While the Internet of Things (IoT) has transformed businesses and has become a widely discussed topic, there is still so much untapped potential that technology can provide. Many industries have become early adopters, especially those that already rely on technology to perform. Others such as retail may not have fully realized the possibilities that IoT can bring with the help of a well-defined strategy.
What is IoT?
IoT 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.” Your smart thermostat, which is connected to the internet, can be controlled by your mobile device. You can turn off your heat during the day and turn the heat back on, 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.
IoT in Retail
In retail, there is a clear opportunity for new product concepts that implement IoT. GE has created numerous WiFi-connected appliances, including refrigerators that can schedule alerts and reminders, ovens with timers that can be set remotely, and washers with a GE Laundry app, so you can download custom specialty cycles.
But capitalizing on IoT does not necessarily mean finding 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 ways to make the most of IoT in retail:
RFID, or Radio-Frequency Identification, is the technology often used in tags in order to track objects. Disney cleverly uses them in their MagicBands wristbands that provide theme park access. With these MagicBands, Disney can track how their guests move about the park and better understand how these guests 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, RFID can track inventory levels on the shelf and alert when stock is getting low. These alerts can either notify an employee to get more product from backstop to refill the shelves, or even place an order for a new shipment to be delivered from the warehouse.
Social Barcodes and Smart Price Tags
Barcodes have traditionally been a way to scan items at the point of sale. Now with new apps, customers can scan barcodes or QR codes to bring up product information, reviews and social media commentary, which allows customers to serve as on-the-spot references for 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 spaces are more available. These adjustments can result in a better customer experience and happier patrons. Additionally, when customers scans an item while logged into their profile, they can gain access to lower prices and special coupons as a loyalty reward.
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 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 track and report what items are selling well. In addition, attached cameras can identify the demographic of customers stepping up to the vending machines and report information such as 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 are about to walk away, the screen changes into a menu display and asks what you are 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. These interactive displays can provide entertainment, boost customer experience and, in turn, boost sales.
Building a Strategy
As you consider implementing IoT into your retail business, define what you are trying to accomplish (e.g., reduce inventory shrinkage; deepen customer relationships). Consider the avenues that make the most sense for your brand, as you must ensure that your strategy aligns 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 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 competition.
Check out our whitepaper "What to Look for in a Remote Monitoring Solution" for further information on IoT remote monitoring.