The Internet of Things…What is it and how can it transform retail?
The Internet of Things (IoT) is leading us towards an increasingly connected universe, but what do we actually mean when we talk about the indistinct “Internet of Things”? IoT refers to the ever-growing network of physical objects that feature an IP address for internet connectivity, and the communication that occurs between these objects and other internet-enabled devices and systems.
Whilst whispers of the phrase “Internet of Things” had been bandied about during the first few years following the Millennium the IoT was still in its infancy with regards to its actuality. According to Cisco Internet Business Solutions Group, the IoT progressed from idea to reality between 2008-09, in line with the growth of smartphones, tablet PCs and the like. Fast forward to today and the IoT is set to experience monumental growth, with Gartner, Inc. forecasting that 6.4bn connected things will be in use worldwide in 2016, with that figure reaching 20.8bn by 2020. Leaders in retail and hospitality will be sure to explore the adoption of IoT in their stores as a means of improving their operations and most importantly, transforming the customer experience.
One of the important challenges facing Retailers right now is supply chain management.
Accurate insights in to where your stock is has become crucial in an age where there is an ever increasing range of fulfilment options emerging. Popular ‘Click & Collect’ and ‘Home Delivery’ fulfilment options are soon to be accompanied by the likes of ‘Next hour delivery’. Amazon has been a catalyst in this space via its introduction of Amazon Prime Delivery, where customers can receive their goods on the same day they placed their order. Retailers are now looking to location based technologies to increase supply chain visibility; with sources such as sensors, Global Positioning Systems (GPSs) and Automatic Identification Systems (AISs) to gain real-time insights to where the stock is.
Increased supply chain visibility begins via the connectivity provided by IoT technology and its ability to transfer large volumes of real-time data across internal and external supply chain networks. In an age where there is an insatiable appetite for accurate information, sources such as sensors, Global Positioning Systems (GPSs) and Automatic Identification Systems (AISs) are giving retailers highly sought after real-time insights.
Where retailers can really harness the power of the IoT is using the data generated by the aforementioned sources (amongst others) to gain meaningful business insight that can be used to drive more efficient and possibly, automated, distribution models. Data derived from in-transit visibility can be used to decide on optimal departure times, methods of transportation and scheduling of shipments. Ultimately the benefits are filtered down to the customer through an increase in on-time deliveries, as well as providing them a view of where their product is throughout its journey to them.
Another issue faced by retailers is the perennial search to keep customers engaged. Part of this challenge comes in delivering a consistent experience across all channels; customers will leave footprints when shopping online which can then be leveraged to drive a more personalised experience in the store. The future of retail is delivering that personalised experience in-store, blurring the lines between an online and in-store journey to ultimately deliver a unified customer experience across web, store and even touch-points such as mobile applications and kiosks.
Delivering an effective omni-channel personalisation strategy relies heavily on dynamic technologies and a slick architecture that allows for efficient real-time communication between its systems. The IoT becomes a core component of a solution that is heavily integrated and consisting of a number of different components.
Insight into a customer journey empowered by the IoT
Location based technologies share the same objective; identify a user’s proximity to a specific location and trigger an action accordingly. Examples such as Geofencing and Bluetooth Beacon technologies are actualising the delivery of real-time personalised promotional offers based on customer location. Beyond this it is equipping staff with rich customer information which is triggered by location. Both are based on the customer entering the store to make a purchase.
What if the customer has made their purchase online and is now to coming to collect?
Upon arrival into the proximity area, Geofencing technology can ping a notification to the store staff who can be on hand to take the parcel out to the customer. An example of enhanced customer experience using such technologies would be a parent shopping with children…
Before, Internet of Things…
Customer would need to park up, transition from the car park to the store with their children in what can be a stressful scenario in order to collect their item. Customer journey – at best 5 minutes, at worst 30 minutes and a whole lot of raised emotions.
After the Internet of Things…
Customer could park up, get out of car, leaving their children for only moments in order to take the item from staff and return to car. Customer journey – less than a minute.
With each of these scenarios reliance on efficient and real-time communication between the location based technologies to the Retailer’s CRM, Inventory and Order Orchestration systems (as well as Loyalty, if relevant) is crucial.
Where the IoT comes into play is installation of in-store shelf sensors that will broadcast real-time in-store stock availability. This can be leveraged by the location based technologies to determine whether a promotion or coupon can be offered on specific items. The importance of personalisation in retail is plain for all to see and epitomised in Coca Cola’s name-on-the-bottle campaign – people like to be made to feel special!
The growth of the IoT is inevitable given its ability to help retailers transition into “tomorrow’s world” of unified commerce. The challenges faced by retailers with the IoT is not only gathering the masses of data that will come with an increasingly connected universe but using this data to drive improvements to the physical store environment – measured broadly on improvements to the customer experience and an increase in overall efficiency to the retailer’s operations. Crucial to this is the interlinked architecture needed to facilitate a new age in retail; rich with information, connected and real-time.