IoT Can Give Your Retail Business a Competitive Edge. Here's What You Need to Know.
Whether you’re an entrepreneur with a retail startup or the head of a traditional global corporation, you've likely seen first-hand the increased challenges of today’s brick-and-mortar retail environment.
The headlines here keep coming: Gap recently announced it was closing 230 retail stores, right after J.C. Penney, Victoria’s Secret and Payless ShoeSource shut the door on thousands of their own store locations. Clearly, legacy retail players are feeling the pressure.
Yet brick-and-mortar retail isn't dead: It’s just ripe for disruption. Seeing success are retailers like traditional chains Target and Best Buy, as well as newer players like Allbirds. Even digital native retailers like Casper, Glossier and Warby Parker are opening brick-and-mortar store locations, following the “clicks to bricks” trend.
What do these successful businesses have in common? Their leaders have seen the future in terms of customers shopping both online and in-store, which has led them to focus on an omnichannel customer experience. But retailers need a way to seamlessly integrate their in-store experience and digital presence. And that brings us to the internet of things. In fact, IoT is the technology that can bridge that gap.
Why should retail entrepreneurs care about IoT?
The omnichannel shopping experience is crucial to retail success in 2019. Some 73 percent of shoppers in one survey said they use multiple channels, according to a study reported in the Harvard Business Review, and the more channels those shoppers use, the more money they spend.
IoT technology -- which collects data from smart, wifi-connected devices -- is changing the data game for brick-and-mortar stores. IoT can enrich physical retailers with data in the same way that ecommerce retailers have historically had access to data through tracking "cookies" and demographics. This is because IoT paves the way to new types of data from new sources, including in-store traffic counters, kiosks, inventory tags, even customers’ mobile phones.
Below are a few of the important ways retail leaders can achieve their business goals and enhance the customer experience by applying IoT technology.
Give customers real-time product information while they’re in the store
According to Yes Marketing, 57 percent of shoppers polled said they used mobile apps while in stores; and that fact offers retailers the opportunity to use IoT to deliver a seamless in-store and in-app experience. Lowe’s, for example, offers an in-store navigation app that allows shoppers to find products in the store more efficiently, using their mobile phones.
Similarly, Sephora’s mobile app becomes the Store Companion tool when a customer enters the store, providing product recommendations based on that user’s profile and what he or she has previously browsed.
Beyond assisting customers in finding products, IoT can also help customers check whether those products are in stock. Lululemon uses RFID (radio-frequency identification) to do inventory checks across its stores, which means that a customer can check store inventory in real time with 98 percent accuracy. Walmart recently launched its Intelligent Retail Lab concept and plans to roll out real-time inventory trackers to its other store locations to make sure a customer doesn’t leave the store without the product he or she came for.
Optimize the shopping experience.
While a digital retailer can track how a customer clicks around a website to improve the website design, a brick-and-mortar retailer can likewise track in-store behavior to optimize the store layout, such as using footfall analytics to measure how people are using spaces.
IoT can also streamline the checkout process. Some 73 percent of customers surveyed said they found checkout process painful, according to an NCR Corporation study; a savvy retailer can fix that problem by implementing IoT to create a frictionless checkout system. Amazon already has Amazon Go stores, but any retailer can move toward a better checkout process using IoT.
Target customers with personalized promotions and experiences.
At a time when consumers expect personalized shopping experiences, the data collected using IoT can help physical retailers adapt to this personalized expectation. Example? For several years now, retailers have used IoT to send promotional alerts (known as beacons) to customers’ smartphones when they are physically near a store location.
Now, retailers are becoming even more creative with their targets: Walgreens, for instance, recently rolled out its Cooler Screens feature, which will display real-time ads for customers in the beverage aisle.
Retailers can also use IoT to let customers engage with products in personalized ways while still in the store. In one of the earliest cases, the brand Rebecca Minkoff introduced touchable dressing room mirrors, personalizing its dressing room experience in an interactive way: Its "smart mirrors" can change your reflection to instantly show how you would look in different outfits or makeup shades without your actually trying anything on.
What’s next for retail leaders and IoT?
The retail environment seems more and more challenged, given the glut of news coverage, but this supposed death of brick-and-mortar retail has been greatly exaggerated. Today’s retailers have a unique opportunity to become “un-Amazonable” by offering experiences that can’t be bought just online. Online and in-store experiences don’t have to be mutually exclusive. In fact, they need to work together.
The forward-thinking business leader, therefore, must embrace tech or risk being left behind: According to Gartner, retailers are projected to invest $200 billion in new technology as they become more open to using emerging technology to meet customer needs. In this context, IoT is a key technology that retailers can implement.
By continuing to leverage IoT to delight customers both inside and outside the store, retail entrepreneurs can adapt to today’s modern consumer and win the market share their less digitally-savvy counterparts can’t capture.