Digital assets are changing the face of just about every industry, and the retail sector is no different. Most interestingly though, is that the retail industry is by its very nature, public facing. This means that there’s a lot more visibility and awareness of the shift and gradual adoption of OT/IoT compared to many other sectors. The result is that this brings not only more scrutiny, but also more opportunity for innovation and experimentation, as the ‘Public Relations’ angle has its own intrinsic benefits, like we saw with the early simple checkout-less pilots of Amazon Go helping bring attention to the company.
In this article we’re going to be exploring the very influences that IoT will have on the consumer experience, and inversely, what influences consumer demands may have on IoT across the industry.
The Changing Face of Retail
While the whole supply chain from producers and manufacturers, to shipping and logistics, to ensuring products reach the shelf is affected by IoT, in this article we’ll be focusing on the IoT options that enhance actual retail operations and the consumer experience; ‘Retail IoT’.
The retail sector may make use of IoT in a variety of ways. From ‘brick and mortar’ (B&M) to ecommerce enterprises, IoT can help solve bottlenecks, reduce costs, and improve customer experiences. While both share many backroom logistics, there are opportunities unique for each at a fundamental level.
By 2027, online sales will account for 40% or more of overall retail sales, up from the current worldwide average of 10%, according to the World Economic Forum. Sensors are now being utilised to track assets, manage stock, and measure consumer satisfaction. With large online demand, the warehousing and picking and logistics aspects of these operations are all augmented with IoT.
The traditional local market and specialised businesses are resurfacing (after their dissipation in the face of massive entities) to fulfil the demands of more discerning customers as large corporate stores and supermarkets lose ground, affected by their own monolithic nature. As a result, small, more nimble merchants are starting to personalise the buying experience for each customer based on their shifting preferences. Digital sensors and devices, when used in conjunction with data from online purchases, will enhance and customise our shopping experiences tremendously. From understanding and addressing specific product demands, to businesses able to better manage in-store experiences with queue adjustments and in-store assistance. Fitness and healthcare have seen great success with wearable technologies. Wearable IoT applications in retail, on the other hand, go well beyond health monitoring. Wearables may help retail businesses identify their customers to reward their most valuable customers and to provide them with special treatment throughout their retail experience.
Because it removed obstacles to the free flow of money, labour, and commodities, globalisation has historically been viewed as favouring big corporations at the expense of everyone else. While there have absolutely been smaller businesses ousted from markets by their online counterparts – bookstores and textile vendors most publicly – this is not a completely accurate account of the shift to online commerce. As the adoption of ecommerce continued to accelerate, the global business climate has been reshaped towards a fairer and more egalitarian state, giving small companies, particularly those led by women, more options and opportunity. With the correct level of attention and care, even the smallest businesses have been able to compete thanks to digital adoption.
The difference is now starting to come manifest due to sheer economies of scale. The ecommerce behemoths are able to drive increased efficiencies through investment into IoT-powered solutions for warehousing and logistics, last-mile delivery. Rapid, often same day delivery is nearly impossible for smaller organisations to maintain in house. The good news for many of these smaller organisations is that neutral carriers are springing up, largely due to the increased demand stemming from COVID-19, that don’t have the affiliations to a specific retailer.
Again, IoT is helping to not only improve customer experience, but is democratising retail, as ecommerce initiatives and models, like dropshipping, become more and more about bringing together the right combination of solutions, than a single vertically-owned model.
Drivers of Change
Future retail trends will be heavily influenced by the needs of consumers. As a result of the internet, local shopping is no longer necessary (except for fresh produce), and buyers now have access to purchasing choices and dealers that were previously unavailable. Convenience is becoming a significant role in our purchasing choices even as we, as customers, continue to demand transparency in pricing and quality.
As a result of 3D printers, retailers will be able to manufacture goods on demand, opening the door to many new and small companies. In addition, many goods may be printed locally, decreasing shipping, storage, and logistics expenses. These ‘smart devices’ will likely be connected to consumer preference databases, allowing for custom products to be created on demand, in a very low-friction manner.
As consumer items are increasingly infused with ‘smart’ options, many of the benefits afforded to industrial applications. Along with greater, more nuanced personalisation, consumers will also benefit from predictive maintenance and upgrades to their products through IoT.
Digital solutions may now be used in conjunction with physical shops through IoT. Online ecommerce and in-store experiences may better complement one another if retailers are able to blend the two benefits for produce a more meaningful outcome. Imagine registering your interest in a new release from Nike, and being informed that a pair in your size (and any other preferences) were enroute to your closest B&M store. The store would be alerted to your arrival, and a representative would be able to assist you without delay or the usual discovery process. You get the product you want, faster, without the headaches or out-of-stock issues that frequently happen for early adopters.
The benefits of IoT for retail as a whole are promising. Let’s take a look at the advantages of integrating Internet of Things technology in the individual retail operations now
- Through IoT, stores may optimise floor layouts for products through reports based on sensor data relating to item interactions and customer movements in-store.
- Customers may be identified with the use of IoT enabled cameras, sensors, and face recognition algorithms as being impatient or particularly curious about a product. This means that employees will be empowered to make proactive choices and effectively shape the environment.
- Retailers using IoT can keep track of how many items are in stock through SKU monitoring enhanced by IoT. These solutions mean less chance of human error, and can be used to augment current scanner-based options in backrooms and Point of Sale.
- A more cohesive experience between B&M and ecommerce can combine the benefits from both, limit the negative aspects, and even facilitate new types of customer experience.
- Using the Internet of Things to increase inventory traceability and visibility, which reduces damage, loss, fraud, and theft.
To realise the full potential that IoT can bring to retail, of course, offers up its own issues. Primarily, asset management and security challenges. Luckily, CyAmast has the right solution that helps retail businesses with everything from their warehousing and logistics through to in-store customer experiences.