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The Internet of Things (IOT) may be an opportunity for Bricks and Mortar retailers. The proliferation of connected devices coupled with less-expensive technology platforms can be used by retailers to get customers back into their shops…
Jonathan Gregory, Managing Director – Accenture Strategy says IOT offers retailers opportunities in three critical areas: customer experience, the supply chain, and new channels and revenue streams.
Before discussing the opportunities of IOT, we must first explain what IOT is.
What is the Internet of Things?
There are many complicated, high tech definitions for the IOT. However, Jacob Morgan contributing to Forbes puts it simply – IOT is the concept of connecting any device with an on/off switch to the internet (and/or to each other).
How many things can you think of that has an on/off switch? In your home – TV sets, air conditioners, lights, alarms, stoves, geysers, garage doors – the list is never ending. Now imagine connecting all these devices to your smartphone or, connecting them with each other. And then connecting everything with other persons…
The IOT is a giant network of connected “things” (which also includes people). Hence the relationship will be between people-people, people-things, and things-things, suggests Jacob Morgan.
Let’s get back to the opportunities that IOT render for retailers.
What opportunities do the Internet of Things offers retailers?
The author of this blog has previously mentioned the challenge that Bricks and Mortar retailers have to stay competitive in the digital economy (How retailers can remain competitive during turbulent-times). How can the IOT help retailers with their activities?
Customer experience
The customers of retail are adopting digital devices at a staggering rate. They are eager users of smartphones, tablets and digital watches. Digital devices make their lives easier, and they want the same experience from them in shops as what they get at home or at their workplaces.
“The digital transformation of retail is driven by customers” says Tony Stockil, CEO and Founder, Javelin Group. Most customers want to experience shopping as part of their entertainment. Shopping is now a form of entertainment, available 24/7, wherever people are. Retailers therefore need to ensure that the brand experience is seamless and constant at all touch points.
James Wilson, Baiju Shah and Brian Whipple did an open-source analysis of IOT user behaviour (“How People Are Actually Using the Internet of Things”, HARVARD BUSINESS REVIEW, October 28, 2015). They found that consumers want an IOT that provides personalized services that can be adapted to different contexts.
The data show that the most heavily used IOT programs are ones that make home life easier, more distinctive, and more pleasant. According to the results, customers show a big preference for services that don’t require them to go out of their way to make something work.
The supply chain
Connected devices and products provide retailers with the opportunity to help optimize operations in the face of a more complex supply chain, increasingly important digital channels, and a more demanding customer. By utilizing the IOT, managers can track inventory more easily, and adjusting pricing in real time using smart tags.
IOT allow small retailers operating an eCommerce channel to automate their warehouses. By upgrading to automate warehouse retailers will be able to process orders rapidly, accurately, and in real time says the OPEX Corporation. The upgrading may put retailer’s service and standards on par with the “big boys” in their retail sector. The cost benefits of a goods-to-person picking system are that it saving time and it is accurate. The system ensures getting the right product at the right time at the right place.
Creating new channels and revenue streams
The power of the IOT lies in the opportunities it presents to retailers to create new revenue streams or build entirely new channels. As such, household appliances, home security and comfort products, even health and wellness products are all becoming part of the IOT ecosystem.
Some retailers are taking further advantage of the wide array of connected products by becoming an integration “platform.” According to Jonathan Gregory, the idea behind these platforms is to make it easier for customers to make all of their in-home devices talk to one another.
Grocery retailers may partner with the suppliers of connected platforms that would give them direct channel to customers. Subsequently a potential gold mine of customer data can be created – information associated with almost every aspect of the household, from utility usage to consumption trends.
What are the dangers of the Internet of Things?
Jason Bloomberg, President of Intellyx writing in Wired, gives seven reasons he thinks the IOT is doomed:
- Security – with products and people connected, savvy hackers can easily access important information about you and the way you live.
- Privacy – it is about ‘Big Data’. Therefore, the more IOT you have, the more Big Data they collect, and the more Big Data they collect, the more they know about how you behave.
- Digital fatigue – too much social media, too many smartphones, too many YouTube videos to watch. There are also too many apps to download, too much of everything digital and wired and online.
- Ecosystems – with the IOT the battle is starting again to dominate this technology ecosystem. There are many dealers, both large and small, trying to establish a foothold, hoping to create their own ecosystem.
- No Killer App – so far, the IOT has no Killer App. However, the Killer App could be just around the corner. They have a nasty habit of appearing on the market suddenly with no warning.
- Enterprises will mess things up – for an enterprise to succeed with the IOT or any other part of their Digital Transformation initiative, there are no shortcuts – only hard work.
- Rather put customers in control of the IOT – let the consumer control the security of each device. Let them determine what data the devices upload to the Big Companies.
Are you ready for the internet of things?
Customers want IOT programs that make home life easier, more distinctive, and more pleasant. Also, the IOT gives small retailers the technology to do their logistics more efficiently and cheaper. Further offer the IOT retailers the opportunity to collect data from their customers at their homes and place of work.
There are however a couple points about the IOT that should be considered before using it:
- Is the IOT system developed and secured enough to use without facing financial of legal liabilities?
- Are you certain that by using the IOT it will be done ethically?
Lastly, let’s hope that the IOT will add value to both retailers
and their customers not long from now…
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Read also: How the Fourth Industrial Revolution Shapes the Retail Industry