by Philipp Richert
New digital and IoT use cases are becoming more and more important. When it comes to the adoption of these new technologies, there are several different maturity levels, depending on the domain. Within the retail industry, and specifically food retail, we are currently seeing the emergence of a host of IoT use cases.
Two forces are driving this: a technology push, in which suppliers in the retail domain have technologies available to build retail IoT use cases within a connected store; and a market pull by their customers, who are boosting the demand for such use cases.
However, we also need to ask the following questions: What are IoT use cases good for? And what are they aiming at? We currently see three different fields of application:
- Increasing efficiency and optimizing processes
- Increasing customer satisfaction
- Increasing revenues with new business models
No matter what is most important for your organization or whatever your focus, it is crucial to set up a process that provides guidance for identifying the right use cases. In the following section, we share some insights on how retailers can best design this process. We collated these insights together with the team from the Food Tech Campus.
How to identify the right retail IoT use cases
When identifying the right use cases for their stores, retailers should make sure to look into all phases within the entire innovation process: from problem description and idea collation to solution concept and implementation. Within this process, it is also essential to consider the so-called innovator’s trilemma and ensure that use cases are:
- Desirable ones that your customer really needs
- Technically feasible
- Profitable for your sustainable business development
Before we can actually start identifying retail IoT use cases, we need to define search fields so that we can work on one topic with greater dedication and focus. We must then open up the problem space in order to extract the most relevant problems and pain points. Starting with prioritized and selected pain points, we then open up the solution space in order to define several solution concepts. Once these have been validated, the result should be a well-defined problem statement that concisely describes one singular pain point.
In the following, we want to take a deep dive into the different phases of the process while giving concrete examples, tips and our top-rated tools. Enjoy!
Retailers possess expertise and face challenges at various stages along their complex process chains. It helps here to focus on a specific target group in order to avoid distraction. Target groups are typically users or customers in a defined environment. A good example would be to focus your search on processes that happen inside a store location and are relevant to the customer (e.g., the food shopper).
Understand and observe problems
User research, observation and listening are keys to a well-defined problem statement that allows for further ideation. Embedding yourself in various situations and conducting interviews with all the stakeholders visiting or operating a store should be the first steps. Join employees around the store for a day or two and support them during their everyday tasks. Empathize, look for any friction and ask questions. Take your key findings into workshops and spend some time isolating specific causes. Use personas based on your user research and make use of frameworks and canvas templates in order to structure your findings. Use working titles to name the specific problem statements. One example might be: Long queueing as a major nuisance for customers.
Are your findings somehow connected? Single-purpose processes and their owners within a store environment are prone to isolated views. Creating a common problem space increases the chances of adoption of any solution later. So it is worth taking the time to map out all findings and take a look at projects in the past and their outcome. In our example, queueing is linked to staff planning, lack of communication and unpredictable customer behavior.
Prioritize problems and pain points
Ask users or stakeholders to give their view on defined problem statements and let them vote. Challenge their view and make them empathize and broaden their view towards a more holistic benefit. Once the quality of a problem statement has been assessed, evaluate the economic implications. In our example, this could mean that queueing affects most employees in the store, directly or indirectly. This problem might be solved through technology and should be further explored.
The result of a well-structured problem statement list should consist of a few new insights that might result in quick gains; one or two major known pain points, where the solution might be viable and feasible; and a list with additional topics that exist but are not too pressing at the moment.
Define opportunity areas
Map technologies and problems together. Are there any strategic goals that these problem statements might be assigned to? Have things changed in terms of technical feasibility (e.g., has the cost of a technology dropped over the past three years?). Can problems be validated within a larger setup easily or are we talking about singular use cases? All these considerations should lead towards the most attractive problem to solve. Again, in our example, this might be: Queuing is a major problem in most locations, satisfying our customers should be our main goal, existing solutions are too expensive or inflexible.
Ideate and explore use cases
When conducting an ideation session, it is very helpful to bring in trends that are relevant to the defined problem areas so as to help boost creativity. In our example, for instance, this might be technology trends such as frictionless checkout for retail, hybrid checkout concepts, bring your own device (BYOD) and sensor approaches. It is always important to keep the following in mind: What do these trends mean for the customer journey in-store and how can they be integrated in (legacy) environments?
Define solutions concepts
In the process of further defining the solution concepts, it is essential to evaluate the market potential and to consider customer and user feedback. Depending on the solution, it might be necessary to ask the various stakeholders – from store managers to personnel to customers – in order to get a clearer picture. When talking to customers or users, it is also helpful to bring along scribbles, pictures or prototypes in order to increase immersion. The insights gathered in this way help to validate assumptions and to pilot the concept accordingly.
Set metrics and KPIs to prove success
Defining data-based metrics and KPIs is essential for a successful solution. When setting up metrics and KPIs, you need to consider two aspects:
- Use existing data – e.g., checkout frequency – in order to demonstrate the impact of the new solution. This offers a very inexpensive way of validating the business potential of the solution early on.
- Use new data – e.g. measure waiting time – from the solution and evaluate it on a regular basis. This helps to get a better understanding of whether you are collecting the right data and to derive measures that help to improve your solution.
Prototype for quick insights
In terms of technology, practically everything is feasible today. However, the value proposition of a use case (in terms of business and users) can remain unclear and requires testing. Instead of building a technical prototype, it can be helpful to evaluate the value proposition of the solution with humans (empathy prototyping). This could be a person triggering an alarm based on the information at hand instead of an automatic action. Insights and lessons learnt from this phase can be used alongside the technical realization (proof-of-concept) in order to tweak specific features of the solution.
Initiate a PoC for technical feasibility
When it comes to technical feasibility, a clear picture of the objectives and key results (OKRs) for the PoC is essential. This helps to set the boundaries for a lean process with respect to the installation of hardware, an efficient timeline and minimum costs. Furthermore, a well-defined test setup fosters short testing timespans that often yield all needed results.
How IoT platforms can help build retail IoT use cases
The strong trend towards digitization within the retail industry opens up new use cases for the (food) retail industry. In order to make the most of this trend and to build on IoT, it is crucial first of all to determine which use cases to start with. Every retailer has a different focus and needs for their stores.
In the course of our retail projects, we have identified some of the recurring use cases that food retailers are currently implementing. We have also learnt a lot about how they can best leverage IoT in order to build a connected store. We share these insights in our white paper “The connected retail store.”
Originally posted here.