The revolutionary potential of the IoT creates three game-changing opportunities for retailers:
1. Enhancing the customer experienceUsing the IoT, retailers can connect physical and digital worlds, allowing real-time interaction with consumers inside and outside the store. Many retailers are already exploring location-based beacon technology, enabling them to interact with smartphone-toting customers. Some department store brands are using this technology to deliver personalized promotions to customers as they enter and move around the store.
Retailers can also use the data generated by these interactions to improve customers’ in-store experiences. Using sensors to track customers’ movements, managers can improve store layout and merchandise-placement strategies accordingly.
2. Optimizing the supply chain
Retailers can use the IoT to optimize their operations in response to complex supply chains and growing consumer demand for improved service and seamless experiences across shopping channels. New sensor technologies can make inventory monitoring more precise, while data visualization tools enable employees to track products across the supply chain. This tracking capability can be extended to customers, showing them where their orders are in the production and distribution process. As sector leaders are already adopting these new technologies, the retailers that have yet to explore the opportunities of sensors risk being left behind.
Managers can also use the IoT to adjust pricing in real-time, using smart tags to cut prices on promotional items and increase pricing on higher-demand items. A fully integrated pricing system would also help retailers synchronize their prices across shelves, registers and digital channels, verifying prices are consistent between online and brick-and-mortar outlets.
3. Revolutionizing channels and revenue streams
The IoT’s greatest potential may be in the opportunities it creates for new revenue streams and sales channels. Over time, we expect intelligent devices – including household, home security, and health products – to make purchases autonomously, on behalf of human beings. As they do so, retailers will effectively have a new consumer class to target.
Some retailers are already using the IoT to become integration platforms that enable customers’ in-home devices to “talk to one another”. Retailers in sectors such as grocery could partner with these platforms, generating a gold mine of customer data. This information could help retailers develop innovative services, such as automated product replacement based on consumption or perishable dates.
The IoT can give leading retailers the advantage inan already competitive environment. Early adopters can position their businesses to deliver exciting capabilities that increase revenue, reduce costs and create differentiated brand experiences. As science fiction rapidly becomes fact, one question must be at the forefront of retailers’ minds: Do you want to be a disrupter or do you want to be disrupted?