterns. It can flag unusual purchases at the point of sale so an employee can take appropriate action.
IoT in retail helps BJ's deploy new customer service
BJ's Wholesale Club deployed Zipit Wireless' Enterprise Critical Messaging Solution to improve order processing and fulfillment efficiency across all its 213 locations. "There's no human interaction between the order and then pulling the inventory," said Frank Greer, Zipit Wireless president and CEO. The solution integrated with the existing order management system at BJ's, which enabled the company to leverage its existing processes and achieve a quick deployment.
The service at BJ's based on Zipit technology is called "Pick Up & Pay." It helps customers who prefer to shop online, but want the convenience and immediacy of in-store pick up. Customers can go online to order any item, but the service is especially geared towards purchases that are large and bulky. Customers can also shop in the store and then combine those products with the ones ordered online; they pick up and pay for everything at the point of sale.
"We are offering our members total freedom of choice regarding how they shop at BJ's Wholesale Club," said Bari Harlam, executive vice president of marketing and membership for BJ's. "Our new Pick Up & Pay option combines the at-home convenience of online shopping -- including guaranteed product availability and our affordable pricing -- without the wait for shipping and delivery."
According to Noor Abdel-Samed, vice president of omnichannel at BJ's, the trial the company performed with Zipit "confirmed mobile applications work even better than expected, and the unique Zipit priority messaging feature ensured that appropriate attention was given to incoming orders."
In its report, Grand View Research defined omnichannel retailing as one of the emerging factors it expects to fuel the growth of IoT in retail over the next seven years. Omnichannel retailing offers seamless and flexible shopping experiences to customers by integrating and aligning channels. It also gives retailers opportunities to capture more sales while increasing loyalty and brand awareness.
IoT enhances communications among customers, retailers and employees
To build the Pick Up & Pay omnichannel solution, BJ's evaluated and then installed the Zipit solution to take advantage of its priority messaging feature and its ability to provide detailed business analytics. BJ's employees use Zipit to get real-time notifications of new orders and then monitor response times.
Zipit can address the needs of any business that needs to reach someone quickly so they can take a specific action, according to Greer. Zipit integrated BJ's processes for taking orders, pulling them from the warehouse and getting them ready for the customer.
Zipit's IoT solution provides cloud infrastructure, portals, consoles and analytics. It also supplies an application-specific device for users. It builds this handset by modifying existing smartphones and tablets with off-the-shelf parts and proprietary software. "We can provide a device that has a complete level of control and monitoring, as well as remote shut off and turn on," Greer said. Zipit's solution relies on Wi-Fi and cellular communications; it partners with Verizon Wireless for cellular connectivity and works with the carrier to obtain "inexpensive cellular plans that Verizon provides."
Zipit's solution allows retailers to set call priorities and ring or display messages that alert employees in proportion to the urgency of the communications. If the assigned user does not or cannot answer, the system automatically sends the call to the next person in a predefined order of priority. It can also coordinate responses from group messages. If 10 people receive a message, when the first person responds, the system notifies the other nine that they don't have to. This process control exemplifies how IoT can automate numerous manual steps and limit potential mistakes and failures.
IoT integration benefits retailers and their customers
Using IoT in retail applications will also allow companies to analyze the performance of their communications, point of sale, inventory and purchasing management systems. Reports can display the success or failure of every transaction. Greer said BJ's looks at data on weekly and monthly bases. It also uses Zipit's customized devices to securely communicate between staff members.
Cloud-based IoT solutions help retailers monitor and analyze existing processes and improve them with only incremental investments in capital equipment. Additionally, IoT-based data protection, security and disaster recovery solutions can address retailers' increasingly frequent data security threats.
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