While retailers are using the Internet of Things (IoT) in many different ways, most have one goal in common: to build customer loyalty and engagement. In fact, it’s already evident that both retailers and consumers are beginning to reap the benefits from more intelligent technology. The onslaught of smart sensors and devices, interactive store layouts, shorter wait times with the use of mobile checkout, and intuitive marketing campaigns have all revolutionized the retail experience.
A study from Tata Consultancy Services (TCS) found the average retailer will spend roughly $41.8 million (0.3 percent of average revenue) on IoT this year, with plans to increase that number to $49.1 million over the next three years. So where will they be spending this money, and how will consumers benefit from the investment?
As the amount of resources that retailers invest in IoT grows, there are three key gifts IoT will deliver:
1. Smart sensors will multiply: Retailers will invest in technology that will entirely change how consumers shop. For example, with Amazon.com’s Dash button, consumers are able to monitor household goods and reorder supplies through a Wi-Fi-connected device or mobile app. The products are then delivered just two days later. This program is essentially a prototype for automated refills. Just think, you’ll never run out of toothpaste again!
2. A more predictive and engaging customer journey: With the onslaught of intelligent technology and a more connected shopping experience, retailers will now have access to more accurate and specific consumer data than ever before. This means they'll be able to use IoT to predict what customers might want to buy next. What’s more, the increase in product sensors and so many consumers carrying smart devices will allow retailers to offer coupons or product suggestions to shoppers when they're in stores. Many retailers are already using Bluetooth Low Energy beacons to identify customers’ locations within a store and, rather than send them a barrage of ads, provide highly relevant and timely promotions.
3. More efficient supply chain: Findings suggest the top impact of IoT in retail has been in the realm of the supply chain, where sensors and big data allow companies to keep a close eye on supply and demand. IoT sensors give retailers far better visibility into their inventory and allow them to shift that inventory to meet increased demand in real time. In fact, TCS found that most retailers are putting just over 25 percent of their IoT budgets toward supply chain monitoring. That means they’re able to keep an eye on manufacturing and production, warehouse inventory, and distribution. In the long term, consumers will notice faster responses from retailers when demand rises for particular products. And for retailers, fulfilling these quick supply chain moves will be more efficient.
IoT has already gifted the retail industry in many ways. The way retailers do business and how customers shop have already begun to shift, and that’s only the beginning. In a few years, it’s likely that your size will never again be out of stock at your favorite store. Endless checkout lines will be a thing of the past. It will be the era of instant gratification, where all your shopping needs will be one touch away … or maybe the items you need will magically teleport to your front door before you even realize they’re needed.
Satya Ramaswamy is the global head, digital enterprise for Tata Consultancy Services, an information technology consulting company.
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