The power of big data, analytics and machine learning have created unique opportunities in the e-commerce industry. Thanks to data-driven enhancements to ads, upselling and cross-selling, online shoppers are able to get “what they want, when they want it.”
This transformation has had a direct and positive impact on business efficiency, driving more sales and improving customer satisfaction. But it has also had the adverse effect of widening the gap between online and brick-and- mortar businesses, and has faced the retail industry with higher shopper expectations and unprecedented challenges.
However, the advent and development of the Internet of Things (IoT) and the widespread use of mobile devices and mobile apps can help overcome these challenges. Thanks to microprocessors and ubiquitous internet connectivity, smart devices can be deployed everywhere and on everything, from point of sales systems to dressing rooms.
Thanks to microprocessors and ubiquitous internet connectivity, smart devices can be deployed everywhere and on everything, from point of sales systems to dressing rooms.
This enables retailers to gather and analyze data like never before, and to interact with each shopper in a unique and personalized way. Here’s how every aspect of a retail business can benefit from IoT technology and mobile apps, effectively improving sales, cutting costs and drawing customers back to the store.
Supply chain and inventory management
Inventory management problems account for some of the biggest expenditures and losses in retail stores. According to a report by McKinsey, inventory distortion, including overstock, stockouts, and shrinkage, cost retailers a yearly $1.1 trillion worldwide. In the U.S., shrinkage alone is hitting retailers with $42 billion in losses every year, 1.5 percent of total retail sales.
Thanks to IoT, retailers will be able to not only improve inventory control within the store but also expand it to the supply chain. Tracking of goods no longer starts at the store’s receiving dock – it begins at the point of manufacturing.
Better handling of the supply chain
With RFID tags placed on goods and environmental sensors in transportation vehicles, retailers will be able to trace the goods they purchase and their treatment and conditions throughout the supply chain. Information gathered from devices will be analyzed in the cloud and rule-based notifications and alerts can be sent to desktop and mobile apps in order to inform employees and staff members of events that must be acted upon.
The enhanced control will enable suppliers to reduce product damage throughout the journey to retail outlets. This will prove especially useful for the shipping of perishable and temperature sensitive inventory.
Retailers can also leverage IoT technologies such as RFID to track products through the extended supply chain, i.e. after the product has been sold. Having data and improved visibility will streamline otherwise-difficult tasks such as critical product recalls.
Improving in-store inventory tracking
One of the perennial problems retailers are faced with is the lack of accurate inventory tracking. Store shelves aren’t replenished on time; items are misplaced in shelves; sales associates aren’t able to locate items customers are looking for; order management is abysmal, leading to excessive purchase orders to avoid stock-outs. The results are higher inventory costs, lost worker productivity, mishandled stocking, potentially empty shelves and missed sales opportunities.
IoT technology can tackle these problems by bringing more visibility into the location of inventory items and offering more control. By deploying an inventory management system that is based on RFID chips, sensors and beacons, physical assets can be directly synced with database servers. Additional technologies such as store shelf sensors, digital price tags, smart displays and high-resolution cameras combined with image analysis capabilities can further help enhance the control of retailers on goods located at store shelves and in the back storage.
Subsequently retailers can better ensure inventory is adequately stocked, and when stock levels become low, reorder quantities can be suggested based on analytics made from POS data. According to the McKinsey report, reducing stock-outs and overstocks can help lower inventory costs by as much as 10 percent.
The use of IoT can also reduce missed sales opportunities attributed to poorly stocked shelves. When customers are unable to find what they’re looking for, they’ll take their business elsewhere. This can happen while the desired item is actually available in the backroom or displaced to some other shelf. Sales associates can quickly track items by their RFIDs using their mobile devices and beacons installed across the store. They can also receive timely alerts for misplaced items and emptied shelves in order to minimize customer mishaps. Improved on-shelf availability can improve sales by as much as 11 percent, the McKinsey report states.
Improved on-shelf availability can improve sales by as much as 11 percent
Reducing shrinkage and fraud
Shrinkage and fraud is an ever-present challenge in retail stores, whether from customers or employees. IoT can help curb the theft of items by adding a layer of visibility and traceability to inventory items. RFIDs, smart-shelves and camera feeds combined with sophisticated machine learning technology can paint a clearer picture of what takes place in-store, detect suspicious movement and determine whether items have been obtained through legal means.
Also, knowing that items are being tracked will discourage patrons and employees from resorting to the pilfering of goods. This is a huge improvement from traditional systems which rely on human monitoring, point-of- sale data and receipts to validate the sale of goods.
One of the benefits of online shopping is being able to push products and offers to customers instead of waiting for them to find them on their own. This helps to catch the attention of customers at the right moment and improve sales dramatically.
IoT will help enhance the brick-and- mortar experience to this level by helping gather data, perform analysis and make the best decisions for retail stores.
Optimizing product placement
Trying to figure out how customers navigate store isles is valuable information. Retailers always try to lay out their stores in order to maximize exposure to customers and improve sales. In the pre-IoT days, this has been done through human observation, educated guesses, random experimentation and manual sales correlation.
But now, thanks to data gathered from RFID chips, IoT motion detection sensors, beacons and video analytics, retailers can gather precise data from customer movement patterns and identify premium traffic areas. IoT makes is possible to learn how customers interact with specific items and discover which items are abandoned. Changes to store layouts can be automatically correlated to customer behavior changes and sales figures in order to perform precise A/B testing on tweaks and modifications.
Optimized use of in-store staff
Being able to identify customers that need help, and tending to their needs in time is an important factor in closing sales and improving conversion rates. But in-store staff can only watch so many customers at once, and in many cases the presence of a salesperson can be misinterpreted and considered offensive by customers.
IoT helps deal with this problem without disrupting the customer experience. Motion detection sensors, cameras and facial expression recognition algorithms can help identify customer who have been standing too long in one location and are manifesting confusion and ambivalence. The IoT ecosystem can then notify a nearby sales associate through a mobile or smart watch app. This way, shoppers get a better experience because they aren’t kept waiting, and retailers optimize their in-store staff.
Personalized offers and promotions
Banner ads and product suggestions that are customized based on browsing and purchasing history are one of the features that give online shopping channels the edge over brick-and- mortar retail. Cross-selling and upselling have become an important source of revenue for online sellers.
IoT can help retailers collect data and make offers to customers that will put them on par with their online counterparts. RFID chips, sensors and beacons can gather data about customer interactions with store items. The data can be analyzed by machine learning solutions and used to push extra information, customer reviews, recommendations and special offers on smart displays that are installed in stores.
Mobile apps can help move the experience to the next level. While customers interact with in-store items, the IoT ecosystem can merge the collected insights with their online product browsing history in order to provide useful information, offer loyalty programs and offer smarter suggestions for upsells.
Mobile apps in retail
IoT devices and sensors help collect data and glean insights from virtually every physical object and event that takes place in retail stores. But it is with mobile apps that IoT becomes a hands-on experience, especially in retail where most of the tasks are performed in field rather than behind a desk.
it is with mobile apps that IoT becomes a hands-on experience, especially in retail where most of the tasks are performed in field rather than behind a desk.
With a fully featured mobile app (or a suite of app for mobile devices and wearables) retailers can make sure that everyone within the retail chain has access to the data they need anytime, anywhere, in order to become more efficient at their jobs. This includes salespersons, inventory managers, suppliers and everyone else.
Mobile apps will also improve the customer experience as it will drive loyalty and enable customers to engage in a more personalized experience with retail stores and the smart gadgets that are installed in them.
With actionable insights offered by IoT-powered solutions, retailers will be able to offer customers what they actually want through a digital, connected and personalized experience. The gamut of data-driven and cloud-powered technology that is available for the retail sector to take advantage of can help merge the benefits of online and brick-and- mortar shopping experience. Eventually IoT will become the de facto standard and reinvent retail as we know it today.