As the hardware components for IoT continue to become smaller, cheaper and more accessible, the power of this technology will continue to creep into new areas of retail. Its impact is already evident in the retail space, but more so with larger assets of the retail supply chain — think warehouses, manufacturing facilities and logistics. But what about IoT’s downstream impact on aspects such as merchandise, stores and the consumer? IoT components are becoming more integrated into retail products, so what should we expect moving forward?
More connected products mean less shrinkage
Retailers have continued to deal with the issue of losing merchandise through theft, both from external sources as well as their own employees. U.S. retail suffered $48.9 billion in shrinkage throughout 2016, according to a recent study by the National Retail Federation (NRF). The reasons for these losses include theft, as mentioned, but are also due to inefficiencies in paperwork as well as fraudulent returns, which is a growing driver behind retail’s struggles. So, how could IoT play a role in reducing shrinkage? Think smarter inventory that allows greater track and trace, as well as less confusion regarding the purchasing data associated with products. If the inventory could speak and stand up for itself, it can reduce the illegal activity associated with those products.
Greater connected inventory, means better store shelf management
When the products that are stocked are smarter, our shelves and backrooms will become more organized too. Think better product assortments. This is becoming increasingly important as retailers go through a transformation of their physical stores. The notion of “stack it high and watch it fly” no longer applies in today’s retail landscape. Retailers ranging from Nordstrom to Target are rethinking a variety of aspects of their physical stores. Being as smart as possible about product assortment is vital, as is using real-time, rich data coming from connected inventory, which can provide retailers with a huge source of information. Which products are being taken from the shelf faster than expected? Which ones are lingering? Can employees do real-time assortment testing and get instant feedback? With smart inventory, yes.
More sensors, better connected stores and employees
As stores and their inventory become smarter and more efficient, a key aspect of the store will be freed up to focus on the most important role: customer service. Currently, store associates spend a disproportionate amount of time dealing with inventory rather than customers. But, as NRF reports, most retailers are looking for store associates that are truly skilled in sales. Greater connectivity of the store can bring incremental improvements, allowing for the mundane activities to become more automated, and freeing up store associates for value-added services regarding customers.
As IoT becomes more affordable, we are seeing its power impact more aspects of the retail landscape. Retailers need to think about how IoT can help improve daily activities, such as basic inventory counts. Once they target and address some of the fundamental daily issues for retailers, employees can focus on the alternative activities necessary for a successful store. Connected inventory at the store level will bubble up information and insights to the greater retail supply chain. The pieces of the puzzle are getting smarter and allowing retailers to take a much better network view of their business.
Before long, IoT will not be a luxurious add-on, but rather a business necessity. As the retail landscape continues to populate with new, inventive forms of shopping, all retailers, from the traditional brick and mortar to those strictly focused on e-commerce, will use IoT technologies to stay agile and competitive.
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