4 Ways IoT is Changing Retailers’ CX Game
When it comes to digital transformation in retail, omnichannel marketing and the customer-first approach are dictating the trend. Data collection, personalization and general convenience of customer experience (CX) are especially in the spotlight, creating demand for any technology enabling them.
In this environment, Internet of Things (IoT) in retail is still a relative newcomer among the most promising technologies. Combined with other prominent technologies today, IoT is well on its way to earning its status as a fixture of the retail market.
So what does it have to offer?
Beacons: Proximity Marketing, Shopper Mapping, and More
Six years after Apple first unveiled Bluetooth low-energy beacons, they have become a staple in location-based marketing. The proximity technology of choice for 86 percent of companies worldwide, beacons leave Wi-Fi, NFC, GPS and other connectivity services in the dust where popularity is concerned.
The reasons? Beacons are affordable as well as relatively simple to install and maintain. They can be used to retrofit already existing in-store systems or become the foundation for completely new ones. Below are some examples of what beacons have to offer for retailers:
- Proximity marketing for location targeting based on where customers are at the moment.
- In-store notifications for promoting special offers while your customers browse aisles.
- Shopper journey mapping for getting access to customers’ positions and analyzing them by creating “heat maps” of sales and time spent at specific locations, or gauging the effectiveness of special offers and in-store notifications.
- In-store navigation and guidance in large areas like shopping malls, showrooms, street fairs, markets, and so on, virtually showing consumers around.
- Gamification for creating limited hidden offers and treasure hunts, or otherwise "gamifying" in-store journeys.
- Loyalty and retainer programs where frequent customers can get personalized discounts and loyalty rewards. As an option, beacons can send reminders and promotional messages to those who tend to browse a lot without completing purchases.
"Smart shelf" is more of an umbrella term for augmenting technologies. It covers everything from electronic price displays to climate control of temperature-sensitive products to in-store navigation based on pre-made shopping lists.
In this context, IoT sensors and electronic tags (usually RFID or NFC chips) for each in-stock item can be the basis in many possible scenarios, such as:
- Cross-sales: Combined with beacons, smart shelves can help with cross-sales by advertising related products and special offers that go with the items a customer has picked up to buy.
- Personalized recommendations: Based on previous in-store purchases, customers can get special offers and suggestions for similar or complementary products.
- Inventory shrinkage control: With every item individually tagged and monitored, theft prevention along with quality and damage control have become all but automatic. Finding items displaced by shoppers or employees also becomes much easier.
Internet of Payments and Self-Checkout
Leaving the “automation is taking our jobs” sentiment aside, self-checkout is nothing but a logical progression of the brick-and-mortar shopping experience.
Working with the same low-energy technologies and RFID tags, self-checkout stations help minimize queues and, combined with a variety of available payment technologies, make checkout more frictionless.
Internet of Payments (IoP) aids in this too, enabling contactless mobile and wearable payments through NFC (Apple Pay, Android Pay), proprietary technologies mimicking magnetic stripes (Samsung’s MST, LG’s WMC), QR code-based payments, etc. Paying with a tap or a wave of a wearable device or using an in-app loyalty system for checking out adds convenience and the element of gamification, eliminating any hassle of cash management.
While some retail giants put much stock in the ideas of voice pay and checkout-less shopping, these technologies still seem like things of a slightly distant future. They're yet to leave the small-scale experimental territory. At the same time, self-checkout and IoP are widespread and well-established already.
As 2019 is/was supposed to finally become the year of mass rollout of contactless cards in the U.S., it signals the widespread acceptance of contactless payments in the near future, making the stateside growth of IoP only a matter of time.
IoT Data: The Future Gateway to Connected, Personalized CX
Tracking cookies has long ceased to be the pinnacle of digital customer profiling. The biggest draw of IoT for retailers and marketers has always been the promise of detailed, ceaseless big data streams, allowing unprecedented targeting and personalization.
This promise, however, still mostly lies in the realms of the future. While there’s little problem with receiving and collecting IoT data, the more ambitious large-scale projects are often halted at the proof-of-concept stage.
Still, as both the experience and precedence grow, the potential of IoT data for retailers becomes less of an untapped territory. Personalized discounts and loyalty program apps; mobile catalogs doubling as virtual guides; digital customer ID cards; and solutions combining IoT, artificial intelligence and augmented reality become the norm. With the demand as high as there is, the future of IoT data in retail is nothing but bright — with a few possible obstacles, though.
There are a couple of caveats in this rosy picture. First, consumers still need to install (and keep installed) retailers’ apps. These apps need to be developed and well-maintained to make it truly worthwhile for users. This can be achieved, for example, by combining navigational functions with purely marketing ones, along with discount information and a user’s loyalty program ID all in one app.
Second, for effective use of beacons, customers have to keep Bluetooth enabled on their personal devices when in-store. This can be a problem since many opt to keep it off to save battery. This issue seems to get gradually solved though as more and more smartphone manufacturers push for wireless accessories (e.g., the headphone jack is quickly becoming a thing of the past).
Third, the question of standardizing data management and securing its processing, all while keeping it in full compliance with regional and global laws, can get tricky as well.
Still, as long as omnichannel is king and IoT is its prominent asset, all these challenges are solvable. Echoing Forrester’s Brendan Witcher, when transforming stores from places where you can shop to places where you engage, it’s retailers that should adapt and evolve to reap the benefits.
Veronika Vartanova is a mobility researcher at Iflexion, a software development company based in Denver. She writes on the latest trends in mobile app development, AR and VR business integration, and mobile-first digital transformation.
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