The Internet of Things (IoT): Finally Finding a Home in Retail?
For retailers, Internet of Things (IoT) is a technology that has taken some time to figure out exactly how it can be used properly, but it seems that it is indeed starting to find some semblance of a home within the industry, according to our new research. In our fifth annual study on IoT, we set out to benchmark retailers’ attitudes about the business value of this seemingly “futuristic” technology. The true promise of IoT technologies has always been about generating better information. In this year’s report, retailers tell us they see IoT providing opportunities for everything from improving customer service all the way through to maintenance and repair procedures. Those who are investing in IoT technologies expect to be rewarded in a big way.
This year, retailers revealed that despite recognizing the positive business impact that these tools would have on the retail industry, one out of two retailers said they didn’t know how IoT would impact their own operations over the next three years. We believe this is a sign of honesty. After all, it's healthy to admit that you don’t know what you don’t know!
The study also found a significant shift in retailers’ perception about IoT’s biggest value. When rating the importance of IoT to support various capabilities in the store, retailers are now prioritizing customer experience-focused features such as tracking shoppers in-store and improving wait times rather than inventory management-focused capabilities, as we found in reports from previous years.
Additional takeaways from the report include the following:
- Retailers aren't taking advantage of low-hanging fruit. This year’s study reveals that retailers are missing many easy opportunities when it comes to IoT, and the data shows that many are ignoring low-hanging fruit in search of a magic bullet. The money that can be saved from preventive maintenance, smart HVAC and lighting systems, and general machine status can be used to fund more exotic projects that will drive top-line sales.
- There are massive breaks in communication between line of business executives and IT professionals. The study shows 50 percent of IT professionals say they have multiple, mature sensor-related projects and use them to drive capabilities that differentiate them from their peers, compared to 29 percent of line of business executives. This is an indication of a big disconnect in IoT’s strategic vision in retail organizations.
- Retail winners focus IoT efforts on operational efforts first. Although a surprising majority of retailers reveal that they don’t know how IoT will impact their operations, retail winners are quick to recognize that the technology can help with operational excellence. The study found that 40 percent of retail winners said the need for speed and agility in their operations is a top three business challenge driving interest in IoT.
In conclusion, we feel like IoT has real benefit opportunities for the retail industry. It's our assessment that it’s long past time for the benefits of IoT to be quantified, taking us from the simplest to the most complex use cases. Now is the time for us to start having more realistic conversations about this technology and how retailers can most benefit from its use.
To learn more, download the full 2019 IoT report.
Steve Rowen is a managing partner at Retail Systems Research, the only research company run by retailers for the retail industry.
Related story: 2019 Retail Technology Report
Steve Rowen is a managing partner at Retail Systems Research, the only research company run by retailers for the retail industry. RSR provides insight into business and technology challenges facing the extended retail industry, and thought leadership and advice on navigating these challenges for specific companies and the industry at large.