RSR just published their annual benchmark on the Internet of Things (IoT) and a couple of things became clear.
First, far too many retailers large and small don’t really understand exactly what the IoT really is. Secondly, retailers have some very unrealistic expectations of what the IoT can do for them in the short term. In fact, knowledge about the IoT was so lacking, we at RSR chose to write a simple Executive Primer on the topic as a companion piece to the benchmark.
Our goal today is to help the independent retailer determine if the IoT is important to you. First: a plain English definition: The IoT is anything and everything that can be connected to the internet and contains a unique identifier (think: license plate) and can also communicate with anything and everything else that is connected to the internet including people, computers and other smart devices.
Here’s a really simple use case: I have a standby generator that can run my whole house for a long period of time. This is top of mind at the moment, since I live in Miami and it did just that for six days after hurricane Maria passed through. It is possible to monitor that generator via cell phone to make sure everything is functioning properly. That turns out to be very useful to us.
That leads to the first way the IoT could be important to the independent retailer. If you’ve got an HVAC system, any kind of refrigeration unit, or other kinds of equipment that must be maintained in good working order, IoT-enabled assets can save you time and money in preventive and emergency maintenance. No one wants their milk to go bad because a refrigerator stopped working overnight. And no one wants to walk into a store without air conditioning in Miami in July. That’s a day of lost revenue.
The next use case is a little more complicated, and its value to you will depend on two things: the number of stores you have, and the volume of Omnichannel, or cross-channel, shipments you find yourselves making. IoT-tagged merchandise can improve inventory visibility and make the process of finding a particular item much more efficient than a search by hand. The infrastructure requirements are way more expensive than IoT-enabled assets. You need all your merchandise tagged, and you need to buy readers and analytics to help you locate the product. By definition then, you need some way to identify locations around your store. If you’re a single store operator, this isn’t going to be of interest to you at all, but as you grow, it could indeed prove to be worth the time and cost to put this type of system together.
Most other IoT projects are either superfluous to the independent retailer, too intrusive on customer privacy or otherwise still too expensive for even the largest retailers to contemplate. This is going to change in the coming years, as prices come down. We may find the opportunity to create more relevant customer experiences using IoT enabled tools. Having said that, I really believe the strength of the independent retailer lies in your ability to create customer intimacy and tailored assortments to your core customers. I would never give that up in exchange for tracking customers in your stores with beacons, for example.
For now, our best advice is to think about the IoT in the context of operational efficiencies. Small projects can bring big rewards. Over time this may change, but for now, it’s your best bet.
If you’re interested in a really deep dive, you can read the full report here: https://www.rsrresearch.com/research/the-internet-of-things-identifying-real-benefits.