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How IoT Could Pave the Road to Recovery for the Retail Industry

It has been a tough time for traditional bricks-and-mortar retailers. Despite being economy-essential employers and occupying the heart of our community spaces, bricks-and-mortar retailers have been steadily losing ground to e-commerce, and then the pandemic accelerated that significantly.

Last year Australia Post reported that online shopping had grown 72.9 per cent year-on-year. Furthermore this change in shopping habit seems to be long-term, with research suggesting that over half of consumers plan on continuing to shop online. The change in shopping habits, though initially a necessity for consumers, has been going on for long enough to be habit-forming now. Retailers need to “win” the customers back.

Many of the most innovative retailers are turning to IoT to provide experiences that out-do the e-commerce experience.

IoT in retail

Just how does IoT technology assist retailers? In combination with 5G technology, it will allow retailers an unprecedented feed of data, which can be used for everything from determining the placement of key items within the store to live promotion, and instant check-outs, delivering a superior experience that will draw shoppers back into stores. Because if there’s one statistic that should warm the hearts of retailer owners, it’s that 85 per cent of consumers would still rather shop at physical stores. They will do so again, as long as the experience is there.

IoT will address supply chain issues

One of the most profound impacts that IoT will have is that all those sensors and chips will make the supply chain hyper-efficient. Currently, $1.1 trillion in revenue is lost every year to overselling or out-of-stock issues. At the same time, retailers can’t risk carrying excess inventory by over-stocking. IoT allows for real-time analysis and supply, helping the retailer to both save significantly in supply chain management and ensure that no customer misses out on their intended purchases.

IoT can track every movement in-store

Retailers can use IoT-powered beacon networks to understand how a customer moves around their store. This can deliver two benefits: firstly, it becomes possible to send promotional material in real time. Say the customer has a loyalty card stored on their phone. Knowing the purchase history, the store’s marketing engine could send the customer a highly targeted promotional offer just as they come to an area in the store where they make frequent purchases.

Additionally, the retailers can use this information collected to create comprehensive heat maps of hour customers move through the store. This information can be used to optimise the placement of items to improve the visibility of the biggest ticket items.

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IoT can make checkout instant and touch-less

Self-service is the priority of many retailers, but it still relies on the customer manually scanning objects – the actual time savings are not that great, and with the increased awareness and concern for social distancing, the physical interactions can cause customers anxiety. RFID chips and IoT devices allow a seamless, touch-free and near-instant checkout experience, preventing lines and enhancing the checkout experience – it’s often quicker than making an online purchase!

Staff can have a higher-value role

Staff manning checkouts or working within inefficient supply chains could be working more productively. With IoT, checkout staff will need less time to process payments and can instead be retrained to become sales orientated. Supply-side staff can have their roles broadened to produce greater value. The fear with technology and automation is that it will make roles “redundant,” but really it’s an opportunity to refocus staff on tasks that the IoT-driven systems can’t manage.

For example in Japan, staffing shortages for low-value jobs in convenience stores are affecting the ability for those businesses to operate. By turning to robots to handle the shelf re-stacking, the retailers can still meet service standard expectations while operating with a lower headcount.

IoT offers new experiences

IoT AR and VR technology can deliver new experiences to shoppers that aren’t possible on e-commerce. For example, customers could take a piece of clothing to a special mirror to have the mirror “fit” it on them, with no need to physically change.

Meanwhile holograms and robots can give AI-driven assistance and guidance without needing to find a human staff member to provide support. Back in Japan (which really is years ahead in terms of using advanced technology in retail) one of the most popular sushi restaurant chains has replaced the greeter (the person that meets you and directs you to a seat) with a robot at 500 of its outlets.

Retailers should embrace IoT across the gamut to draw customers back into their stores. IoT can assist with the management of the store itself (particularly at the supply chain level), but there’s more to it than that. Retailers should embrace the novelty of IoT to deliver exciting, innovative new experiences to customers, that both entertain and delight. But making e-commerce seem like the boring alternative to visiting a bricks-and-mortar store is the best step forward for retailers that want to get a post-pandemic boom in foot traffic.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2021 jacquicoombe

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