More and more retailers are adopting the Internet of Things. Many of them believe IoT will be their most important technological initiative of the decade. Now, new technologies have changed the way shoppers interact with retailers, and the shopping experience can be the retailer’s strategic differentiator.
With the Internet of Things, retailers can leverage intelligence to make strategic, informed business decisions that improve customer loyalty and associate effectiveness while creating exciting experiences for their shoppers.
Outlook Series’ Michael Lippis interviewed me to gain Zebra Technologies‘ perspective on how the Internet of Things is changing retail.
Undoubtedly retailers have collected troves of transaction data on their customers. With advancements in analytics, they are now desperately trying to make sense of it all; over 50% have not been able to leverage their loyalty data in meaningful ways.
I believe that the data (corpus) retailers have on their customers is unfortunately not comprehensive enough, to reliably activate today’s shopper. That is, I do not think that retailers have a wide enough view of today’s shopper, and this leaves them exposed to those who do (e.g. Amazon, Facebook, Google, Apple). I would argue that retailers need to federate their customer data, and create a Real Customer Data Exchange (RCDE). I understand there will be PII [Personally Identifiable Information]concerns to work through, but going it alone doesn’t seem like the right solution for truly understanding today’s shopper. On this vein, I do believe that generally we will see a lot of consolidation in the retail industry in the months and years to come, but will be posting on that later.
I recently read a WSJ article which takes a prescient view of what tech gadgets are staged to prevail in 2016. The article is great, but as usual the gold is in the comment gems. The views on technology across generations is clear, with self-defined “older” generations losing site of the need for it all, and “younger” generations feeling it’s not enough. For my take, I continue to wonder that given the advances and attainable price points of robotics, computer vision, sensor tech, artificial intelligence, and emergent knowledge (Big data), etc… Where are we headed? You always hear that xyz personal technology will make life easier; the more things that we no longer need to know or do, must have a peak in benefits. I don’t want to wake up just to go to “sleep” again.
More and more shoppers are getting comfortable with shopping from mobile: Smartphones accounted for 44 percent of all online traffic last weekend and drove 19 percent of online sales, according to IBM Watson Trend. That is a 65 percent increase over how many sales were driven by smartphones over the same period last year.
In-store shoppers were highly efficient. according to a survey conducted by the International Council of Shopping Centers, Thanksgiving shoppers visited an average of 2.7 stores and made a purchase at average of 2.5 stores. The following day, they visited an average of 3.3 stores and opened their wallet at 2.8 stores. This is likely a reflection of a pattern we’ve seen take hold since the recession: Shoppers are doing their research before they make it to the mall, and so by the time they get there, they know exactly what they want.
For all the time we spend on social media, it’s not doing much to drive sales. According to Custora, whose software is used by many retailers, sites such as Facebook , Pinterest, Twitter and Instagram drove a meager 1.7 percent of total online sales on Black Friday.
Customer Engagement: It Takes A Network – http://www.innovativeretailtechnologies.com/doc/e-commerce-in-executing-on-the-customer-engagement-0001 That customer engagement is cited as the top priority for 2016 comes as no surprise, but securing investment in something so broadly defined presents a challenge. Defining the term in the context of your business and pinpointing customer engagement goals is paramount; simply being seen by customers is far different from being engaged with them, and that’s true in any channel. Building customer engagement requires a concerted effort that aligns merchandising, inventory, assortment, fulfillment, and stores, and it further requires an extension of that coordinated effort to all touch points, including email, mobile CRM, stores, call centers, and social media initiatives.
Building customer engagement is predicated on the effective measurement of tactical initiatives at each touch point, which collectively roll up into an opportunity to continuously improve the overarching engagement strategy. In practice, customer engagement metrics should include customer-level analysis of:
Frequency and duration of site visits
Recency of visits
Depth of visit (percent of site visited)
RSS feed subscriptions
Bookmarks, tags, and ratings
Provision of personal information
Social posts, comments, and trackbacks
Inventory Visibility. Consider that just one year ago, when we asked our survey participants if their companies had inventory visibility across all channels, fewer than 50 percent said yes. When we asked that question this year, the figure leapt to nearly 62 percent. That momentum continues and evolves. Inventory visibility is the precursor to order management, and those are retailers’ top-two supply chain spending initiatives for 2016. More than 34 percent of retailers intend to spend on solutions that improve inventory management through better visibility, and more than a third will invest in order management/fulfillment solutions.
The Cloud. When we asked retailers if they were actively moving apps to the cloud last year, fewer than 37 percent said yes. Today, that figure approaches 52 percent (see figure 2). What’s more, when we asked the open ended question, “What was the best systems or operations decision your company made this year?”, transitioning applications to the cloud led the response count, followed closely by inventory visibility and fulfillment initiatives and mobile device deployment. The aversion to cloud is clearly dissipating, in no small part because cloud application delivery is increasingly being realized as the conduit to realtime enterprisewide data access. That’s a necessity of inventory visibility and an enabler of order management. But there is still some aversion to overcome, and it’s decidedly security-related. Among the nearly 17 percent of respondents who disagreed with the statement, “My company is actively moving applications to the cloud,” nearly 68 percent cited security concerns.
The Store.Merchants are extending digital channels to the store at a feverish pace. Mobile POS hardware is the top storelevel hardware-spending priority for 2016, with 35 percent indicating investments there in 2016. That was the case heading into 2013, 2014, and 2015 as well
Store-level software spending will focus on wireless networking in 2016 as a third of retailers invest in their store networks. The fact that wireless networking and Wi-Fi (more than 31 percent) are the top software priorities for stores heading into the new year is a product of the digital transformation happening
Digital signage slides in at a close second in the most sought-after instore hardware contest, with more than 31 percent of retailers planning to invest there this year.
Marketing and operations teams are pushing the same agenda — in 2016, customer experience management is job No. 1 for them, as more than 43 percent of their ranks will work to ensure the aforementioned plumbing (inventory visibility, order management, wireless) is leaking no data when the omni-channel customer hits the store.
[post getting the assortment right] In 2016, what marketing and operations solutions does your company plan to invest in?
Asked about their marketing and operations spending intentions in 2016, our audience of retail executives indicated that e-commerce-specific initiatives are the clear frontrunners. More than 43 percent cite customer engagement as their top priority, followed by email marketing and social media marketing at 40.65 percent and 38.85 percent, respectively [http://www.innovativeretailtechnologies.com/doc/e-commerce-in-executing-on-the-customer-engagement-0001]
LP/AP Priorities Follow Omni-Channel Initiatives. For the first time in the history of our survey, video surveillance has been dethroned as the top spending priority cited by LP/AP professionals. In fact, payment security charged ahead of video surveillance, with more than 35 percent indicating it’s their top security priority for 2016. Further evidence can be found in the fact that online/card-not-present payment applications rounded out the top three initiatives of LP/AP departments. This big shift in LP/AP priorities is a reflection of the October 2015 EMV liability shift, which fell directly on the heels of our survey period.
Legacy Systems, Excessive Integration Remain The Bad And The Ugly. When we asked retail executives about the worst decisions they’ve seen made this year — by their own company or by another — legacy systems maintenance and either excessive integration or a lack of integration due to systems incompatibility were the prevailing themes. These leading challenges only support the argument for centralized, single-source enterprise data that can be accessed by multiple applications at any location and in any channel. Those merchants investing in omni-channel infrastructures that enable digital transformation at the mobile, application level — beyond the four walls of stores, distribution centers, and call centers — are mitigating customer experience issues and cutting business inefficiencies off at the pass. To consumers, it might not be happening fast enough, but it’s incumbent on retailers to balance consumer urgency with sound, methodical store-level investment.
Who Responded To The Survey? 7-Eleven, Bloomingdale’s, Cavender’s, CVS, Dollar General, Estee Lauder, Hallmark, JCPenney, Kroger, Luxottica, MidwayUSA, Orvis, Panera, Plow & Hearth, Ross Stores, Sports Authority, Sprint, Victoria’s Secret, Wakefern, Walgreen’s, Walmart
By 2016, 75% of born digital retailers don’t even consider omni-channel commerce platforms that aren’t cloud based and fundamentally mobile.
By 2018 recommendation engines and forecasting will converge on personalization and machine learning, creating a foundation for substantive collaboration among merchandizing and digital marketing.
By 2017, 85% of customers expect one click away commerce and fulfillment from all retailers, and those retailers will beat peer revenue growth by 200 basis points.
By 2017, 90% of the top 100 global retailers will have enabled multi-factor payment authentication in store, with NFC, finger prints and contactless payments playing major roles.
By 2017, digitized “brick & mortar” stores will provide retailers with new sources of data to convert 50% of shoppers from casual to loyal purchasers through digital experiences.
By 2018, 40% of the top 100 global retailers will encrypt all customer data in flight and at rest, declaring “Trusted Data Certification”, with a 25% gain in competitive wallet share.
By 2017, fully integrated omni-commerce platforms get selected 2X more than platforms that require “custom” integration between store, online and mobile commerce capabilities.
By 2018, operationalizing omni-channel will require omni-channel commerce, IoT and social convergence, and retail laggards will close 10X more stores than competitors to stay in business.
By 2017, the next wave of omni-channel retailers invest in fulfillment “your” way, driving dozens of tier 1 & 2 retailers to make new supply chain analytics, planning and execution investments.
In 2016 ten large retailers will complement advanced “inside-out” assortment planning with “outside-in” customer and competitor insight to exploit gaps in competitors’ assortments, catch emerging trends, and set higher opening price points.
IDC Drivers for Retail
Accelerating Business Disruption from Digital Transformation
An Interconnected, Informed, Interactive, Intrusive, Intelligent & Cognitive Ecosystem
Cloud Life – The Merging of Real Life with Digital Identity