Everything suggests that the IoT has the potential to revolutionise the way we work, rest and play. McKinsey predicts there will be 20 – 30 billion connected devices and a market worth up to $17 trillion by 2020, so there’s little doubt that, far from being the latest in a long line of retail tech trends, the IoT is significant, it’s industry-changing and yet it’s poorly understood by even the most switched-on C-level personnel.
There are some clear messages coming through from across the industry, from managing board expectations to the nuts and bolts of operations infrastructure:
- We’re only at the beginning
- Data is the most important part to get right - who owns it, who looks after security, and who can extract meaning and use it intelligently
- Retailers know they have to do something but they don’t know where to start
These points undoubtedly raise some big questions for retailers, with no obvious answers – so far, the IoT can’t readily be pinned down to one single technology, activity or even definition.
So what are the challenges retailers are facing today so that they’re ready for the IoT tomorrow?
- IoT is set to be the ‘fourth industrial revolution’ with effects so far-reaching we can’t quantify them yet
- It’s predicted that growth in and adoption of the IoT could result in the loss of a third of all retail jobs by 2025 – something which needs to be planned for at the highest levels of industry and employment policy
On the face of it, the IoT could improve efficiencies, free up resources and reduce costs. From a purely practical perspective, better asset management through connected buildings, improved safety through automated processes and reduced downtime through the IoT’s 24/7 capabilities can all contribute to a more streamlined business which is cheaper to run, but it leaves out the human element. What’s good for the business might not be good for the customer, and viewing assets as revenue-generating opportunities might be detrimental to the overall customer experience.
The inevitable loss of jobs to automated processes is very much a cause for consideration. Mitigating potential job losses should certainly be part of a retailer’s five to ten year plan, but it remains to be seen if it’s practical to include such an indefinable proposition in employment policy.
On the plus side, increasing revenue through increased efficiencies has the potential to give retailers the opportunity to employ more people in different roles. Automating some run-of-the-mill tasks could free up colleague time for the development of more sales value through creative and innovative customer experiences (link to Clients page).
Who takes care of the data?
Single customer view is more important than ever – the intelligent use of cross-channel data will allow for predictive analysis for stock/consumption as well as personalisation.
Opening up access to data gives retailers all kinds of opportunities – but who is responsible for it, especially when it involves third parties?
Data presents a huge challenge for everyone involved in the IoT – users, developers and businesses. It’s great to have a single customer view (link to Research page), whether they’re in-store, online or elsewhere in the journey to purchase, but working out who’s responsible for their details isn’t that easy, especially when you’re relying on third parties to deliver at least some of the experience. The management, security and ownership of data is possibly the biggest issue for retailers, because it requires a commitment to co-operation across not only the businesses themselves but anyone involved in the purchase journey who touches on customer data – that includes manufacturing, logistics, outdoor advertising, shopping mall management and more. It’s a cross-industry concern – one which has yet to be tackled in a comprehensive way.
The view from the Board
- The IoT digitises events in the physical world – digital instructions control physical events. But there’s such a lot of data and complexity that it’s hard to identify its value – retail boards are generally concerned that they have already wasted money
- Retailers have so many big problems to consider, not least their survival over the next 10 years, that they can sometimes find it hard to make quality decisions
- The business case for IoT should be about efficiency coupled with growth – both vital to maintaining profit
It can be daunting to be on a retail C-suite in the era of IoT. Board members are listening and reacting to what they hear from the industry, but they are finding it hard to make the right decisions quickly and don’t want to back the wrong horse. What they need is reassurance that while the IoT is about tech, it’s also about value. Enabling the IoT and ‘connecting the dots’ using development platforms is the only way to deliver superior customer experiences and exciting innovations like chatbots and virtual concierges. And, while this will touch every part of the business from logistics to HR and operations, the most important IoT assets are people – customers, sales colleagues, buyers, designers and anyone involved in the retail chain can be empowered by the right kind of technology.
While it’s clear that a widespread inability to precisely define what the IoT is and to quantify its benefits may be holding some retailers back, there’s no denying its magnitude and the scale of its potential, if only retailers can overcome their fear of making the wrong decision. And they need all the help they can get to do that, from hiring the right staff to choosing the right connected retail platform to free up their data and make it work properly in a secure, customer-focused way.