Internet of Things (IoT) in Retail
According to McKinsey, the total number of IoT devices used worldwide is projected to reach 43 billion by 2023. The increasing number of connected devices will lead to the emergence of a so-called connected ecosystem as a new paradigm of the interaction among manufacturers, sellers, and consumers, offering totally new opportunities and challenges to all the parties involved.
Retail was among the first industries to adopt IoT. According to Accenture, in the coming years, retailers will further increase their spend on IoT, which is expected to reach $2.5 billion. Below, we list the trends that will drive a new, consumer-centric retail model enabled by IoT technology.
The IoT will allow the functions that are still performed manually to become automated. Some potential use cases include:
- Smart price tags will adjust prices in real time, based on the item’s popularity, expiry date, and other factors.
- Smart package will enable the tracking of product conditions.
- Customers will use their gadgets to navigate the store and create digital shopping lists.
Workplace digitalization will allow the retail sector to adopt such cooperation models as crowdsourcing and short-term partnerships, which will make the workforce more mobile.
Workforce education will improve as well. With the advancement of technologies, courses and webinars are already accessible for anyone, anytime, and from any device.
As the ecommerce segment occupies a significant market share, ecommerce connectivity platforms will further evolve as one of the main drivers of the digital economy.
In the retail industry, connectivity platforms may take multiple forms: from large marketplaces, such as Amazon and Alibaba, to online payment systems and device communication hubs. Eccomerce connectivity platforms trigger positive changes in such domains as customer experience, supply chain management, and revenue generation.
Improve CUSTOMER EXPERIENCE
The increasing number of connected devices will give businesses valuable insights into customers’ preferences, habits, and behavior patterns. For instance, a facial recognition solution we built for an Austrian provider of digital retail services allowed the customer to recognize store visitors and tailor their in-store experiences accordingly. Below are some more ideas of how the store of the future may look like:
Beacons installed at the store entry inform sales assistants once a customer with a loyalty card enters a store. As the customer moves through the store, they receive individual promo codes or discount notifications based on their previous purchases.
In a wider connected ecosystem, digital shopping lists can be made automatically based on the customer’s diet preferences, fitness device data and fridge stock, while smart shopping carts may analyze the lists to help customers navigate the store and find necessary products faster.
Unrestricted access to product information
Customers use smartphones to scan products’ bar codes for additional information, user reviews, etc.
Smart stock replenishment
A smart fridge installed at a customer’s home analyzes the available stock and automatically schedules product delivery to the prearranged time.
optimize SUPPLY CHAIN management
The traditional supply chain that is mostly based on the manufacturer-retailer-end customer connection will soon cease to exist. Retailers will reconsider the ways the supply chain management is organized, which will result in the following outcomes:
Reduced human participation
Most jobs implying repeated activities, from arranging items within a store to handling hazardous materials, will be taken over by robots. However, this does not mean that human participation will no longer be required. Conflict management, PR, marketing, and other jobs that welcome creativity and advanced communicative skills will remain human prerogative.
Enhanced inventory management
The usage of connected devices for inventory management activities will eliminate reliance on manual labor.
- Smart shelves will keep track of the available stock and automatically schedule replenishments.
- A flexible price system will allow adjusting prices in real time, maximizing sales and significantly reducing wastage.
- RFID tags will help keep track of the inventory items’ locations, decreasing the possibility of losses or thefts.
create new REVENUE STREAMS
Connectivity will not only enhance the operations of a traditional retail store, it may as well create new ways of generating profit. Thus, retailers will be able to switch from offering products to offering well-rounded digital experiences, based on unique customer preferences.