IoT heralds a new era for the high street
Carefully implemented Internet of Things (IoT) technology can be crucial to transforming the retail experience and preventing further high-street casualties. As retailers around the world count the cost of digital disruption, the IoT is growing in importance.
In fact, says Matt Sebek, vice president of Digital at WWT, it could transform the sector and save stores up to $1.2 trillion (€1.05 trillion) by 2025. After a catastrophic year that saw over 1,200 stores close in the UK and 3,800 close in the US, it’s vital that retailers adopt a more technology-enabled approach to achieve real business outcomes. IoT technologies are radically altering the way businesses operate, empowering brick-and-mortar stores in tough market conditions to remain competitive against their booming online counterparts.
Rising to the challenge
Customers who have grown used to the ease of e-commerce commonly complain that brick-and-mortar stores are inconvenient to get to, and that there is insufficient staff support or stock information available once they are there. Poor in-store customer service costs companies in the US $1.6 trillion (€1.40 trillion) last year. Businesses delivering a superior customer experience achieve 6% higher revenues on average. So it’s no surprise that customers are lured away by the instant gratification of agile, online-only platforms.
E-commerce growth is accelerating globally, particularly in the West, but also in China, where 16.6% of retail sales are now made online. However, the high street can find a ray of hope in game-changing technology such as IoT, which can combine the best features of online and in-person shopping to radically transform the customer experience.
Taking centre-stage on the shop floor
Retailers have long used IoT technologies to track and replenish stock. But they can now also reap the benefits of an IoT-connected experience on the shop floor. High-street food outlets, for instance, can deploy fridge-monitoring sensors to keep stock fresh, as well as sensors that track customer experiences in restaurants.
Among customers’ common complaints are complicated sales procedures or long checkout times. With IoT, retailers can set up systems that read tags on each item as a customer leaves the store. A checkout system can then tally the total cost of these items and automatically deduct the payment using the customer’s mobile payment app. Such IoT-enabled, automated checkout can improve customer satisfaction and make shoppers more willing to visit a physical store, especially if they want to get in and out fast.
IoT technology can also be used to build customer loyalty. Using sensors set up around the store, retailers can send loyalty discounts via smartphones to target customers standing near certain products, if those customers have signed up for such a program in advance. Additionally, IoT can keep track of items a customer has spent time looking at, and later send that customer a personalised discount for when they’re back in-store.
Retailers can also use ‘smart shelves’ to ensure that items are never out of stock and to check that products aren’t placed on the wrong shelves. This technology – which can be used on both display and stock shelves – uses weight sensors, RFID tags and readers to scan each product. It can then inform store managers when items are running low or in the wrong location. This makes the inventory process more precise and cost-effective. Because each RFID tag is connected to a reader, smart shelves can also detect in-store theft, saving retailers money on security personnel and cameras.
It’s important to remember that IoT projects must be integrated from the ground up: connecting devices onto an already-existing network is often disastrous and can lead to cyber vulnerabilities. It’s also a good idea to segment a network or introduce air-gaps between vital and non-vital devices to help defend against possible cyber-attacks.
Savvy retailers all over the world are fighting to stay competitive, and investment in these connected technologies is on the rise. Competing against the likes of online giants such as Amazon will always be a challenge. However, the fact that Amazon has begun opening its own brick-and-mortar stores – armed, of course, with the latest in IoT tech – demonstrates there will always be demand for the in-store experience.
86% of retailers are expected to increase their IoT spending in 2019 to avoid being left behind or becoming a business casualty. Failure to adopt connected technologies will prove a costly mistake. However, retailers who can provide the same seamless convenience found online are sure to see consumers flock back in-store.
The distinction between online and offline commerce is rapidly disappearing. Retailers who stand the best chances of survival will be those who use both physical and online components that enhance each other to better serve customers and achieve their business goals.
The author of this blog is Matt Sebek, vice president of Digital at WWT