Retailers are increasingly aware of the impact of IoT on customer engagement and competitive advantage yet, they are hesitant to invest in cutting edge technologies due to operational challenges and a lack of supporting infrastructure.
That’s a key finding from a recent benchmark report from Retail Systems Research (RSR), underwritten by Software AG.
According to Oliver Guy, Global Industry Director of Retail for Software AG, “2017 is a critical year for IoT in retail. Early adopters are seeing good ROI from pilot programs around connected inventory due to the needs of inventory understanding to support omnichannel commerce. Many brands, however, are falling behind by not making the leap to deployment and customers won’t wait much longer. They are starving for fresh offerings that enhance their shopping experience. For retailers, the biggest ROI comes when these technologies are connected together.”
Broken up into four categories, business challenges, opportunities, organisational inhibitors and technology enablers, the benchmark report highlights several key findings which underscore an increasingly tumultuous relationship between retailers and IoT deployments.
The authors reveal that 70 per cent of retailers acknowledge that IoT will drastically change the way they do business in the next three years. However that stands in sharp contrast the the reality of their behaviour. Only 74 per cent who have deployed one or less sensor-based projects in the past 12 months.
For some, IoT is viewed as a “Swiss Army Knife” technology — a tool that can be applied and benefit many parts of the business. IoT has the potential to automate and optimise a vast number of retail processes, most importantly, productivity. Respondents stated that there is much to gain from deploying IoT. Almost 70 per cent say they see the potential impact on inventory management and store operations, and 68 per cent believe IoT will boost profits by deepening customer engagement through monetising data.
Data is one of the major benefits of IoT and there will be masses of data about consumer habits to be collected and analysed. Amazon has been doing this for years, making recommendations based on previous behaviour.
Guy said, “The IoT has the potential to create business value that goes far beyond operational cost savings, indeed it can become the foundation for crafting new ‘smart’ services that can significantly enhance a customer’s journey. However, the IoT ecosystem comprises many hundreds of new players offering one or two parts of the IoT puzzle, which can muddy the waters for retailers. What is apparent is that no single vendor in the IoT ecosystem can do it all.”
Advanced technologies from machine learning, augmented reality, drones, 3D printing, blockchain and much more will play into this evolving IoT ecosystem in creative and exciting ways. The combination of these and other technologies will enable rapid innovation and value creation for those retailers who can imagine the possibilities.
“It’s clear brands grasp the need for and potential application of innovative technologies like IoT, but there is a growing disconnect between this understanding and the call to action. The findings of the RSR Research not only provide some context for this challenge – with 51% stating that their infrastructure cannot support the Internet of Things and 47% saying business leaders don’t understand the benefits of IoT – but also provide a roadmap for IT to overcome these obstacles so they don’t miss out on a huge opportunity,” he said.