4 Ways the ‘Internet of Things’ will Impact the Retail Industry
May 28, 2014
‘Internet of Things’ (IoT) has emerged as a keyphrase in most tech circles. With an array of developments that allow consumers to use and control technology for their own benefit, IoT is becoming more of a reality these days. While it may seem tricky to grasp as an idea, ‘Internet of Things’ in its simplest form, stands for a concept where devices, objects and systems connected to the web can share information.
According to a recent report by Pew Research Center, the IoT sector is all set to transform businesses worldwide with about 83% of the 1,600 industry experts agreeing that the IoT market will dominate mainstream in about 11 years. With a projected worth of $14.4 trillion by 2020, it represents a business opportunity which can provide companies with a distinct competitive advantage.
While most of these business areas of impact are under speculation, retail is one of the few sectors that is beginning to see real action. The emergence of ecommerce is said to have been one of the major disruptions witnessed by the retail sector. Experts, however are of the opinion that IoT has the potential to cause an even bigger disruption to the retail and ecommerce space.
Here are four ways retailers are using IoT to create a proliferation of customer touchpoints that helps improve customer experiences and ultimately drive the bottom line.
Beacons and the proximity-marketing services they deliver empower retailers with the ability to cut through the advertising clutter and speak directly to customers who are within 5 inches to 150 feet of the signal. Using the information on a customer’s browsing history and social presence, retailers can accurately predict their buying requirements and even send special offers on items that the customers are more likely to buy.
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American Eagle Outfitters, an American clothing and accessories retailer, for example, recently partnered with Shopkick, to launch shopBeacon in 100 top-performing American Eagle and Aerie stores. Built on top of Apple’s iBeacon protocol, shopBeacon automatically notifies shoppers of deals and product suggestions based on their location in the store.
Waze, a real-time social GPS navigation app, partnered with Taco Bell to promote its Taco 12 Packs. The app seamlessly integrated Taco Bell into their native experience by using their mobile advertising solution to place ads that users see on their maps as they drive by them. Taco Bell further leveraged several brand integrations such as promoting branded pins of locations, destination-specific targeting, and custom campaign messaging to engage the Waze drivers.
Radio-frequency identification (RFID) is already widely in use in inventory and warehouse management systems. And in the near future it is likely to be extended with more connected services like smart shelves that send out signals when they are going empty. These signals will then automatically trigger replacements at the store level by communicating it all the way back into the supply chain.
American Apparel, an American clothing manufacturer recently deployed RFID to deliver hands-free inventory visibility. Having automated the inventory process, the American Apparel staff can now expend less time finding products and dedicate more time towards enhancing their customer service. It provides them with useful data to test their merchandising effectiveness while helping them prevent theft and loss as well.
4. Drive Business Intelligence
Today retailers are linking more of their operations to the Internet, thus aggregating information that helps them serve their customers better while also controlling everything from the store’s temperature to the locks on its doors.
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Starbucks recently deployed more than 500 Clover coffee brewers – a connected coffee machine. These smart coffee machines are connected to the cloud through a system called CloverNet, and by integrating it with the MyStarbucks loyalty program the coffee giant it able to track customer preferences down to the individual level. Further these machines also help them update recipes digitally, track customer and store consumption patterns, and self-monitor employee performance.
The coffee giant is also considering connecting more smart hardware such as smart fridges that monitor ingredients, in an attempt to lower the maintenance costs of its baristas. While all of this data is critical to Starbucks, some of this will be primarily used to amend its business plans and product offerings to generate additional profit and maintain stores more efficiently.
The above mentioned trends indicate that there is likely to be large-scale adoption of IoT in the retail sector. And if this continues, IoT is sure to drive the biggest disruptive phase for the retail industry in the coming years.