BearingPoint as partner of the ESCP "Retailing 4.0" Chair is committed to contributing to building bridges between the academic world and companies. As part of this engagement, the BearingPoint Retail, Luxury and CPG team mentored the writing of a series of articles of ESCP MSc students and shared insights on major retail stakes. Enjoy your reading!
After explaining all the features linked to IoT, it is now important to understand how retailers can apply these technologies to their business in order to generate many benefits like reducing costs, improving overall performance, and enhancing customer experience. Below, are explained 4 main opportunities offered by IoT to the retail industry and how retailers can leverage them to take advantage and create a USP (Unique Selling Position). Indeed, IoT creates many benefits such as traceability in the supply chain using RFID tags and QR codes, asset monitoring, improved customer experience and data collection.
Nowadays, many retailers are using different kinds of IoT technologies in the form of QR code, sensors, RFID etc., not only in the shops, but also for their supply chain. With IoT technologies, companies can collect and use many information to recreate the journey of the product, to maintain its features and to avoid bottlenecks in the stock.
For instance, retailers can put QR codes or RFID tags on the products in order to improve traceability. Scanning this code, retailers can track the products over the entire chain and consumers can consult the journey of the product from ‘farm to fork’. Because of transparency requirements driven by consumers and shareholders, many companies are implementing traceability programs. An example of a company implementing this technology is Dole, where consumers can enter a 5-digit code and can explore the location of origin of the bananas. Lidl Romania is another example of a retailer where consumers can scan a QR code and see a video about the vegetable or fruit farms.
Lastly, IoT is improving efficiency in operations. One of the most common examples is the stock management of retailers. Using the RFID technology, they can have a better outlook on their quantities and replenishment planning. In this way, the company avoids overstock with the associated storage costs or being out of stock. For example, UNDIZ is using RFID to perform fast receiving, inventory and checkout. RFID is helping them to improve stock management as they can know the quantity and the location of items in real time, thus optimizing replenishment and allowing cost savings.
One of the biggest assets of retailers are the shopping carts or baskets. One trolley can cost from $50- $250 and it can happen that these are misplaced by consumers or are stolen. Asset monitoring guarantees a competitive advantage and limits expenses for the retailers by leveraging this technology to track shopping baskets or charts. By taking advantage of IoT technologies, one can guarantee both the location and the presence of enough trolleys for customers.
A perfect example of asset monitoring is Kontakt located in New York: through IoT enabled beacons and Bluetooth products the retailers can track asset movements, monitor environmental factors (temperature, humidity and light) and assess a situation in real time to make appropriate decisions.
Nowadays, many retailers are trying to apply IoT to improve customer experience.
IoT is used in stores in order to ensure customer benefits, such as reducing queuing time at cashiers, and optimize resources via several technologies to automate purchasing detection and process transactions. Amazon Go is a perfect example of automatically billed shops where the consumer is detected as they leave through the gates without having to check-out thanks to cameras and Artificial Intelligence detecting their purchasing in real time and saved credit card in their Amazon account allowing automatic payment.
Retailers can also digitize the price tag so that prices can be adjusted in real-time from the headquarters when fluctuating, without replacing the paper price every time. Leclerc created the first fully equipped hypermarket with readable NFC tags allowing dynamic pricing and allowing customers to scan the products and receive many information about the items such as the origin, ingredients and transformation phase. This integration of IoT technology is well perceived by eco-conscious consumers.
IoT helps companies not only during the shopping experience, but also in the subsequent data collection and measurement phase. Data collection can be used for stock management and store merchandising management but also in order to understand better consumers interactions with products.
Implementing IoT, retailers can monitor how many products are still available in the shops in real-time and when to replenish from the warehouse or to transfer between stores in order to avoid understock and miss sales. They can also know when to replenish a shelf using the stock from the store back-office area in order to avoid Out of Shelf or when to replace a product that has been misplaced or moved to a wrong location.
IoT technologies also facilitate the comprehension of customer interactions with products. Through the data collection, the retailers can understand the products flows inside the store such as the product trials in fitting rooms vs. products eventually bought. These new Key Performance Indicators enable adjusting product assortment, store merchandising and marketing operations.