Defining and structuring the Internet of Things (IoT) or sensory information for retail is a critical step in building a better understanding of the consumer buying journey, customer loyalty, on-shelf product management and marketing mix modeling.
IoT in retail refers to the use cases and applications that underline the business value of interconnected and uniquely identifiable embedded computing devices (such as beacons, RFID, sensors, mobile devices, WiFi access points, etc.) within the existing Internet infrastructure.
IoT is relevant for consumer industries as there are several connection points between the unpredictable worlds of digital consumer behavior, product demand, offers, loyalty and revenue. Can these links be better understood and managed in the not so distant future by consumer industry companies? Finding an answer to this question is paramount as more and more companies strive to create a unified and integrated view of their consumer’s overall experience and product management.
The problem for companies fast-tracking IoT and other new innovations is the fact that there are countless strategic activities that retailers undertake on a daily basis. However, among these priorities exists an urgency of finding new operational efficiencies and customer engagement opportunities within and outside the four walls.
The underlying value of web connected devices and sensory technology insights can be very useful to companies. When business actions are taken in response to such insights in stores and distribution centers, more often than not such actions lead to increased customer satisfaction, fewer stock-outs, consistent customer experience, targeted promotions, enhanced revenue, and other benefits. The reasons such benefits are there for the taking includes but are not limited to the fact that by using IoT, companies can understand and model their businesses to suit distinct consumer journeys or product experiences. They can start to understand why and where in the journeys of consumers and products does the process workflow or message cycle breakdown and outline actions to address each gap in the value chain.
Today, while half of retailers are absolutely clear and understand the meaning of IoT, close to a third or less are aware of its value and potential business application areas. Bear in mind IoT in retail is not “a solution or a platform” just yet. It is a group of disparate and by default intertwined solutions that are currently impacting or has the potential to positively impact operational and customer engagement-related efficiencies.
Therefore, it is vital to define this space more lucidly and continue trials as well as new research and development till such a time that retailers can implement a comprehensive platform approach within stores, warehouses, and distribution centers.
While today less than half (4 in 10 retailers) are absolutely clear about IoT, this area has a particular data, application and people connotation and underlying business value as long as companies make use of the web and sensory data they collect. One can do marketing mix modeling; deeper customer segmentation for loyalty improvements; promotions/pricing optimization; plus companies can optimize floor plans, planograms, assortment mix and labor or staffing.
Sahir Anand is VP research/principal analyst EKN Research,
www.eknreaserch.com, [email protected].