IoT is becoming increasingly prominent in our daily lives. According to Statista, the global IoT market is set to grow to $8.9 trillion by 2020, highlighting the level of investment in the technology by both consumers and businesses. The ability to connect everyday objects, as well as our electronic devices, to the Internet is transforming how we interact with the world around us. When we look at how IoT will change retail experiences, it is clear that it is just one of several industries that will benefit.
Technology is driving a change in how we conduct business. The models and systems that we have relied upon in the past are becoming defunct as businesses go through processes of digitalisation. In our upcoming report 'Tides of Disruption: How to navigate business transformation' we explore the five primary forces that are causing companies to re-evaluate how they operate to ensure that they benefit from the opportunities that new innovations can offer, rather than falling foul of potential risks.
There are several sectors where IoT has the potential to make a significant impact and be a force of true disruption. Through the use of connected sensors, industries such as manufacturing, healthcare and natural resources will be able to gain access to valuable data that could drive efficiencies, improve service and help manage equipment.
In the retail industry, we are likely to see IoT transform the shopping experience for customers as well as provide actionable data for business owners and their internal processes. In the current climate, bricks and mortar stores are struggling to compete with the online market, however the possibilities that IoT could offer have the ability to reset the balance between the high street and e-commerce.
Here we set out just five of the ways how IoT will change retail in the future..
1.Smart shelves and retail stock management
IoT sensors with Radio Frequency ID (RFID) can be added or built into retail shelving to give stock controllers a better view of the current state of play. Employees will be able to spend less time keeping track of what is in and out of stock or what has been returned to the wrong shelf.
The RFID sensors will allow for stock data to be collected in real-time and automate tasks. Data could then be analysed to understand buying patterns and optimise restocking processes to ensure that they are cost-effective. Businesses would also be able to understand where customers tend to dwell in-store and alter floor layouts to ensure the most sought after products were the easiest to find.
2. Automated checkout
We are already beginning to see elements of IoT in the retail experience when we checkout. Paying for goods with our smartphones has become second nature and we can often find ourselves not purchasing items when mobile payment is unavailable in-store because we have become less likely to carry cash and debit or credit cards. According to WorldPay, 16% of global point of sale payments were made via an e-wallet and are predicted to grow to 28% by 2022.
As the adoption of IoT in business increases, we are likely to see checkout systems change. Products will be scanned as customers leave store and payment will be automatically taken by mobile payment through the use of sensors. Automating the checkout process in retail would lead to significant cost savings with staffing as well as encouraging sales with the reduction of wait-times reflecting the instantaneous experience you receive when buying online.
3. Advertising and digital signage
In a previous blog, we discussed how blockchain is being used in the advertising industry to provide real-time data to achieve instantly personalised messaging. Similarly, in retail digital signage and BlueTooth beacons can be used to provide a personalised shopping experience.
When a customer enters a store, their previous history of interactions and purchases can be analysed to provide specific discounts and messaging. The customer may have been browsing online before entering store and the technology would register that they were looking at a specific product category but no purchase was made. Once the beacon in-store connects with the customer's mobile device it would then be able to provide in-store loyalty discounts for that specific item and direct them to the product to encourage the sale. Any digital signage would also be able to advertise the specific products that the customer may have been browsing for online.
4. Smart Transport
While most retail companies are able to track the journey that their products have taken, any other information from the supply chain is often limited. Using IoT, retail companies would be able to gain insights such as the temperature an item is being stored at and the length of time in transit.
Retail businesses would also be able to use IoT to optimise the transportation of their products by being able to identify the best routes for shipment to take and build in real-time alerts to ensure unexpected weather and traffic do not impact customer experience.
5. Competition with online competitors
E-commerce websites have become prominent players in the retail market. Businesses that choose to offer their products online are able to achieve a global reach while cutting real estate costs and providing a convenient experience to their customers. The incorporation of IoT in bricks and mortar stores could help the struggling high street to compete with online entities and their market share.
By implementing IoT, businesses would not only be able to provide a new experience to their customers but also gain data that can give them the insight needed to cut costs and drive efficiencies to build effective and valuable processes.
Capitalising on the IoT opportunity
Businesses that are yet to implement new technologies like IoT need to be considering the impact that ignoring innovations could have on their operations and success in the future. Digital disruption is not something that we can stop from emerging in our industries. Businesses need to be thinking about both the opportunities and risks that technology presents to them and the action they need to take to ensure their futures. If they do not act they could risk being left behind as their competitors and new entrants to the market capitalise on what digitalisation can offer.
For example, in the retail industry, companies that implement IoT are offering new experiences to their customers with the potential to overcome the current issue of the high street versus online. Those that do not take the steps to enhance their customer experiences and move with the times are likely to struggle in the current climate.