Internet of Things – How Is It Transforming Retail?
We are all waiting for that super-tech refrigerator that auto-detects when the beer is about to run out and places an order online. While we wait, the Internet of Things or IoT is revolutionizing the world by creating smart devices that are all connected to the internet. E-commerce turned the retail world on its head and now, mobile is reshaping ecommerce in unprecedented ways. How much better can it get really? Well, a lot. The Internet of Things is about to be the next big thing after the internet itself.
So what is Internet of Things?
Simply put, the Internet of Things is a system of digitally connected devices that transmit data to a central system as well as among each other. Now these devices can be absolutely anything, from kitchen appliances, washing machines, air-conditioning systems to cars, printers, even door knobs. Sounds a little far-fetched, but so did the internet, or for that matter, even electricity, until people finally saw its real impact.
BI Intelligence, Business Insider’s premium research service predicts that by 2020, nearly 34 Billion devices will be connected to IoT, up from 10 billion in 2015. Also, 24 billion of these will be IoT devices as opposed to 10 billion in traditional computing devices such as smartphones and tables. Businesses across the world already understand the power of this technology as the BI report also predicts that over $6 trillion will be spent on IoT solution across the next five years. And why not? IoT can help businesses in powerful ways:
- Reduce operational costs
- Increase productivity
- Open up new channels for marketing and
- Provide better, more personalized customer experience
How IoT is changing the game for retail
A number of innovative technologies, sensors, beacons, RFID tags, QR Codes and a host of other digital solutions are taking center-stage, collecting and transmitting real-time data, helping retailers better understand patterns, behaviors and preferences. This allows them immense benefits in personalizing offerings and providing smoother customer journeys as well as opening new channels for commerce, inventory tracking and a lot more.
The Internet of Things is reshaping the world of retail, for sellers as well as for buyers. Here are the main ways IoT will transform the retail landscape:
1) Blur the lines between online and offline
Omnichannel presence is about to take on a whole new meaning in retail, thanks to IoT. Shopping isn’t a scheduled activity anymore. People shop on the go, people shop on a whim.
For instance, a reluctant shopper might just be casually walking into a department store for a packet of mint. Suddenly, he or she might get a message on their mobile telling them that there was a special discount on their favorite brand of jeans, in the store they were in. A personalized offer and a relevant messaging based on this person’s shopping history can entice them to have a closer look. This is possible thanks to e.g. NFC, which allows sending personalized messages to the mobile phones of people entering a store. The customer gets the best of both worlds and a retailer gets customers from both channels. That’s the power of IoT.
Similarly, shoppers in a physical store can easily swing out their smartphone and scan a QR Code to find out more about a product he/she is looking at but unsure about or start an interactive digital advisor to get immediate advice. For the buyer, it’s a way to make a more informed purchase, with zero doubts or suspicion. For the seller, it’s a gentle, less pushy marketing effort that affords an opportunity to better persuade a vaguely interested shopper.
2) Providing better in-store experience
Shopping is more about an experience than just amassing a commodity. Playing to that vibe, IoT makes it possible for retailers to provide customers with an amazing experience that often feels like the store can read their minds.
RFID Tags on products can easily tell whether that product is available in another size or color and even help locate it. No more sifting through every single hangar to find the right size. Smart mirrors could help customers virtually try on apparel as well as suggest accessories that go well with the chosen items. Lesser trips to the changing room mean more time to buy things shoppers really need
Advanced digital product advisors have an important role in the retail landscape of Internet of Things. These can be located on kiosks in a store or even on individual aisles, helping the customers make better choices. When confused between multiple products, all they need to do is answer a few simple questions about their needs and preferences and the digital product advisor can suggest the right products for them. Connected devices can then guide them to exactly where those products are.
3) Faster Checkouts
An online study conducted by Harris Poll commissioned by Digimarc in July 2015 found that 88% customers want faster checkouts on retail counters. 61% people observed that the store attendant is more focused on barcode scanning than paying attention to customers.
The Internet of Things has solutions for all these problems. A sensor could send a message to a store employee’s phone if a customer has been waiting in line too long, so the employee can attend to that customer quickly.
In fact, queues at the billing counter could possibly be completely done away with. All the RFID tags in a cart could collectively enable for an itemized invoice to be sent to the customer’s phone, who could then make an online payment and walk right out. Just imagine – shopping without queues! We’re headed towards retail dreamland.
4) Improved supply chain management
The two worst supply chain nightmares all retailers face – being overstocked and ending up with wasted product, and being understocked on an important day, ending up disappointing customers and losing sales. Managing your supply chain with the Internet of Things can completely eradicate both these challenges.
First, devices can collect real time data and analyze patterns to understand just how many units of a particular product are required at any given time. RFID readers in smart shelves can then sense when the product is about to run out and send an alert to the responsible party’s phone, or even better, directly send an order to the supplier.
Automating the supply chain can also provide for much more efficient tracking of orders, reducing time taken in the shipping process and providing time to react to any bump in the road.
More time for the important things
Retailers, who understand the value of adapting to the latest technology to scale new heights, are already experimenting with Internet of Things. Falling behind could be detrimental now. Several studies have found that customer experience is still far from stellar in most stores. Products are still hard to find and checkout is still too slow.
Strategic use of Internet of Things will provide sustainable solutions and greatly enhance the retail experience. With the tedious and dull tasks such as inventory out of the way, retailers can spend more time doing the important things such as resolving customer concerns, providing them with a warm shopping atmosphere and coming up with innovative ideas to grow their business.