Investment in digital technologies are transforming retail store operations, allowing stores to operate more efficiently and with greater flexibility.
A study by Zebra Technologies recently showed that seven in ten retailers are likely to invest in IoT technologies to revolutionize customer experience.
Retailers are the sect of the industry which deals directly with end-users. As such, store-based retailers are embracing digital technologies to better engage with their customers, improve store operations, and gain a competitive advantage over web-only retailers.
These retailers are shifting their models from “selling” to “serving” their customers in the store and are transforming their retail stores into digital stores.
Today’s customers are armed with information, devices, and a rising willingness to experiment with technologies.
In 2016, market research firm Forrester forecast that 64 percent of US online adults owned a smartphone — up from 60 percent just two years earlier.
For the Asia Pacific region, online retail via mobile is expected to grow at a CAGR of 15.6 percent to reach $1 trillion in 2020 against $539 billion in 2016.
Meanwhile, a recent study in India by digital marketing firm Regalix revealed that more than eight in 10 young adults use their smartphones for shopping.
That means the retail sector opens a sea of opportunities for the tech industry. A well-developed digital store platform holds the promise of higher revenues and happier customers, but it also requires a significant investment to retool store infrastructure and operations.
Retailers have to budget for significant effort to execute a comprehensive transformation, especially since it won’t be done in a single phase.
Based on interviews with omnichannel retailers, Forrester identified the four phases of technology evolution that eBusiness leaders must follow in their innovation journeys.
Phase 1: Build and continually update the technology foundation.
Phase 2: Create operational efficiencies, which will allow retailers to generate measurable return on investment (ROI).
Phase 3: Turn data into insights.
Phase 4: Provide real-time contextual experiences to by using real-time insights from customer relationship management (CRM) and analytics systems.
To remain competitive, eBusiness leaders must take the internal lead to test, pilot, implement, and optimize digital store technologies that improve both the customer experience and store operations.
A Forrester report says that digital disruption will have an impact on every area of your business. CIOs must truly transform their business digitally by establishing a clear digital vision and digital-first culture, create a cross-functional, customer-centric model, and protect their customers’ trust.
According to Juniper Research, global retailers will connect 12.5 billion business assets, such as products, digital signs and Bluetooth beacons, to IoT platforms by 2021. This figure is expected to rise from 2.7 billion in 2016, representing a 350 percent increase.
RFID (radio-frequency identification) will be the key factor in the IoT retail ecosystem. RFID tags, used to identify and locate retail assets in real-time, are available at a low prices for mass deployment and integrate well with new IoT systems and analytics. New services, such as dynamic pricing or enabling promotional offers via in-store digital signs are also poised for growth.
Juniper forecasts that software spend for enterprise resource planning systems to integrate data from connected IoT assets would reach $11.3 billion annually in 2021 from $1.5 billion in 2017.
Retailers’ approach to the IoT should differ depending on their main channel focus. Online retailers’ focus would be on technologies such as machine learning to provide digital assistance, or digital performance management.