Retailers are experimenting with the Internet of Things (IoT) to offer new services, reshape the customer experience and enter new markets by creating digital ecosystems, a report said.

The proliferation of connected devices coupled with improved, less-expensive technology platforms and adoption of common standards will only increase the rapid growth of IoT-enabled capabilities across industries, added the report entitled “The Internet of Things: Revolutionizing the Retail Industry” released by Accenture, a multinational management consulting, technology services, and outsourcing company.

 And the IoT will be particularly disruptive to the retail industry, it highlighted.

The IoT movement offers retailers opportunities in three critical areas: customer experience, the supply chain, and new channels and revenue streams.

Improving the customer experience

Many companies can already mimic customer intimacy—as seen in online ads that quickly reflect your latest purchases—but the IoT promises something much more authentic and meaningful to the individual. What’s happening now is that every experience is becoming a digital experience as ordinary “things” become intelligent devices. These experiences are coalescing into what some are calling the “Internet of Me,” which describes an interconnected environment in which businesses are building products and services to be designed for, created for, and specifically centred on the individual.

Consumer adoption of IoT devices is expected to rise quickly: The “State of the Internet of Things” study from Accenture Interactive found that nearly two-thirds of consumers intend to purchase a connected home device by 2019, while ownership of wearable technology is expected to double year over year in 2016.

The Internet of Things presents an opportunity for retailers to develop a vastly improved ecosystem that connects physical and digital worlds, allowing bidirectional, real-time interaction with consumers both inside and outside the store. The increasingly ubiquitous smartphone will be the hub for these interactions.

Retailers are slowly evolving from fearing smartphone-toting shoppers who “showroom” (browse products in-store and then purchase online, often from competitors) to exploring new ways to connect with them to enhance the in-store experience.

One way is through location-based beacon technology, which retailers can use to interact directly with customers as they enter the store. Department store brands such as Lord & Taylor and Hudson’s Bay are already using Apple’s iBeacon technology and a mobile marketing platform called Swirl to deliver personalized promotions to customers who download the brand’s app.

Retailers can leverage the copious amounts of data produced by these interactions to improve the customer’s in-store experience. Using sensors to track customers’ paths through a store, for example, can help managers improve store layout and merchandise placement strategies. Hugo Boss has already deployed heat sensors in its clothing stores to track customer movements, which helps managers place premium products in high-traffic areas.

Optimising supply chain operations

The “Industrial Internet” has emerged as a term to describe how companies are leveraging cloud, mobile, big data and other technologies to improve operational efficiencies and foster innovation by tightly integrating the digital and physical worlds. The combination of the Industrial Internet and IoT devices could add more than $14 trillion to the global economy by 2030.

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. RFID technologies, for example, can improve the precision of inventory tracking. Data visualization technologies make it easier for employees to track products across the supply chain. This service could even be extended to customers—allowing them to track, for example, where a custom order is in the production and distribution process.

Managers could begin to adjust pricing in real-time, using Internet-enabled smart tags to lower prices on promotional or low-turnover items or increase pricing on higher-demand items. A fully integrated pricing system would help retailers improve synchronization of prices between the shelves and the registers and also across channels, to verify prices are consistent between online and brick and mortar stores.

Other IoT devices can be integrated within the supply chain to further improve store operations and help reduce cost. For example, IoT-enabled sensors confirm store managers to monitor lighting and temperature control and adjust settings to improve customer comfort and support more cost-effective energy usage.

Using sensors to automate many of the functions that employees currently have to perform manually, such as tracking inventory or changing prices on individual items, gives sales associates more time to spend interacting with customers—further improving the in-store experience.

Creating new channels and revenue streams

The true power of the Internet of Things lies in the opportunities it presents to retailers to create new revenue streams or, in some cases, build entirely new channels. We’re already seeing examples of incremental revenues retailers can help achieve by expanding into new channels or creating new, high-margin product categories for the emerging “connected home.”

Household appliances, home security and comfort products, even health and wellness products are all becoming part of the Internet of Things ecosystem. Retailers in home improvement or consumer electronics sectors not only can drive more sales of these connected devices—Home Depot already stocks more than 600 “smart” products in its stores—they can also tap into the data they provide to extend their touch into customers’ homes.

Some retailers are taking further advantage of the wide array of connected products by becoming an integration “platform.” The concept behind these platforms is to make it easier for customers to make all of their in-home devices talk to one another.

Lowe’s, for example, has launched the Iris platform, a “smart home hub” that can communicate with any device using networking technologies like Wi-Fi, ZigBee, or Z-Wave. The hub was designed with an open interface so that manufacturers could integrate their products with the platform.

Iris puts Lowe’s in direct competition with telecommunications providers such as AT&T and Verizon, while opening up new opportunities for teaming with manufacturers to integrate their products with Iris.

Other platform examples include Home Depot’s Wink and Staples’ Connect. Retailers in other retail sectors, such as grocery, could potentially build or partner with these platforms as well.

Connected platforms would give retailers another direct channel to customers, generating a potential gold mine of customer data—information associated with almost every aspect of the household, from utility usage to consumption trends.

This information could help retailers to drive more targeted offers or, by integrating connected platforms with existing e-commerce channels, offer new services such as automated replacement of products based on the customer’s consumption or by monitoring perishable dates. – TradeArabia News Service