Need training for Internet of Things? Browse courses developed by industry thought leaders and Experfy in Harvard Innovation Lab.
A Verizon 2016 report on the Internet of Things reveals that retailers have shown positive attitude regarding expectations of IoT deployments. According to this report, 77% retailers believe that Internet of Things enhances customer experience. Further, it says 89% of early adopters of IoT in the retail business can experience enhanced insight into the behavior and preferences of the customers from IoT. You can see more infographics from the report below.
Source Verizon: “State of the Market – Internet of Things 2016”
The Sky’s the limit for Retail IoT
Many technological developments are shaping the Internet of Things in the retail business. For example, the advent of in-store robots can transform the retail experience. These robots can help take inventory and stock shelves, as tested by Target in a San Francisco location it owns. Some restaurants in China have started replacing waiters with robots. Then, there is the advent of Google Glass. Google Glass sensors along with RFIDs can enable a customer who entered the store just with Google Glass on to get the information he is looking for in a product by just looking at it without the help of any in-store attendee.
With such changes happening, the sky’s the limit for deploying Internet of Things in the retail business. With its disruptive nature, the IoT can scale retail to new heights in the coming years. You can find more on this in the most comprehensive report on IoT of the BI Intelligence, “The Internet of Things: Examining How The IoT Will Affect The World”.
The IOT Bridges the Gap between Digital and Brick & Mortar Retail Stores
Today's customer wants a smooth shopping experience in what, where, when, and how he wants to buy irrespective of the retail environment whether it is a physical shop or a digital one. And, it is the Internet of Things that is bridging this gap in providing the seamless retail experience to the customer.
Equally, the digital signage is providing a great opportunity for new engagement in IoT environment. According to Manthan infographic shown below, retailers can look for 99% accuracy in inventory, an out-of-stock reduction by 50%, and reduction in shrinkage by 70% with the use of RFID tags.
Source: Manthan - Internet of Things in retail stores
IoT to Transform Retail and Consumer Experience
The days are not far off when a coffee vending machine smartly recognizes us to suggest what kind of blended coffee with the proportion of a mixture of coffee, milk, and sugar we like most within a few seconds before pressing the coffee vending machine button for dispensing the coffee. This is possible with the IoT identifying the person with the help of algorithms to push the suggestion as above.
Thus, Smart Vending Machines (SVMs), a new generation vending machines are on the anvil that can become a favorite at retail outlets. The retail outlets come equipped with telemetry sensors, options with NFC payment, barcode readers, geo-fencing, large touchscreens adjusted to personalized services, all connected through a cloud to the internet. These Internet of Things, designed to be intensively customer oriented, provide options to the customers like gifting to their friends and family members that are connected to them through social media.
The IoT is about to create a planet of virtual machines that can emit data. Thus, engaging customers in a better way and retaining them through the agile supply chain is going to be the gateway for building brands and sales. The flawless execution of supply chain with IoT-enabled self-healing and predictive-maintenance reduces the downtime for the engaged equipment and machinery helping retailers maintain their business. The smart mirror is going to be another prominent IoT trend. When shopping for clothes in a retail shop, these mirrors can take video and stills of the clothes that customers make trials. The customer’s hand gestures allow color changes of the clothes without changing them in real-time. The customer can share these videos or stills with their family and friends for their opinion regarding the outfits they are trying.
A True Transformation For a Retail Store Outside its Four Walls
RFID technology, a component of Internet of Things, helps to keep track of the availability of finished products and raw materials. A retail store can use RFID tags to identify product’s batch that helps in case of a replacement required or to solve a dispute. Apart from this, the Internet of Things can help the betterment of the business of a retail store out of its four walls in many ways.
Suppose someone is working on his document at his place, and suddenly finds the ink depleted for printing, then he can just press a button for ordering the ink supply from a particular retail store by the Internet of Things engagement. Therefore, without the customer visiting the retail store, IoT helps retail business making home replenishment possible in a grand manner out of its four walls, paving the way for happy customers and more revenue for the store. Similarly, when you find that you’re out of your pills, you can place an order for the pill with a local medical store if you both connected through the Internet of Things. Amazon already developed a Wi-Fi enabled device, the Amazon Dash Button, that enables reordering your preferred product by simply pressing a button. There is no need of logging the site to search for the item every time to buy.
Big Challenges for Retailers in Managing IoT
Rapid changes in technology applications and scope of connected ecosystems are big challenges for retailers adopting IoT for their business. It is a hard proposition for retailers that have no guarantee for future-proof technology and investment. Retailers need to constantly keep a watch on the rapid developments in IoT, or they risk the danger of being unable to replace connected things, technologies and make investments.
Another big challenge is the management of data pouring from the connected ecosystem, along with analyzing and acting on insights. Capturing the data is one challenge, and drilling the data for actionable information is another challenge that needs both good investment and workforce. For a small and medium retailer, it may be a difficult task.
Security and safety of IoT technology are also concerning issues. The vulnerability of the connected ecosystem, software applications, and hardware in IoT to cyber threats is a real-time challenge. The retailers have to manage these challenges effectively.
Retail IoT Market Predictions
The retail industry is significantly adopting Internet of Things in every field from supply chain and inventory management, marketing and advertising, vending machines and smart kiosks, customer management and payments. The IoT is expected to show promising growth in retail business because of increased competition and a need to provide better customer services, and the decreasing cost of connected things, RFID, and sensors.
Gartner, Inc. predicts the existence of 50 billion connected things by 2020. Such devices can surpass tablets, smartphones, PC, and could be any machine. The analysis report on the retail market of Internet of Things, done in February 2017 by Grand View Research Inc., a U.S. based market research and consulting company, estimates $94.44 billion of IoT global retail market existence by 2025, for both the retail store and digital operations. According to MarketsandMarkets, a number two firm in the world for publishing market research premium reports annually, the digital signage global market value of $15.8 billion in 2015 can increase to $23.7 billion in 2020.