Within the next four years, the Internet of Things will be worth a whopping USD$19 trillion according to Forbes, with the retail industry among the major drivers of this new connected world.
It’s an industry where 70% of retail decision makers are primed to invest in IoT as they cater to a new era which sees consumers expect more from their retail experience than ever before.
Retail expenditure will encompass near field communication, artificial intelligence, mobile Point of Sale, virtual reality and even delivery drones as stores strive to learn more about shoppers and cater to their every whim.
The Internet of Things Revolution
Behind all this innovation is the connected universe of the Internet of Things. And this is how it’s set to revolutionize retail:
The mobile consumer
Armed with an ever-present mobile phone the mobile consumer has more access to information and shopping opportunity than at any time in history. By the end of this year, Statistics notes 68.4 percent of Americans will own a smartphone, and that market penetration will climb to almost 80% by 2021.
This gives retailers the challenge and opportunity of catering to a consumer who has information at their fingertips anywhere, anytime, and can shop at the push of a simple button. It is a consumer primed with price comparisons, product reviews, social media trends, and often a digital wallet that enables them to buy right here, right now, whether that’s in store or remotely.
In the comprehensive “POS/Consumer Engagement” study Boston Retail Partners explain:
“Stores must now encompass both worlds – the sensory experience available in the physical world, such as touching and feeling merchandise and personally interacting with a knowledgeable associate, married with the unique and personalized shopping experience common to the digital world.”
The Internet of Things is the tool many bricks and mortar stores are banking on to provide that holistic experience. No longer able to rest on their laurels that having a product and service is enough to prompt a sale, they are utilizing the IoT to provide a consumer experience that’s second to none. This is how it’s being done now and how it will improve in the future.
Near field communication
One of the greatest challenges for bricks and mortar stores has been recognizing their consumer. Where the online world provides and utilizes information about abandoned shopping carts, search histories, and trends, the physical store first traditionally encounters their consumer and purchase history at the register.
However, near field communication like beacons and mobile apps are working to remedy this trend. From the moment a consumer walks into a store this IoT-connected technology allows retailers to tap into a mobile phone, see where the consumer goes, note their loyalty credentials and purchase history, and make relevant suggestions.
Coupled further with RFID product tags it will provide consumers with information about the items they pick up and suggested additional purchases while furnishing the retailer with invaluable data about consumer spending habits.
Radio Frequency Identification tags are by no means new technology, but the connectivity allowed by the IoT means these information-packed tags serve a greater purpose than ever before.
Not only do they allow transparency and real-time inventory information, but they can track a product from the point of manufacturing right through to when a purchase is made on the showroom floor. For retailers, this has opened a world of potential.
Store owners can currently ascertain where a product is in the supply chain, know what’s picked up and then put back by a consumer, and then link it with other services like Smart Mirrors and change rooms so the consumer can scan a tag and know what’s available in alternate colors, or different sizes.
It can tap into social trends like reviews of a product or sales volume to show what’s in vogue right here right now or how others have experienced that product.
As retailers have access to greater amounts of information about what consumer seek, they will be able to provide an even better consumer experience courtesy of artificial intelligence (AI) and chatbots.
Essentially computer algorithms, the key to AI is that it learns and grows over time, adjusting its results based on information from the shopper along with endless other sources like the current weather, social media, location, buying trends and general consumer behavior.
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Or as IBM’s Michelle Peluso told Forbes: “It works through a progression of understanding, reasoning, learning, and then adapting insight.”
AI is already being applied with great success by retailers to tailor shopping directly to a consumer’s needs. Their use includes gift and product selection, based on consumer input and qualifying questions, but also extends to external data and trends to offer tailored suggestions to the shopper.
Meanwhile, behind the scenes, AI is offering retailers a more intricate understanding of consumers and predicting future shopper behavior. It can assist with stock management by monitoring the weather, trends and historical behavior to predict what a retailer needs to have on hand and when.
Chatbots take this methodology one step further. They can hold a conversation between the user and consumer and are already available on platforms like Facebook Messenger, WhatsApp, retail websites, and apps.
They offer the benefit of immediate response in real time, and their uses range from handling easy inquiries like “what time does your store open today?” to more specific frontline services such as reviews, advice, or even product delivery timeframes.
Insider trends explain they can be further used to process orders, share the brand or product updates, provide in-store assistance and navigation, offer promotions based on location, and support brand storytelling.
Smart change rooms are just the beginning of new ways the consumer can envisage how products will impact their lives. Increasingly virtual and augmented reality is being used to demonstrate how products and services look and feel for the buyer.
Used in store or online they provide a fully immersive experience where retail can utilize the full potential of its brand with inc.com noting it has “the potential to disrupt the entire retail industry”.
“From the moment you slip on a VR headset you are immersed in the audio, video, and experience of that virtual world. Retailers can share this experience to provide an enjoyable and enticing moment for their customers,” they explain.
In an era where the consumer expects the shopping experience to be seamless, providing easy payment methods will be critical to closing the sale. Already that’s being facilitated via mobile POS that the sales associate can take to the consumer, self-service checkouts and near field communication or contactless payments.
But in the not too distant future, the entire register may be a thing of the past. Late last year Amazon opened an 1800 square foot store where shoppers can simply grab their items and go in Seattle.
Fintech website Fin explains to use it “customers need only open and scan an app on their phones upon entry, pick up the items they want, and walk out. According to Amazon, the technology combines “computer vision, sensor fusion, and deep learning” to detect which items shoppers pick up. When they walk out, their Amazon accounts are charged for the total.”
The Final Word
The Internet of Things is no longer an abstract concept of the future. It’s right here, right now driving a revolution in retail, and its full potential has only just begun to be explored.
Let us know what do you think about using the Internet of Things and how it will and can affect the world using the comment section below. Also, if you have any trouble understanding anything that we have discussed in this article then do let us know.