Why IoT is the future of the retail industry
How millennials and the innovation of IoT is changing the retail industry
It is no secret that millennials have taken reign as the current largest generation and have thus become the driving force of consumer demands, both online and offline. And with a need for an omnichannel experience, many retailers are burdened with frictional challenges that are hard to fulfill. From the supply chain and order fulfillment to the in-store experience, it’s becoming exponentially challenging to meet the expectations of consumers who have blurred the lines between the physical retail and digital space. While innovative organizations have been leveraging technology like mobile and smart devices to improve the customer experience, many fall short. They are still searching for an efficient way to capture consumer data and measure ROI accurately.
However, the rapid advancement of the Internet of Things (IoT) will soon change the future of retail. Falling costs of the physical technology, the progress of the cloud, and new SaaS solutions will make it easier and more efficient for retailers to deploy smart devices of all types throughout their stores. These tools deliver real-time, cross-platform dashboard visibility of data, helping to close the gaps in omnichannel retail, improve the customer experience, and create the store of the future.
Key challenging areas for retailers
As the largest generation, millennials already have a spending power of $1.4 trillion and represent 30 percent of all retail sales in 2020. And unlike their predecessors, they’re also a problematic segment that demands a personalized experience with modern shopping patterns, high expectations, and very little patience. Many retailers are still struggling to implement the technology-driven, seamless, and customized expertise that millennials demand, and those who fail to adapt will be left behind.
A demand for omnichannel fulfillment
In a world where consumers continuously want to buy, pick up and return items from anywhere rapidly and efficiently, retailers can’t keep up. More than 70 percent of retail and consumer goods CEOs believe that omnichannel fulfillment was a top priority and reported they were under threat from other online and big-box retailers offering same-day delivery. Many were also worried about failing to meet customer expectations across all channels and managing costs of fulfillment.
Retailers are challenged with integrating their supply chains with high speed, visibility, and efficiency from the warehouse to the customer, and everything in between. It primarily impacts fashion retailers who must quickly turn over seasonal inventory, introduce new fashions with no history of sales and carry an ever-growing mix of designs, colors, and sizes. Fashion retailers that lack visibility and ability to put products in the hands of customers quickly won’t survive.
Increasing labor wages
As retailers develop omnichannel strategies that balance the needs of physical and digital channels, they’re also facing rising labor costs and a demand for more excellent customer service. Simply cutting hours or workforce can have adverse effects by reducing the customer experience. With no clear, designated solution, many are experimenting with automation, simplifying processes, and improving work design.
Technology like tablets, sensors, and digital signage can supplement and better enable human associates to serve customers more effectively. Self-serve kiosks, mobile payments, and apps can also allow customers to do more themselves, reducing the workload on staff.
IoT Edge Devices are the building blocks of the stores of the future
Shortly, IoT devices will reshape themselves to be a wholesale solution to the retail industry. Under the tutelage of industry pioneers, these IoT devices will work in tandem throughout the entire retail system – transmitting, receiving, and processing data to ensure everyday decisions are automated and provide information for humans to make other critical decisions. This in-store experience of the future will optimize both customer and operational benefits.
In this store of the future, when a customer walks through your retail store door with an enable app, it will immediately trigger beacons near an entrance. The smart system will then automatically read the customer’s shopping history. It will then start pushing notifications with information and other essential details like promos and discounts about products that might appeal to them.
Internet-enabled digital signage will also drive content to stores in real-time, all customized to the preferences at each store. The IoT ecosystem will give the customer an almost real-time experience of simultaneously shopping in both the physical and digital worlds. In tomorrow’s retail world, customers will use smartphones or wearables to quickly scan items for price checks, pull up information or reviews, or post social media commentary. Smart shelves in the store will detect when inventory is low, and even place new orders with vendors.
That’s right. As mentioned earlier, in the future, IoT devices will all work in sync throughout the entire retail system.
Smart shopping carts will help customers navigate aisles based on their shopping history, and smart price tags can enable retailers to quickly and easily change prices to respond to demand. Robots with touch screens may even move throughout the space to approach and assist customers, while other “smart robots” could work autonomously to replenish stock and assemble products. All the while, smart devices in manufacturing facilities, distribution centers, and stock rooms will collaborate to offer real-time insight into customer demand.
Areas for IoT Application
Data analytics and measurement
IoT will collect infinite amounts of data, offering retailers endless ways to better serve their customers. Smart devices will soon automate customer identification and avoid the need for phone numbers, cards, and manual entry at the point-of-sale. These devices will also make such customer data more detailed, accurate, and actionable. It will be processed and used throughout the entire retail ecosystem to create an environment where the retailer can predict interest, options, price sensitivity, and fulfillment preferences as soon as a customer walks in the door.
How customers interact with the retail stores
IoT will expedite and enhance customer interactions in the future. The customer will use kiosks, digital signage, and their app to interact with the retailer. Heat maps will also help measure how customers move about the store, how they respond to the placement, and how long they spend browsing at products. IoT devices will allow companies to understand their customers’ needs like never before, better anticipate preferences, and adjust designs and inventories to meet those demands.
At the same time, retailers will also have to address privacy and security as IoT collects vast amounts of data from consumers. Retailers will need to conduct security risk assessments, minimize the data they collect and obtain and test security measures before launching products.
Retail store entrance
In the future, most of the components that impact the shopper experience will be handled in the digital world. Digital efforts will support even touchpoints in the store. When the customer arrives at the store, with the app downloaded on their phone, it will trigger digital signage with personalized content based on purchase history. A store associate can also be notified of a wearable about the customer’s arrival and potential interest.
Use of mobile payments
Check-out friction and shopping cart abandonment have cost the retail industry billions of dollars. Retailers will soon adopt seamless payment systems that allow instant payments from anywhere in the store via a mobile device, kiosks, and associate-assisted tablets. Mobility and self-service by the customer will radically change the check-out process in the future, reducing lines and speeding up transactions. The use of mobile wallets has already risen dramatically with the adoption of NFC readers, with payments forecasted to reach $410 billion by the end of this year.
A new way of merchandising
IoT will reduce fiction in merchandising by anticipating customer wants and making it more targeted and effective. Proximity sensing lightbulbs, beacons, sensors, and geofencing will enable stores to engage in highly personalized merchandising similar to an optimized online experience. When combined with robust data about the customer, retailers will be able to broadcast personalized offers to customers in the store. Data from heat mapping will also open new ways for apparel retailers to optimize their store layout to find the most effective arrangement of products.
After years of promise, IoT has truly arrived, and it is here to stay. If you are a retailer and you are looking for a long-haul, then, please, we urge you to digitize your retail space with the help of IoT edge devices as soon as possible. That’s right. You have to make the jump real more quickly if you don’t want to be left behind.