Commentary

3 ways IoT is impacting retail

Chris Koeneman, senior vice president of strategy at Tangoe Managed Mobility Services, explains why retailers don't need to wait to uncover IoT's business benefits and shares three ways IoT is already making an impact on the industry:

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April 9, 2019

By Chris Koeneman, senior vice president of strategy, Tangoe Managed Mobility Services

In 1999, Kevin Ashton coined the term Internet of Things after witnessing inventory, logistics, and supply chain management challenges in retail. Since then, millions of global enterprises have adopted IoT and are uncovering its tremendous economic impact.

However, while most retailers see value in IoT solutions, these enterprises are largely unsure of how this technology specifically benefits business. When asked about industry adoption and the key issue being solved by IoT, greater inventory accuracy was the leading response — but only 24 percent of organizations agreed this was the case.

Despite the lack of large scale agreement, almost half of all retail organizations have already adopted IoT in some form and more than three-quarters believe it will have a transformative impact across the industry. That's because more than 80 percent of companies currently using IoT report efficiency improvements, and more than 70 percent of executives say it delivers increased profitability.

In fact, between revenue growth, cost reductions, and business process optimizations, experts estimate the annual digital value IoT creates across the global retail sector to be worth almost three trillion dollars. No wonder almost 70 percent of retailers believe this technology will significantly impact how they do business in the future.

However, retailers don't need to wait to uncover IoT's business benefits. Here are three ways IoT is already making an impact on the industry.

More meaningful customer experiences

In recent years, technology has helped retail enterprises leverage data and new capabilities to customize customer experiences. IoT takes this trend a step further by offering something that feels even more authentic and personalized to shoppers. Today, "ordinary" devices and systems can now be integrated with IoT to collect and communicate data in real-time — the Internet of Me.

This interconnected business environment focuses on designing and optimizing experiences for individual shoppers. That's why almost 80 percent of the industry admits IoT has already improved aspects of its customer experience.

The Internet of Me is important to retailers everywhere because it's the first global, technology-enhanced opportunity to connect physical and digital worlds. By doing so successfully, organizations can enable two-way consumer interaction and enhance in-store experiences through smartphones and other mobile devices.

Location-based beacon technology powered by the IoT, for example, allows companies to push personalized offers and discounts to shoppers as soon as they enter a store — creating the potential for millions of additional sales every year considering more than 70 percent of consumers say this content increases their likelihood of buying products in-store.

IoT makes it possible for retail businesses to deliver a variety of customer experience benefits. Contactless scanners make shopping stress-free by letting customers skip wait times and checkout processes. Barcode scanning devices immediately display additional product information like size, color, and location availability as well as online reviews. And smart shopping capabilities allow consumers to not only call for in-store assistance via mobile device, but also browse inventory and recommended products based on preferences learned from past purchases.

IoT makes stores smarter, too. Imagine how much more engaging in-store interactions could be if beacon technologies delivered shoppers' purchase histories and frequencies to customer service professionals in real-time. Or, if digital signage changed based on the buying habits of close-by shoppers or real-time pricing trends.

The valuable data generated from retail IoT systems gives companies insights they've never had before. Today, enterprises can track customer paths across store layouts to upgrade merchandise placement strategies, use smart shelves to detect when inventory levels are low, make energy use more efficient through continuously monitored thermostats and lighting, leverage autonomous machines to perform maintenance and stocking tasks, and protect the freshness of perishable goods through smart packaging and inventory notifications — among many other things.

A streamlined and secure supply chain

In addition to impacting customer experiences, IoT is helping the global retail sector improve supply chain efficiency and innovation despite an increasingly complex enterprise environment. In fact, by 2023 retail IoT platforms are expected to generate more than four billion dollars in revenue through industry-wide efficiency gains — causing 72 percent of companies to consider replacing current technologies with IoT-driven automation, sensors, and analytics that deliver unprecedented supply chain visibility.

Radio frequency identification-enabled assets are already helping these efforts improve inventory tracking and, if implemented successfully, can be used to power IoT and grow annual sales revenue almost three times faster than competitors who fail to leverage this technology.

IoT also makes it possible for retailers to integrate data visualization capabilities that simplify inventory tracking methods, pricing systems that ensure consistency across all sales channels, and automated systems that perform repetitive tasks. By doing so, IoT not only adds value to customer engagements and increases shopper satisfaction, but also reduces out-of-stock and overstock scenarios that cost companies almost two trillion dollars annually.

Beyond improving efficiency and productivity, IoT also impacts supply chain security by minimizing the potential for item theft, counterfeiting, and safety issues. A continuously monitored data steam enables an enterprise to track assets in real-time, eliminate the potential for human data entry errors, and maintain accurate inventory records.

For decades, most retail establishments have used technologies like security cameras to feed video data into a repository where humans sift through footage whenever an incident takes place. However, IoT and AI are transforming these devices from purely reactive tools to intelligent, proactive security upgrades instead.

Stores like Amazon Go are already leveraging cameras with advanced object detection and in-depth behavioral analysis capabilities to track shoppers and inventory in-store. Through deep learning technology applied to complex pattern recognition, these digital tools can detect when products are removed and replaced on shelves to prevent shoplifting and ensure proper payment.

New sales channels and revenue streams

Retailers are already relying on IoT to expand efforts into new sales channels and create higher-margin product and service categories — by 2021, 70 percent of the industry will invest in these technologies to do so.

However, the opportunities IoT presents don't stop there. Retail companies can use these systems to create integrated platforms that help develop and sell future products, communicate with other smart devices, and collect valuable in-home consumer data like utility usage and consumption habits to increase sales and uncover demand for products and services that don't currently exist.

Today, almost 90 percent of IoT-enabled retail organizations have increased insight into how customers think and behave due to this technology, and almost 80 percent are using it to create better collaboration with global product and service delivery partners.

Through IoT, the retail industry can create omnichannel shopping experiences that allow consumers to shop precisely when and how they prefer—enhancing customer value and reducing prices by as much as 10percent due to decreased overhead. This also reduces back-of-store workloads and enables businesses to save more than one trillion dollars annually through improved inventory accuracy, reduced out-of-stock scenarios, and increased on-floor sales associate availability that prevents customer walkouts.

For almost 80 percent of the industry, developing a satisfying omnichannel experience is business-critical because more than half of retail consumers feel their experience is disconnected from one channel to the next, and nearly two-thirds believe retailers don't truly understand consumer needs.

Another impactful business advantage IoT creates is the opportunity to repurpose existing enterprise technologies. IP-enabled cameras, for example, used currently for loss prevention and physical security purposes can be integrated with IoT systems to enhance operational capabilities like marketing space planning, customer traffic counting, and behavioral analytics. By improving asset utilization in this manner, retail organizations can add as much as $300 billion in digital value.

The next several years are sure to bring new IoT opportunities to retailers all over the world. While these technologies have already made a dramatic impact in their infancy, future business advantages will only continue to add value and importance to integrated IoT inside this industry.