Inside the Promise of IoT in Retail

When it comes to brands connecting with consumers, the Internet of Things (IoT) is often referred to as the third great technological transformation of a generation. It follows on the heels of the emergence of websites in the late 1990s and the explosion of social media and mobile devices in the mid-to-late 2000s.

Given all the hype over IoT, many companies — retailers included — are convinced that it will require massive amounts of time and money to get an impactful IoT program in place. Nothing could be further from the truth. Retailers can be harvesting a trove of customer data today from existing infrastructure and, in some cases, an additional modest investment.

IoT simply refers to a network of “smart” physical objects and machines that gather electronic data. This doesn’t necessarily mean complicated and expensive new equipment. The fundamentals for an IoT program — Wi-Fi, beacons, point-of-sale (POS) machines and cameras — are already in widespread use. In fact, by 2035, there will be 1 trillion new connected devices. Many are commonplace today in retail environments, and they have the ability to dramatically increase customer engagement.

Think about today’s connected retail. Digital signage, infrared foot traffic monitors, RFID inventory tracking chips, beacons, interactive kiosks, smartphones and tablets used by store staff and customers — these are all already part of retail’s IoT paradigm shift. By connecting customer data collected from POS transactions, web browsing habits, mobile apps, customer call centers and more, retailers can design a seamless, connected retail shopping experience for customers across every channel.

While the possibilities are practically endless, here are four ways your organization can use IoT customer data to boost results.

Customer Service

IoT customer data and connected retail systems can revolutionize customer service from the very first touchpoint. Currently, consumers use phone, email, chat or social media to reach customer service — a time-consuming process that will be held against the business if the issue isn’t satisfactorily resolved. However, the tremendous expansion of the IoT means that connected retail devices and systems will soon be able to automatically initiate customer service interactions before customers have experienced frustrating service experiences.

In-Store Offers and Discounts

Rather than bombarding customers with an onslaught of poorly timed offers and discounts, retailers can use IoT customer data to tailor unique offers for individual customers. Data such as POS history and website browsing records maximize conversion rates and provide incentives to keep customers coming back.

For example, imagine that one of your customers shopped for smartwatches on your website. When they visit your store, sensors can be set up to send targeted offers and discounts to that customer’s smartphone as soon as he or she enters your store.

Tailored Personal Experiences

As retail stores struggle to maintain or grow foot traffic, they’re focusing on new ways to enhance customers’ in-store experiences. IoT customer data can be used to tailor how staff approach shoppers to offer support and suggest complementary products.

An oft-cited early example is Rebecca Minkoff’s forward-looking approach to data-driven apparel retailing. In 2014, the company rolled out “digitized mirrors” that help shoppers pick out items to try on, request different sizes or styles, and even get styling advice. When these types of experiences are connected with individual customer profiles, the result is a vastly improved understanding of each and every customer that fuels repeat buying and brand loyalty.

Streamline Checkout — Better Yet, Offer No-Wait Times

Long checkout lines can deter shoppers from making purchases and, in some cases, even chase them away from going into retail stores. According to one study, 41 percent of shoppers abandon their carts when waiting in line takes longer than nine minutes, and 86 percent avoid stores when they see that lines are too long. IoT customer data can help to prevent frustration and save time. One simple strategy is using in-store systems to identify long wait times. Customers who have opted in to notifications can receive texts about current wait times and alternate locations where lines are shorter.

Retailers are coming up with creative, disruptive, connected retail strategies. For instance, shoppers arriving at stores could instantly connect their smartphone with a Bluetooth shopping cart. As they shop, the cart would tally items put inside the cart. At the exit, the app would prompt the user to finalize the purchase with a tap. Amazon Go stores have already taken this concept to the next level, eliminating checkout altogether.

While Amazon and Walmart have the resources to run numerous test projects, selecting only the best ones for production, most other retailers must follow a more practical route. And that’s fine. If you focus on what you have in place today, think of creative ways to use those resources and create empowering experiences, you’ll be delighted with the results. And, most importantly, so will your customers.

Erik Archer Smith is the director of ABM at Arm Treasure Data, an enterprise customer data platform.