The Future of the Internet of Things in Retail
The Internet of Things in retail has been radically changing the industry for a number of years.
IoT technology is being more frequently implemented for a wide range of uses, including insights on customer behavior and product performance, as well as applications pertaining to onsite efficiencies for staff and consumers.
The uptake in IoT tech within business has driven investment substantially—the global market for the IoT in retail was estimated $22.36 billion in 2018 and is expected to reach $69.25 billion in 2024.
So, how exactly is IoT being applied in retail businesses? What is driving this growth, is it benefiting retailers, and what will the landscape look like in the future?
Let’s take a look at the current Internet of Things environment in retail and where it’s going.
Why Are Retailers Investing So Much in the Internet of Things?
There are several technology factors that are driving more use by retailers of IoT tech.
While it’s easy to get caught up in the eye-catching innovations of cashless bookstores or walking, talking robots that help customers in-store, the uses of IoT tech in retail are generally far more practical in nature to everyday business processes.
Let’s take a look at some examples of how the Internet of Things is being used in stores:
Predictive maintenance is something some may be familiar with as a product of the manufacturing industry, buts its uses are as much a boon to retail as anyone else.
It uses raw data provided by equipment sensors, automatically translating it into actionable data, and if necessary alerting users to any issues or problems that are arising.
This is particularly useful to businesses that operate in the food and beverage sectors, where organizations not only have to ensure the correct standards for storage, but want to avoid costly repairs down the line—which is where predictive maintenance comes in.
Inventory management is not easy, and marking down prices because a product has been overstocked or isn’t in demand is of course something to be avoided.
Thankfully, because of big data, it’s a lot easier now than it’s ever been. Businesses sit on mountains of data, and many of them don’t use it to full effect.
Since 2017, at least 53% of companies have leveraged big data to make informed decisions—and that number is growing.
By implementing an ERP, a retailer can automatically utilize analytics to predict how much stock they will need to order. The system will assess historical and recent data to determine trends and then relay actionable data directly to the stakeholder on whatever device they’re using.
A study done by IHL Group revealed that Inventory Distortion costs retailers collectively nearly $800 billion globally.
This helps retailers cut down on waste by removing guesswork and instead using data that is already available to keep overstocking or understocking down to a minimum.
Customers are more reliant on their phones than they’ve ever been for shopping, and so in tandem retailers have had to adapt by offering them better engagement through their devices.
According to a Marketingland report, nearly 55% of all web traffic that streams into the top sites comes from smartphone handsets.
Have you ever had alert for when an item is ready to pick up? Or a personalized email recommending a product that you’re interested in that is currently on sale?
These are both examples of how IoT tech can help provide a better and more convenient experience for the customer, and moreover, it’s what they expect.
This may not be an issue for a small brick-and-mortar retailer, but for many—particularly those who have an e-commerce presence—taking advantage of the technology at your disposal to give customers a more positive experience will be crucial going forward.
The idea of a “smart” store is quickly becoming an appealing idea not least because tech can be leveraged to determine the best physical layout of a store (and several other things), but let’s take a look one application.
We all know that grocery stores place fruit and veg at the entrance of the store because it put customers in a good mood—they are drawn in by fresh produce.
Now suppose you could use technology to determine an improved layout and location for every section and product of the entire store.
In the same way that door sensors have been used for years to track the number of people visiting a store, sensors can also be used on individual aisles.
From those sensors, data can be analyzed to determine how many people visited a certain section and for how long they remained stationary browsing at particular products.
This information can then be used by store owners to better plan the layout of the store according to the tastes of customers.
Is Retail IoT Just a Fad?
The examples we’ve just looked at are just a few of the applications of Internet of Things technology that retailers are using in their stores today.
As with many new technologies, there will of course be a certain amount of healthy skepticism as to whether things like smart stores truly will be around in the future.
This is only natural, and while the more ambitious applications of IoT tech may be a little out-there for many SMBs, the uses for the IoT for shop-floor practicalities mean that not only is it useful, but it is a necessary way for improving efficiency and productivity.
This is particularly the case when it comes to big data and analytics, which can significantly help reduce waste in your operations by streamlining your stock and getting a better idea of which products resonate best with your customer base.
What Do Retailers Say About IoT in Retail?
Shifts towards IoT implementation in retail are indicating that its use is more of an inevitability than anything else.
In addition to the growth of investment from retailers in technology, surveys appear to suggest that it has a positive impact.
Here’s are some stats from retail professionals about the impact of the Internet of Things in the industry:
- 66% of surveyed retail executives state that IoT has already positively impacted their customer experience processes.
- 88% of the study’s respondents state that using IoT in retail will provide better customer insight than any other data gathering method.
- 94% of retailers believe IoT’s benefits outweigh its risks and are evaluating how to incorporate it into their business
- Almost half (49%) of retailers are already benefiting from using IoT solutions to improve their supply chain, and 38% expect to see value within two years.
- Of the retailers surveyed, 44% have enhanced security with IoT, and 40% expect to see benefits within two years.
- 86% of CX leaders agree that five years from now, their company will leverage AI and machine learning to customize every product, service, or offer.
- 88% of companies agree that in five years, their company will learn more about customer habits from connected devices than from other forms of first-party data.
- 87% of firms using voice assistant and chatbot technology will realize significant business value within one year of deployment
- The applications of IoT in retail are numerous and varied, whether it’s analytics for a supply chain or a more personalized shopping experience for customers.
- The customer-centric approach that can be better achieved with the help of IoT is making it an inevitability for many retailers to adopt—with customers valuing personalized experiences more than ever.
- The investment in and growth of the IoT market in retail is showing no signs of slowing, suggesting that it’s here to stay.
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