Posted on 11/12/2015
By Fran Stevenson, Director of Strategic Accounts
The way that the Internet of Things (IoT) has transformed businesses has been a widely discussed topic that continues to make news. There is so much untapped potential that technology can provide. And while many industries have become early adopters, especially those that already rely on technology to perform, others like retail may not fully understand the possibilities that IoT can bring with the help of a well-defined strategy.
The Internet of Things refers to, “the network of physical objects or ‘things’ embedded with electronics, software, sensors and network connectivity, which enables these objects to collect and exchange data.”1 Consider your smart thermostat, which is connected to the internet and can be controlled by your mobile device. As an environmentally conscious citizen, you may turn your heat off during the day and then turn it back on as you leave work so that your home is at a comfortable temperature by the time you reach it.
While smart thermostats and other home automation devices are some of the first examples of how IoT is changing the way we live, there are new examples entering the marketplace every day.
In retail, there is a clear opportunity for new product concepts that implement IoT. General Electric (GE) created numerous WiFi-connected appliances, including a fridge that can set up alerts and reminders, ovens with timers that can be set remotely, and washers with a GE Laundry app where you can download custom specialty cycles.
But capitalizing on IoT doesn’t necessarily mean having to find ways to connect your products to the internet. Instead, you can find ways to connect your business model, from the warehouse to in-store customer experience.
“The Internet of Things is an important technological shift for customers, consumers, and our brands, said Greg Swimer, former chief technology officer of Unilever. “Our ability to explore and learn and innovate around IoT in retail is a key part of our constant thirst for knowledge around our brands – connecting and engaging with consumers.”
Here are some examples of ways to make the most of IoT:
RFID, or Radio-Frequency Identification, is the technology often used in tags in order to track objects. Disney cleverly uses them in their MagicBands wrist bands that provide theme park access. With them, Disney can track how their guests move about the park and better understand how they use Disney services.
RFID chips are also often embedded in the tags of clothing and other products to accurately track inventory. According to an article in Forbes, “Using RFID tags, retailers can expect 99% inventory accuracy, a 50% reduction in out-of-stocks, a 70% reduction in shrinkage, and sales lifts in the 2% to 7% range.”
This technology can also be installed on shelves. There, they can track inventory levels on the shelf and alert when stock is getting low. This can mean either notifying an employee to get more product from backstop to refill the shelves, or even placing an order for a new shipment to be delivered from the warehouse.
Social bar codes and smart price tags
Bar codes have traditionally been a way to scan items at the point of sale. Now with new apps, customers can scan bar or QR codes to bring up product information, reviews and social media commentary. This is a great way to let current customers serve as on-the-spot references for your products.
Smart price tags enable retailers to adjust the price of their products based on demand and customer profile. By lowering the prices of items during non-peak hours of the week, a business can encourage its customers to shop when lines are shorter and parking is easier to come by. This can result in better customer experience and happier patrons. Additionally, when a customer scans and item while logged into their profile, they can have access to lowered prices and special coupons as a reward for being loyal.
Though beverage and snack vending machines have been around for decades, developments like Redbox have stirred their respective industries with a more convenient option. Other businesses have jumped on board the vending wagon, from electronics retailer Best Buy to makeup brands like L’Oreal and Benefit Cosmetics. Many of these vending solutions accept payment through quick purchase options like Google Wallet. Vending machines can not only track and report what items are selling well, but attached cameras can identify the demographic of customers stepping up to them and report information like gender and age to help retailers better understand their target audience.
Imagine walking into a store and being greeted by a screen. Just as you’re about to walk away, the screen changes into a menu display and asks you what you’re looking for.
Being prompted by an interactive display may seem less invasive than a sales clerk asking to help find you something, and you may be less likely to respond with, “Thanks, I’m just looking around.”
With interactive displays, customers can engage with your brand, which promotes brand loyalty. They can provide entertainment, boost customer experience and, in turn, boost sales.
As you consider implementing IoT into your retail business, define what you’re trying to accomplish (e.x., to reduce inventory shrinkage or to deepen customer relationships). Consider what avenues make most sense for your brand. You must make sure that whatever you do falls in-line with your business goals and culture.
When building your strategy, assess your existing IT infrastructure and find where it may be easiest to start. It will take a lot of work and agreement among your businesses’ stakeholders, IT, marketing and supply chain operators. As an early adopter, you must also prepare to fail until you find the right solution(s). When you do find what fits your business, you will have differentiated yourself from the masses.
1”The Internet of Things.” Retrieved from https://en.wikipedia.org/wiki/Internet_of_Things