At one point, RFID was pegged as the disruptive retail technology that would forever change how this industry operated. And, while RFID had a positive impact and has helped evolve retail to address the need for a frictionless process, the power of the Internet of Things (IoT) – a networked infrastructure that connects multiple devices to share data in faster, more varied ways – has certainly evolved over the last 10 years.
McKinsey reports that IoT in retail environments will create an economic impact of between $410 billion and $1.2 trillion per year by 2025. With such incredible potential, retailers need to know how they can grab a piece of that market. Here’s how IoT is changing the retail environment forever, providing you with an opportunity to address many of the ongoing challenges that affect how you respond to consumers.
A Connected In-Store Shopping Experience
With consumers looking for more personalized shopping experiences and willing to share their data with others, IoT may be the solution to take that wish to the next level. Pretend you are a consumer who is looking for a pair of sunglasses you saw through a retailer’s website. Rather than buying them there, you opted to go to store because you wanted to try them on and make sure you liked them rather than risking the possibility of returning them.
You spot them as you walk in the store, try them on, and decide to buy them. At this point, a robot appears and asks if you need help with any other merchandise. You tell the robot that you are interested in a handbag and describe the color and style, so they take you to a display of handbags that match the description. The robot has tapped into the retailer’s customer database to find you to help further personalize the recommendations.
You find a handbag you also want to buy. You pick out what you want and head toward the exit. As you leave, sensors scan your items, apply any available coupons, and deduct that amount from the mobile payment app you use.
The displays that held those sunglasses and that handbag also has sensors that send messages to the store’s inventory system, sharing information on restocking and reordering.
That’s retail IoT in a nutshell. It connects all of your retail operations – online, offline, inventory and logistics, loyalty and rewards, and payments – with your customers’ devices for on-demand experiences. Let’s look more at specific IoT applications for retail that can help a retail brand start leveraging this opportunity.
IoT in the Warehouse
Let’s look at the back component of the retail operation found in the warehouse environment. This aspect of retail involves inventory and logistics, maintaining the right amount of the right products for the right time. Make sure you have everything customers want, when they want it, but without holding too much inventory that can impact fiscal health.
Enter retail IoT. New solutions include sensor technology that helps provide retail updates to the warehouse on how to manage inventory to achieve optimal operational flow and space while reducing overall costs. In some cases, these costs might involve things like electricity and refrigeration that can be lowered thanks to real-time data insights.
IoT in the Store
While the aforementioned scenario already described much of what IoT can do in the physical retail space, it can also offer smart retail labels to help a store ensure they have the products they are marketing online so no customer is disappointed or frustrated when they arrive to make a purchase. The ability to connect all aspects of the store can improve overall efficiency, plus win big with customer satisfaction.
Amazon Go stores are a real world example of IoT retail in action like the previous clothing and accessory purchase example. With no cashiers, shoppers simply enter the store, locate what they want, pick it up and leave. An IoT system of cameras, beacons, and RFID readers takes care of the rest, including purchase and payment verification. All shoppers need is a mobile app so they can scan and go.
Voice-Enabled Commerce Opportunities
IoT for retail also has potential with the growth of voice-enabled devices by consumers, including Amazon Echo and Google Home. Although most consumers are still using these IoT devices for product research versus ordering, there is traction in that direction. The biggest growth in this segment for retailers may come when more of these speakers are embedded in vehicles, appliances, and homes.
The Evolution Continues
This is exciting but just the beginning of what’s to come as IoT technology develops, is integrated with other technology, and is adopted by a larger audience as they see the benefits of such connectivity.