What’s happens when IOT really hits the retail industry – panic, problems, or profits?
Volatility is nothing new for the retail sector; stores have been responding to changes in fashion, function, and process for nearly as long as they’ve been serving customers. However, while the concept of moving with change has been around for a very long time, these changes are picking up speed. Now that IOT is emerging as a force, what is on the horizon for retailers?
Consider how changing consumer habits (communication, shopping styles and mobile Internet usage) and newly-available sensor data impact the traditional retail store. While expense and effort is involved in adapting to a new technology, our opinion is that these will be offset by gains in three important areas:
- Customer Acquisition
- Customer Experience and Loyalty
- Store Operation and Management
Don’t fear the data flood associated with the interconnected. Learn to harness its power, starting with how you acquire and convert customers.
Changing the Game: Customer Acquisition
One obvious benefit of the increased IOT data flow is that companies will have much more information about their customers. Imagine what a simple instore app could tell you about each customer’s retail experience. For example, we all know that the longer we wait in line, the more we re-think purchases. Leave a customer waiting long enough and they may simply park their cart and exit the store. But if you knew some stores have longer wait times, you could send customers a push notification or text message that could give them an incentive to stay and complete the sale. (You can read more about the future of in-store analytics here.)
And let’s not forget about repeat customers. Have you considered how the IOT is already influencing people’s in-home buying experience? Think about Amazon’s Dash button, which lets buyers instantly order their favorite items — from laundry detergent to snack bars — simply by pressing a physical or virtual button. This isn’t a hypothesis; it’s actually happening. BI Intelligence, a research service by Business Insider, reports that, as of 2016, orders placed via Dash buttons increased five-fold in a single year. (Plus, these buttons provide Amazon with lots of data about the lifespan of various products.)
Delivering the Goods: Customer Experience Enhancement
Converting shoppers into buyers is good, but delighting repeat customers is even better. An IOT-enabled retail system can help you create an in-store experience that keeps customers happy. Think about how excited you’d be to receive personalized, localized offers and coupons from your favorite store app as you enter the building. While we mentioned this as a way to combat long wait times, it can also encourage customers to view your store as something that’s meaningful and special to them.
Plus, it bears mentioning that the additional information IOT can provide about customer behaviors equals a more tailored experience for each consumer. Don’t let this valuable profile data get lost in the crowd.
Saving Money: Store Operations
Let’s switch gears from making money to saving money. A retail store is not a cheap proposition; maintenance and utility fees alone cost a bundle. Saving money, then, is key.
However, fitting out a store with Internet-connected shelving and RFID sensors also costs money. What are the benefits?
- “Smart” shelves can use sensors to detect low inventory levels and help predict when a product needs to be restocked. This can help stores avoid running out of items, even temporarily, and missing out on revenue.
- RFID sensors can track the movement of products in the supply chain, which reduces stock lost in-route and cuts down on lost profit and inventory.
- A better idea of how the store works, courtesy of IOT operating data, can help stores minimize wasted energy. For example, connected thermostats, lighting, and fridges or freezers can automatically learn the schedule of the store and reduce energy consumption during off-peak hours.
- Smart in-store cameras, beacons, and sensors can combine with app data and illuminate customer traffic patterns and buying behaviors. Employees can better manage high-traffic situations, and more workers can be scheduled for local peak times. This data can also be used to improve the store’s flow and product or promotional placements.
At this point, retailers shouldn’t be asking if IOT is going to disrupt their industry. There’s every indication that the disruption has already started. What the smart retailer should do is prepare to embrace the extra insight that the Internet of Things can bring.
Authored by Titir Pal, Vice-President- Products & Solutions, Absolutdata