Lately, there have been numerous news reports, webcasts, blogs, tweets touting or doubting the Internet of Things (IoT) and how it can benefit retailers and shoppers alike.
IoT can generally be defined as sensor-equipped devices and everyday items that are digitally connected for the benefit of people and businesses. In retail, these devices can do everything from enabling mobile point-of-sale (mPOS) payments to tracking product inventory and shipping status and much more. Equally as important, these connected devices and items can provide retailers with information on shoppers’ buying habits and preferences.
So is IoT, or better characterized in this context – the Internet of Retail — ballyhoo or the big top that will speed buying transactions, help customers find what they’re looking for more quickly and make shopping a more pleasant experience? Even for people who loathe a once-a-year trip to a department store to buy new shoes? Are retailers – small, medium and large – ready to say goodbye to their cash registers and think outside traditional ways of operating to make what some see as a bold move to IoT?
According to market intelligence firm International Data Corporation (IDC), IoT and the technology ecosystem surrounding it are expected to be an $8.9 trillion market in 2020. IDC’s newly published market analysis ‘Worldwide Internet of Things (IoT) 2013-2020 Forecast: Billions of Things, Trillions of Dollars’ claims the installed IoT base will be approximately 212 billion “things” globally by the end of 2020.
But not everyone shares the same view as IDC. Some doubters argue that the software and hardware needed for mPOS payment, security and operational systems, combined with aisles, warehouses and production lines full of sensor-wearing merchandise, put a heavy burden on existing retail IT infrastructure and staff. And that many legacy retail IT systems simply aren’t ready or robust enough to make a smooth and painless transition.
While those are valid concerns that may slow the adoption of IoT-related technologies and systems in select industries, those touting the Internet of Retail have mounting evidence retailers and their IT infrastructures are more than capable of handling the perceived challenges. One of the keys to success is making sure that hardware and software components are platform agnostic, allowing retailers to seamlessly integrate them into their legacy operations without disturbing existing systems or commercial relationships.
For example, a major department store retailer is currently using radio frequency identification (RFID) sensing and communications technology so it can find shoes by style, size, and color and have them brought to a sales associate in a matter of minutes. This automated solution is reducing walk-aways and speeding purchasing transactions by getting the desired shoes to the customer more rapidly than before. And if a particular pair of shoes is not available in the shopper’s desired style, size and color, this Internet of Retail solution provides the sales associate with accurate information to make quick recommendations on other in-stock choices.
There are myriad other successful Internet of Retail installations that use RFID and other sensing and digital communications technologies, and the movement toward adoption is accelerating at a rapid pace. Meanwhile, Internet of Retail trends are continuing to emerge and evolve. For instance, more and more people are not just browsing and shopping online using their smartphones and tablets, but paying for merchandise with their mobile devices, too.
Additionally, as part of the shift to an omni-channel experience, it is becoming more common for large online retailers to offer what’s called ‘buy online pickup in store’ (BOPS) service. Merchants that have a large number of retail stores and a strong e-commerce brand are now exploring how they can leverage those stores as distribution and fulfillment centers. Similar to BOPS, online purchases can now be shipped from the closest store that has the item in stock to expedite delivery to the buyer’s home, allowing the merchant to more effectively leverage and balance inventory. This minimizes out-of-stock situations and provides better customer service.
Retailers and shoppers alike are benefiting today from existing IoT deployments and will continue to do as trends become more prevalent. Mobile technology, RFID and automatic data identification and capture (AIDC) have played a key role in store systems and operations for many years and will continue to do so. However, with consumers continuing to drive the exponential growth and use of smartphones, tablets and other mobile devices connected to the Internet, retailers that don’t embrace the Retail of Things soon are putting themselves at risk of perishing. The day is fast approaching when mobile technology and connected devices and objects will no longer be part of retail store systems. They will be retail store systems.