IoT: Are Retailers Missing The Forest For The Trees?
RSR is getting close to publishing our annual study into the uses of the Internet of Things in Retail. While we’re seeing retailers finally recognizing that they don’t know what they don’t know (the percentage indicating they have no idea how the IoT will transform their businesses) there does seem to be some consensus around the opportunities: getting closer to the customer.
Of course, there is an obvious counterpoint: the equipment and technologies associated with IoT cost real money - especially when deployed into retailers’ brick and mortar stores. And so it begs the question: how will retailers invest without breaking the bank? How can they find projects that pay for themselves quickly, and can demonstrate obvious to and quick benefits to already dubious senior management?
And that’s where things start to get a little… confused. Consider this, among all the operational challenges retailers expect IoT to help them address, “equipment outages and repair” is the least frequently cited as really important, with only 17% calling it a top-three operational challenge. Seeing this, I thought, “Certainly FMCG retailers, those with a huge investment in refrigeration units, will rate this opportunity more highly.” Wrong. Only 14% of retailers selling fast moving consumer goods rate this as a top-three opportunity.
This tells us that on some level, retailers are still looking for magic bullets to help them connect with customers. And the data that came in on pilots and indications of where implementation activity is occurring is even more confusing, especially when one looks at other studies on the topic.
Consider this. I’m not going to name names here (it’s not fair, really), but a rather large consulting firm just published a study on RFID, the kingpin of IoT, and quoted implementation and pilot numbers that are frankly simply not believable. The challenges were the same – satisfying consumers and managing inventory. But that’s where similarities end.
Here’s a little secret about how we write our benchmark reports, and what we do with the data we receive. It’s got to pass a sniff test. If it doesn’t, we’ll either call it out as such, or simply not put it in the report. To us, that’s the most appropriate thing to do with questionable data. That’s why actually understanding the industry you’re benchmarking is so important. You have to be able to do the “sniffing.” Steve and I sniffed the implementation data and said “nope.” We’re not publishing this. It has been so with IoT, every single year.
So, when the complete obvious is being missed, what’s the obligation of the research analyst? TO TELL YOU SO. We are saying this now. IoT can save you time and money if you look for low-hanging fruit. With the time and money you save, you can fund projects that get you closer to the customer.
Even more basic, when a freezer has either had its door open, or otherwise had problems with temperature control, and the customer goes to buy some ice cream from that freezer, a very specific experience happens. The consumer sees ice cream containers covered with ice. That’s a sure sign that somewhere along the way, that freezer got warm. The shopper walks away (at least if it’s me) and doesn’t buy the product. So, not only have we missed low hanging fruit, we’ve actually gone counter to our strategy. No magic bullet is required, just the basics of good looking, attractive to buy food.
We talked with one vendor client last week about using IoT data gathered from in-store equipment to help set prices. I mean, shouldn’t those ice-encrusted ice cream containers have been marked down immediately? Seems like. But it wasn’t.
This is the interesting stuff, the variations on the theme that start to drive retail value.
Our upcoming benchmark has lots of details about the challenges retailers face and the hopes they see for IoT to help them solve them. All this is true. But what must be said, and what we have said for the six years we have conducted the survey remains the same: identify some quick wins, and use the money saved from those quick wins for experimentation and more advanced usage. That’s the obligation of an analyst firm. Not to hype every technology use case that seems to come along, or pass along dubious data. We know you are using real money to drive these decisions. We believe our advice should be real as well.
You’re going to like this benchmark. We’re not making promises your IT group can’t keep, or recommending projects that will cost years and millions of dollars based on theories. These are practical matters, and this benchmark will show signature practical solutions. That’s just the right thing to do: Help you see the forest. It’s our continued promise to you. To help see the forest.