How IoT is leveling the playing field for high street retailers

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The internet is quickly becoming the destination of choice for shoppers, heaping pressure on traditional bricks-and-mortar retailers who are struggling to keep up with their online-only rivals. In the coming months, the implementation of new technology and innovation in high street shops will be integral to their success in today’s digital economy.    

One technology that is already touted to disrupt retail is the Internet of Things (IoT), which can help build a competitive differentiation. According to research, early adopters of IoT across a number of industries are already reaping benefits that include improved customer experience (81%); better visibility across organisations (78%); and increased profitability (74%). According to Accenture, these are the three areas the IoT revolution will also help retailers to prosper.    

Customers are getting smarter about their shopping choices and their expectations of the retail experience are accelerating quickly. Shoppers expect a seamless and immersive experience tailored to their personal needs – anytime, anywhere – and retailers are having to adopt new digital tools, as well as processes which allow real-time insight and action, to make this happen. 

There’s an app for that

Online retail business is booming which means high streets are taking the hit and need something special to bring shopping back into stores. In fact, most high street retailers suffered the worst sales growth for five years last Christmas – with monthly sales growth in December 2017 slumping to 1.5 per cent and annual growth pulled back to 1.9 per cent – and there is much to do to recuperate those losses. For businesses aiming to digitise their physical stores, IoT will be key. 

Consequently, most of the big retailers have already started to implement IoT strategies in-store and test which retail technologies fair best with their customers. Tesco, for instance, recently began trialling “shop and go” technology that allows customers to scan and pay for their groceries on their smartphone. The grocery chain is using staff at its UK headquarters as guinea pigs for the service, before rolling out the new technology across the whole of the country, in a bid to keep pace with the likes of Amazon. 

The implementation of Tesco’s new IoT technology arrives hot on the heels of Co-op introducing pay-in-the-aisle technology earlier this year, and Sainsbury’s trialling a similar “shop and go” app last year. If executed effectively, in-store-apps could be the answer to the woes of the high street shop: marrying all the time-saving benefits of online shopping together with the much sought after in-store customer service and overall shopping experience.

Changing demands

In addition to streamlining the existing buying process for customers – alleviating the need to queue in-store and reducing the number of busy periods that often discourage customers from visiting – IoT also offers retailers the opportunity to draw in new customers with brand new technology. Clothes retailer Zara, for instance, announced earlier this year that its flagship store in Stratford would feature smart mirrors equipped with radio frequency identification that will suggest other items for customers to buy, based on what customers are trying on. 

An increase in other, similar customer touchpoints – such as in-store tablets and online chatbots – has occurred already, but this will continue to evolve as shops become increasingly connected. IoT sensors are being used to alert customers to items that have come back in stock (connecting back-end inventory to in-store and online), to track patterns to develop better instore layouts and even track customer footpaths to help retailers decide on new, more effective store locations and marketing strategies.  

The next big thing

As in-store equipment becomes increasingly connected, retail technologies will only grow in sophistication and popularity. The next-generation point of sale (POS) retail solutions are already, after all, encouraging retailers to embrace the future now. One IoT technology that cannot be ignored and is poised to become commonplace in stores up and down the country, is inventory management. By deploying RFID tags in stock rooms and providing staff with Android-based handheld computers to scan the tags of products bought, returned, or in use in fitting rooms, information can then be fed back to the inventory management system to automatically log and adjust stock levels in real time. 

This system replaces the need for manual logging and recording of retail inventory which, in turn, reduces storage space due to improved stock visibility and control, as well as reducing the time retail staff spend work on stock ordering and replenishment, all of which leads to overall improvements in customer service and drives consumers into store and to make a purchase. Similarly, those same RFID tags will be increasingly used to alert store staff and security staff to missing items to prevent theft. 

In the future, shoppers can also expect to see shelf-stacking robots fitted with smart cameras to scan aisles as they roam to identify misplaced items, incorrect prices and mislabelling. The robots then pass on the information they gather to human employees, who can then respond by stocking shelves or correcting labels, and this ultimately frees up staff for better customer service. 

According to IT Pro research, consumers now view digital experience as a major factor in deciding when and where to buy. So much so that 67 per cent of shoppers are more likely to shop at a store that integrates technology, while over two-thirds believe retailers that utilise more technology enable a more effective shopping experience. It’s still relatively early days for IoT technology in retail, but 2018 will be the year when supply chains become significantly smarter and more mobile, thereby creating new value for both retailers and their customers. 

For bricks-and-mortar retailers wanting to find a way to level the playing field between themselves and the likes of Amazon, IoT is proving to be the ace up their sleeve.  

Abel Smit, IoT Consulting & Customer Success Director at Tech Data Europe 

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