Interest in the Internet of Things (IoT) is fueled by a very real and pressing problem that retailers have today: they must integrate the store to a 24×7 anytime/anywhere digital selling environment. The question is: how to get the same visibility into the physical selling environment that retailers can have in the digital one, so that one seamless experience can be offered to consumers?

Since 2015, RSR has conducted three benchmark studies on the subject of “IoT in Retail “, and in those studies we’ve observed that retailers are focused on three objectives: inventory visibility and accuracy, interacting with digitally enabled consumers in the physical store, and making the physical store more effective for consumers. Our most recent benchmark report, The Internet Of Things: Identifying REAL Benefits (September 2017), zeroed in on one objective in particular:

“The big and immediate opportunity associated with the IoT is finding and managing inventory in a more efficient way … We may believe a particular SKU is somewhere in the store, but how can we find it? In distribution centers, we have locator systems and bar code to help find products. In stores, one can only hope that the employee in charge of floor recovery put the item in question in the correct location, or that it’s not buried in a back room somewhere. Using IoT technologies can help find these items more quickly and efficiently. “

RSR has been tracking the two-pronged challenge of “Inventory accuracy and enterprise-wide visibility ” since our inception in 2007, and it has been the single most difficult problem that retailers are trying to overcome with technology. In fact there has been slow but steady improvement to the point where in our latest report on supply chain execution, Supply Chain Execution: New Challenges Demand New Solutions (October 2017), we noted that:

“The number of retailers that have achieved ‘a lot of visibility’ has significantly improved even from our 2015 supply chain benchmark… For example, in 2015, 48% of Winners indicated that they had achieved ‘a lot of visibility’ for system-wide inventory; in 2017, 74% of those retailers report success… Bottom line, inventory visibility enables other supply chain improvements, and clearly Winners are using it as a competitive wedge to further separate themselves from average and under-performers. “

The question is, are IoT technologies helping to enable improved inventory visibility and accuracy? Increasingly the answer is “yes “. The 2017 supply chain reports noted that, “Winners are even pushing ahead with front-edge technology solutions to help solve the inventory accuracy problem, such as item-level RFID tags. “

That’s good news, but it leads to the next question: what about the other two objectives, interacting with digitally enabled consumers in the physical store, and making the physical store more effective for consumers?

Real World Progress

I had the opportunity to moderate a Retail CIO advisory council meeting last week, and in the process heard several examples of how retailers are beginning to deploy IoT solutions in the store to improve the shopping experience and gain insights. Their stories had to do with both their desire to connect with consumers digitally while they are shopping the store, and to better understand how the physical space is being utilized.

To address both of those opportunities, the retailers at the meeting explained how they are using certain technologies to it happen. For example, to engage with consumers on the selling floor, the retailers agreed that it’s important to offer free WiFi, but only with the proviso that customers sign on through a location-based mobile portal (such as Cisco’s CMX product) that is capable of delivering personalized content to customer devices and to gather customer insight data.

With such a portal, the customers “opt in ” to a two-way dialogue, giving the retailer permission to engage. In varying degrees, several of the retailers explained how they can then offer more personalized messaging to consumers, in one case using the customer’s geo-location to fine tune the content.

Another retailer, a hardgoods merchant known for its large footprint stores, offers customers the ability to find a product within the store. Based on the customer’s geo-location, the mobile app will provide a map of the store and the best route to the desired product. The retailer also uses the data captured from customers’ mobile devices to perform heat map and dwell time analyses, to optimize the physical layout and merchandise display placements within the store. To perform these analyses, the retailer is using an AI solution to sift through the data and establish pattern profiles of customers’ paths through the stores to various departments.

These are just a few practical examples of how retailers are starting down the path to realizing IoT’s promise.

Read The Report

Internet-of-Things solutions are still emerging, and many retailers still express uncertainty about the technology’s value. Slowly but surely, however, innovative practitioners are finding ways to deliver value both to customers and to the business.

To find out more about the state of IoT in Retail, please download our free benchmark report, The Internet Of Things: Identifying REAL Benefits (September 2017).

If you don’t have time to read the full report, check out the eBook version, The Internet of Things eBook: A Primer For Executives!