If you’re a fan of fan of the sci-fi genre, you’re going to love the retail experience that’s just around the corner. As you probably know by now, the Internet of Things (IoT) is already here and we’re starting to see it enter every aspect of our lives.
According to research, the IoT retail market is expected to be worth about $35.64 billion by 2020 (growing at a CAGR of 20%) and $53.75 billion by 2022. Those numbers are staggering and it’s a good indicator of what’s to come (our shopping experience will never be the same again).
The targeted advertising we saw on the Minority Report has already been going on for a few years, so it got to me wondering how else technology can impact the retail space.
It all comes down to harnessing the power of IoT and that’s not going to be easy. Brick-and-mortar retailers have increasingly become connected and have collected a massive amount of data.
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However, although consumer preferences can be identified by gathering data from lightbulbs, beacons, cameras, and mobile devices, a lot of this data hasn’t even been accessed (yet).
As a result, the key here is to integrate the data to enhance mobile and omnichannel strategies to take retailing to the next level. This information should be connected to the supply chain where inventory, customer engagement, and consumer activity can all be monitored and managed concurrently.
A “smart” retailer should be able to track its own inventory and serve customers with little to no human intervention. The smart store of the future will be powered by item-level radio frequency identification (RFID) technology in a highly connected IoT ecosystem.
The IoT ecosystem will be connected by Wi-Fi and Bluetooth and will incorporate the following technologies:
- Device management
- Digital signage
- Energy optimization
- Security systems
- Smart doors
- Smart shelves
From the way things are going, it looks like this will be a reality in just a couple of years.
So how do you effectively harness the power of IoT for retail?
Track Consumer Behavior
Big data is really BIG! It’s so vast that most retailers are overwhelmed and are struggling to take advantage of the data to enhance customer engagement. As a result, machine learning has to be utilized to process a massive amount of data and identify consumer behavioral patterns.
One way retailers are overcoming this hurdle is by using the IBM platform, Watson. This technology is able to scan through social media profiles, analyze individual demographics and even psychographics (personality) in real-time.
These are some of the services offered by IBM’s Watson:
- Concept insights
- Concept tagging
- Document conversion
- Entity extraction
- Language translation
- Natural language classifier
- Personality insights
- Sentiment analysis
- Text extraction
- Tone analyzer
In the retail space, this data can help significantly improve communication between the retailer and the consumer.
If you know that a consumer has researched a product online when they walk into the store, you can avoid boring them with information that they’re already aware of. Instead, you can guide them to other product reviews or even make comparisons with similar products on the retail floor.
IoT in Apparel
With smart clothing rapidly becoming a reality, the race is on to take clothing business to the next level. So, IoT will be important for apparel retailers to stay relevant in a market that is changing dramatically.
As a result, what retailers need to focus on is building a robust IoT ecosystem. Apparel retailers have to utilize the IoT ecosystem to take advantage of continuous product visibility (availability and movement). Further, the technology within the store needs to seamlessly communicate with supply chain partners to make the most of IoT in retail.
As a result, to get the most out of it, multiple devices need to be able to work together to communicate data rapidly to enable interactive business decisions.
This will require the implementation of standards to avoid operational chaos.
Brands need to focus on utilizing IoT as a competitive advantage that helps them stand out in a crowded marketplace by enhancing the customer’s retail experience. An intelligent store should be able to compete with both online and offline markets by leveraging its strengths (such as the store’s location).
So what are brands already doing?
A study conducted by Retail Systems Research (RSR) found that 72% of retailers surveyed had already started working on IoT integration.
Retailers like Target have already taken advantage of item-level RFID to enhance Omnichannel commerce that will enable them to fast track orders and maintain inventory accuracy.
Further, Ralph Lauren has incorporated connected fitting rooms that enhance customer experience at their Fifth Avenue flagship store in Manhattan. The smart mirror can be used to check on other colors that are available, adjust lighting, and even have the items shipped directly from the store to the customer’s home.
The IoT in Hospitality
A lot of hotels are already riding the IoT bandwagon. In fact, 26 billion IoT devices are expected to directly impact the hotel industry.
Most large chains already have apps that allow guests to check-in and checkout which negates the dull part of the whole experience. Further, the same smartphone app can also be used as a digital key to unlock the hotel room door.
As a result, it diminishes human interaction with the guests and also helps to gather a lot of data to serve the guests better. Further, with tracking preferred places and buying habits, hotels can also now target clients with better offers to keep them coming back.
All this sounds great, but to truly enhance the customer’s retail experience, they would need to opt-in to take advantage of a smart store. So they would either need to share personal information, download an app, or sign up for a loyalty program.
If the past is anything to go by, the number of customers that opt-in will be significantly limited. So brands need to get creative to get their target audience to opt-in while not violating consumer privacy.
So it’s a good idea not to over-personalize the experience and scare the customer away. In order to make the customer comfortable with giving up personal data, brands need to provide the consumer with real value in exchange for that data.
What’s your experience with retail IoT? Share your thoughts in the Comments section below.