By Barton Goldenberg
There are various retail Internet of Things (IoT) benefits and risks that retailers will encounter before, during and after implementation. The IoT is not a one-size fits all solution as all retailers need to segment their customer base carefully and be differential whenever a high-touch approach is required and when low-touch approach is sufficient.
Here are the Benefits for a retailer with using IoT Technologies:
- More targeted and personalized shopping experience is available resulting from advancements in machine learning, deep analytics and AI. Consumers now have longer digital footprints, including shopping histories, social media profiles and interests.
- Enhanced customer experience (e.g., speed and convenience resulting from smart fitting rooms, self-checkout in the fitting room, etc.).
- Builds customer loyalty (e.g., special incentives, personalized offers, special loyalty program offers, etc.). With IoT offers, the customer can be in control of their shopping experience in which that he/she can reserve a product online and pick up the product at a reserved time.
- Better data: Lots of customer data to better serve customers and enhance store layouts.
- Cost savings: Automate and control purchases on the consumer’s own terms, while avoiding human intervention. The automation brought by IoT will lead to reduced costs for the retailer.
- Revenue growth: IoT will provide the retailer with the opportunity to offer the consumer the right product at the right time, leading to increased revenue. The retailer can additionally up-sell their products to the consumer in the dressing room.
- Inventory efficiencies: IoT can provide the retailer with more inventory accuracy. Products in the warehouse and the store are easier to track and it is more convenient to order the replenishment of certain products.
Here are the Risks a retailer will encounter with the implementation and use of IoT Technologies:
- With the increased use of IoT, consumers will lose the interaction and engagement aspect of shopping. The interaction and engagement piece of shopping is an essential component of providing a personalized shopping experience, especially for luxury shopping.
- While the IoT advances may be good for fast-fashion retailers who cater to time-starved shoppers in high traffic locations, for the luxury/premium stores, there will be a significant issue concerning the value of convenience provided by automation and the desire by each customer for personalized service and interaction with the retail sales staff.
- Privacy and security: Certain customers may view the IoT technology as creepy since they are being monitored in-store.
- Possible high-cost for IoT technology implementation.
- Store changes: There will be a certain cost to revamp the store layouts to implement the IoT technologies.
- Organizational adaption changes and employee buy-in of the technology: Each retailer will need to train the sales staff to use the IoT technologies. Retail management will have to determine the role of each sales staff, while determining each person’s compensation.
- “Non-use” consumer segment for IoT technologies: Not all consumers will want to opt-in for the use of the retailer’s use of IoT technologies. This consumer segment will be slow to adopt to the changing retail environment brought about by IoT technologies.
In my next blog post, I will discuss the IoT options available in the current market for retailers.
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Barton Goldenberg, is the founder and president of ISM Inc., customer-centric strategists/implementers serving best-in-class organizations globally. As a CRM leader for 30 years, he was among the first three inductees in the CRM Hall of Fame. Recognized as a leading “customer-focused” author, his latest book, The Definitive Guide to Social CRM, is hailed as the roadmap for Social CRM success. Barton is a popular speaker on “maximizing customer relationships to gain market insights, customers and profits”. He is a long-term columnist for CRM Magazine and speaker for CRMevolution and frequently quoted in the media.