IoT update: how are retailers successfully implementing connected technologies in the physical store?
As digital-loving consumers clamour for more and more connectivity in their lives, the concept of the Internet of Things (IoT) is gathering momentum among innovative retailers. Shoppers want convenient access to personalised products, services and information, 24/7.
In response, Juniper Research forecasts that merchants will spend $2.5 billion on IoT technologies by 2020. In fact, many retailers are already leveraging business intelligence solutions in their operations to better understand consumer behaviour and optimise the customer experience. For instance, retail traffic insights can be used to improve checkout times, store layout, and shopper-to-associate ratios.
And as a greater number of connected technologies reach the market, new opportunities arise for retailers to enhance or reshape the customer experience. As Forbes journalist, Barbara Thau, concludes in a recent article, “Merchants are looking to offer compelling experiences and services that can’t be duplicated by e-commerce. The idea is to leverage the Internet of Things to add a new dimension of product discovery, education, interaction, even entertainment, to physical stores.”
IoT is an iterative cycle of experimentation and improvement, and many retailers are already laying the groundwork for improving the customer experience as a result of the continual deployment of data-collecting devices. Here are some examples:
Example 1: Shelf-edge Engagement
Bluetooth and Near Field Communication (NFC) technology can support a wealth of connectivity in stores. Retailers can engage shoppers through their smartphones and, increasingly, wearable tech at the vital point of product interaction: the shelf edge.
With this type of engagement, shoppers can look up product information, read reviews and peer recommendations, and even receive personalised offers for the product in question, directly to their device. Apps will be key here, working in conjunction with location-based beacon technology, which retailers can use to interact directly with customers as they enter a store.
Example 2: Digital Product Discovery
An example of the proliferation of ‘things’ as part of retail’s burgeoning IoT strategy is Sephora’s Beauty Board. The French cosmetics retailer’s concept stores are designed with a community feel. Beauty workshops are hosted on site, complemented by Beauty Boards – interactive online galleries that display user-generated content on digital screens.
Already, we’re seeing other retailers explore forms of IoT-connected digital signage, which can push content to consumers in real time, tailored to that specific store or city.
Example 3: Smart Replenishment and Pricing
Operationally, there are big wins to be had from connected technologies. RFID has long been hailed as the key to accurate inventory management, and today it’s coming into its own, thanks to the cost of RFID tags dropping to commercially affordable levels.
Headway is being made in improving replenishment through smart shelves, which detect when inventory is low, and the ability to reduce or even eliminate out-of-stocks is tantalisingly close. Additionally, store managers are close to a world in which connectivity can be used to adjust shelf-edge pricing in real time, using Internet-enabled smart tags to lower prices on promotional or low-turnover items.
Creating a Connected Future
The retail sector is ripe for dramatic evolution. Strategies rooted in IoT capabilities can enable retail stores to both understand the consumer in greater detail, and communicate in more relevant, personalised ways.
These kinds of activities are essential for a future in which the store can offer the same endless aisle, individual value-led proposition as ecommerce can. In a scenario in which consumers have the added benefit of being able to see and try products, while also enjoying the human warmth and knowledge of the store associate, there is much to gain.
Few retailers can afford to rest on their laurels in this fast evolving landscape. The smartest move will be to take steps now tthat lay a foundation for a connected future.