IoT Benchmark Sneak Peek: Trying To Get In Front Of The Opportunity
In our 2016 study on the state of IoT (Internet of Things) technologies in Retail (The Internet Of Things In Retail: Getting Beyond The Hype, October 2016), we surmised that “interest in IoT is fueled by a very real and pressing problem that retailers have today: they have struggled to integrate the store to an otherwise 24x7 anytime/anywhere selling environment.” Like businesses throughout the entire consumer products ecosystem, retailers have been looking for ways to respond more quickly to events in the physical environment, and because of that show interest in how connecting things to the network can help them to achieve that. To that end, in retailers prioritized three general use cases in the 2016 study, “inventory visibility and accuracy, interacting with digitally enabled consumers in the physical store, and making the physical store more effective for consumers”.
Netting out the 2016 study, retailers’ interest in IoT was really all about getting the physical selling environment closer in sync with the digital environment. Given that the whole subject of IoT is relatively new to retailers (RSR’s 2016 study was only our 2nd in the series), it’s probably no surprise that we broadly characterized the interest level as “high” but the understanding level as “low”. In other words, retailers’ interest in the new technologies was in the early stages of a typical “hype curve”.
But what was also revealed in the 2016 study, compared to our inaugural study on IoT in 2015 (The Internet Of Things In Retail: Great Expectations, August 2015), was an interest in two “new” IoT technologies that refer to consumer enablement: “in-home ordering devices” and “consumer owned smart mobile devices”. This interest was clearly a reaction to the surging popularity of Amazon Echo and Dash buttons with consumers. It was apparent to us that consumers were driving the IoT adoption curve, and retailers were already struggling to catch up.
The fact that technology-driven giants like Amazon were helping to accelerate consumer adoption only made the sense of need more pressing, to the point where by 2016 some retailers were thinking of IoT as an external business challenge as much as an opportunity to create new value. In other words, retailers were being “forced” to innovate –never a good position to be in!
Trying To Get In Front Of The Opportunity
My RSR partner Paula Rosenblum and I are currently sifting through the survey results for our 2017 IoT benchmark report, and once again, the responses suggest that retailers are still calibrating their responses to both the challenges that IoT adoption by other players create, and the opportunities that IoT opens up for the business. One thing is clear however, and that is that the focus is clearly on the consumer –in the context of the store.
In fact, while “inventory management across the enterprise” (which retailers see as critical for the success of their Omnichannel fulfillment capabilities) is still the top-rated capability for IoT adoption, “understanding customer flow through the stores”, improving “wait time to service” in the stores, and “instore customer interaction” are almost as important. In fact, looking beyond the pressing need to both expose inventory across the entire selling environment and ensure its accuracy, when it comes to IOT retailers are almost entirely focused on “the customer”, as the results below show:
|Please rank the opportunity for impact from deploying Internet of Things solutions to the following processes ('A Lot Of Value')|
|Inventory management (visibility, accuracy)||74%|
|Customer service and support||66%|
|Customer engagement outside of the store||59%|
|Customer engagement in stores||58%|
RSR, August 2017 (preliminary)
So it isn’t a surprise that the top-rated “in-scope” technology for IoT after “barcode scanners” is “consumer-owned smart mobile devices”.
Not So Fast!
With the majority of retailers seeing the IoT-enabled processes listed above as having “a lot of value”, it would be easy to jump to the conclusion that they are moving full-speed-ahead. But… not so fast! The forthcoming 2017 study reveals that only about ¼ of responding retailers claim to have “multiple, mature sensor-related projects and use them to drive capabilities that differentiate us from our peers”, and less that 15% more “have a comprehensive strategy … and are beginning to implement that strategy”. And even more troubling is the fact that most retailers (in fact, 68% of all our survey respondents) indicate that “the internal IT group” is promoting an IoT agenda within the company.
It’s imperative that the business use cases that would drive IoT adoption in the company be developed by the business leaders who have the most to gain: merchants, retail operations, and marketing. So whether it’s the internal IT group, the WAN provider, or the software solutions provider that is most enthusiastically promoting IoT, the time is “now” to develop the business rationale for using the technologies to interact with consumers more.
Consumers already expect it.
Editor Note: Look for our upcoming benchmark study on IoT in Retail to be published this September!