IoT Helps Retailers Win Customers and Drive Sales
When it comes to embracing the Internet of Things (IoT), the retail sector takes the top spot in PwC’s 2019 IoT survey. This trailblazing industry has the highest percentage of companies with active IoT projects: 58 percent, compared with only 48 percent for the total number of survey respondents. Furthermore, another 30 percent of the retail respondents have IoT projects in research or development phases. These projects run the gamut from customer service to cybersecurity to manufacturing to supply chain management.
It’s easy to understand why retailers value IoT, as the benefits range from customer interactions to store designs to warehouses and supply chains. These technologies make it easier for retailers to track products in real time throughout a supply chain — from a factory or fulfillment center to a retail store or customer destination — and to get alerts if any problems or delays arise while a product is en route. Almost half (49 percent) of retailers are already benefiting from using IoT solutions to improve their supply chain, and 38 percent expect to see value within two years.
When IoT tech is integrated with advanced analytics, retailers get even more value by gaining insights into both store and online traffic volumes, customer demographics, dwell times, and data reporting. They can discover customers’ desires and responses, learn what’s trending on social media, get upselling/cross-selling recommendations, detect fraud, and optimize their supply chain. These insights can help them improve decision making, which 42 percent of retailers in the survey have already done, and half expect to do within two years.
Searching for Efficiencies
Why are so many retailers IoT trailblazers? The main reason for implementing the technology is to operate more efficiently and reduce costs (37 percent), as well as to add capabilities that will modernize their brand (33 percent). Retailers are far less concerned with breaking into new markets (15 percent) and changing their business model/redefining their company (14 percent). In fact, making operations more efficient is the top pursuit achieved by 62 percent of the retailers surveyed, and 18 percent plan to pursue this objective over the next two years.
In efforts to make their business operations more efficient, many retailers are either using — or planning to use — IoT solutions that can help them deal with everyday challenges. These areas include logistics (the top area mentioned in the survey), employee and customer operations, facility and energy management, predictive maintenance, asset management, employee productivity, supply chain management, and employee and customer security. IoT can also save retailers money by making retail and warehousing facilities more energy-efficient, lowering the cost of lighting, heating and air conditioning.
Enhancing the Customer Experience
It’s not surprising that a top priority for retailers using IoT is to enhance customer service. Almost half (48 percent) of the retailers surveyed have already improved the customer experience by implementing IoT solutions, and 43 percent plan to do so within two years. Another priority is to gain customer insights, which 38 percent have already achieved, and 48 percent expect to attain during the next two years.
The focus on customers is apparent in IoT-based use cases. For example, retailers can use facial recognition to gather demographic data on customers who enter their store and then deliver targeted sales promotions to them on their smartphones. Other applications let merchants know when a prohibited individual walks into their store, so security can be notified. Retailers can even develop IoT-based payment systems, such as handheld devices that enable store employees to ring up sales on the spot. This eliminates the need for point-of-sale terminals, freeing up valuable space at the front of stores.
Most retailers are proponents of IoT, yet they're also concerned about trust issues such as security and privacy. However, 94 percent believe IoT’s benefits outweigh its risks, so they're not letting trust concerns stop them from deploying IoT solutions.
Instead, 57 percent are taking steps to deal with consumer and employee privacy concerns. A majority (55 percent) have designed security at the start of an IoT initiative, half have trained their employees on IoT security, and 46 percent have implemented security policies that are specific to the IoT.
It’s clear that IoT technologies have a lot to offer retailers: improved customer experience, increased revenue and profits, better customer insights, enhanced security, and reduced costs, to name a few. Therefore, it makes sense that retailers are big IoT advocates, especially when 44 percent reported that the IoT is keeping them somewhat ahead of their competitors, and 23 percent said it’s keeping them significantly ahead.
For retailers that want to compete successfully, IoT offers a deal that’s too valuable to ignore.
Rob Mesirow, leader of the PwC Connected Solutions/IoT practice, is a partner in the Technology, Media, and Telecom (TMT) Risk and Regulatory practice.
Rob Mesirow, leader of the PwC Connected Solutions/IoT practice, is a partner in the Technology, Media, and Telecom (TMT) Risk and Regulatory practice. Based in Washington, D.C., he helps clients plan and execute their mobile and business strategies and advises them about regulatory and market complexity and operational and financial risks.