Using the Internet of Things to improve the physical shopping experience
New research released by Cisco Consulting Services indicates that retailers who offer Internet of Things (IoT) and hyper-relevant experiences can boost profits by over 15 percent. Cisco surveyed over 1,200 consumers in the U.S. and U.K. as part of a global study that will survey 6,000 consumers in 10 countries.
In an interview with RetailWire, Lisa Fretwell, the managing director for Cisco’s Internet of Things division, said the study (the fifth annual) indicates that digital now pervades everyday life, with change being both constant and increasingly swift. She said that retailers are now able to understand consumer behavior better through improved analytics and match relevant offers more easily.
Ms. Fretwell also noted that consumers are slightly more open to providing at least some personal information in return for improved relevance, and cited U.K. retailers River Island, Waitrose, and John Lewis, along with U.S. retailer Macy’s as among those doing a good job of integrating online and brick and mortar inventory and shopping experiences.
Cisco tested 19 IoT-enabled shopping concepts with consumers and found receptivity for most, in several areas:
Product Delivery
Fifty-seven percent of consumers surveyed were willing to use a drive-thru lane when ordering products online and picking up at the store; 53 percent would use same-day home delivery of orders placed online if there were a $5 fee; and 40 percent would pick up online shopping orders from a conveniently located secure locker.
Augmented Reality
Seventy-three percent were willing to use a smartphone to scan products for offers and promotions in-store; 63 percent would use augmented reality apps to locate shopping list items in-store; 57 percent would use augmented reality apps to get information about products, such as reviews or ingredients.
Mobility Enhanced Shopping
According to Cisco, 47 percent of U.S. consumers and 42 percent of U.K. consumers are already using smartphones to enhance their in-store experience, while one-third of U.S. shoppers and one-quarter of U.K. shoppers use independent shopping apps on their smartphones or tablets at least once a week. Sixty-percent of surveyed consumers are willing to scan barcodes on items while shopping in order to pay at a self-checkout; 50 percent would use a smart shopping cart; and 49 percent would store payment cards on their smartphones and smartwatches in order to pay with a swipe at checkout.
Interactive Digital Signage
Seventy-seven percent would like digital signs at checkout to provide estimated wait times; 67 percent would like to view offers tailored to their interests and preferences; and 67 percent would use in-store maps for product location.
The key, according to Cisco, is that the rise of mobile and e-commerce has changed the shopping behaviors of digitally-enabled shoppers. So, retailers need to forget traditional customer segmentation and pay more attention to the digital demands of consumers, which transcend traditional demographics. Through real-time analytics, retailers can offer not just a personalized, but a hyper-relevant experience.
- Cisco Research Reveals Hyper-relevance as Key to Winning the Digital Consumer – Cisco
- Winning the New Digital Consumer with Hyper Relevance – Cisco
- Cisco Research: Hyper-Relevance is Key to Winning Digital Shoppers – Retail Touchpoints
- Mobile’s influence on physical is growing – RetailWire
- NRF: Tech that capitalizes on physical retail’s strength – RetailWire
Discussion Questions
How can brick and mortar retailers best use the Internet of Things to improve the physical shopping experience?
Even 10 years ago, retailers were still talking about keeping the customer in the store as long as possible. Now they’re focused on making the shopping experience more efficient and less frustrating. Connecting online commerce with store fulfillment will prove to be a huge advantage, and visionary retailers like Macy’s that made the investment in RFID will come out way ahead.
This is an old discussion gussied up with fancy new words, “The Internet of Things.” It all comes back to basics: Making the shopping experience easier.
Consumers have shown that they will use an omni-channel shopping experience. Buy online pickup in-store is a reality. Consumers regularly use mobile devices to gather information and compare prices. E-commerce is at an all-time high.
Retailers need to master providing an excellent customer experience, some facets of which are digital.
Two observations from a Boomer whose wife now has him wearing a MotoActiv.
First, Cisco and Ms. Fretwell have astutely organized their findings around the utility IoT can provide to shoppers—not the capabilities of the technology. I don’t really care whether the device on my wrist can talk to iBeacons in the supermarket. But I darn well care whether that thing can tell me how to find those fancy olives she likes.
Second, as with all consumer opinion research, the percentages of people who will adapt IoT capabilities are probably overstated by a factor of between five and 10. Not an indictment of the work, just the way these studies work. But IoT will be an integral part of the shopping experience much sooner than we imagine. We just won’t know that’s what to call it. (And we won’t care.)
How can you make your retail store more like a drive-thru McDonald’s is more like it. Drive up lanes to serve Millennial tech-enabled shoppers? One-third of them don’t even have driver’s licenses. It all sounds great but someone is paying for these services.
The complicated part is not getting customers to say they want such services, it’s getting the service and the product to the customers in a profitable way. I don’t think more discount scanable apps are anything new or are going to build average ticket—in fact just the opposite.
Over the past three years, the Internet of Things has become one of the hottest topics in the consumer goods manufacturing industry, especially around wearable devices (smart watches, fitness bands, medical accessories) and intelligent vending systems, but not as much in the clothing and product packaging domains.
This may be in part a function of the inherent cost-per-unit to enable device intelligence and part availability of flexible technologies, the ability to create “smart” clothing and packaging has lagged behind. Several recent fabrication innovations, such as affordable flexible circuits and bio-sensors from companies such as Samsung and NeuroSky, now enable fashion designers to include intelligence in the clothing as part of the designed use of the product.
Early examples of products entering the mass market include performance-monitoring footwear and performance monitoring underclothes, all geared towards providing the athlete bio-senor collected data that can be tied to athletic performance through analytics.
All this said, brick-and-mortar retailers can partner with consumer goods companies to develop joint promotions in-store to highlight the capabilities of these products. There are a couple good examples of this happening, however the most prevalent examples are those retailing locations of the manufacturers themselves. These collaborative efforts will help define a compelling shopping experience.
It’s not rocket science, but rather using the latest technology to improve the shopping experience for the customer. That can manifest itself in a number of ways: Providing a great shopping experience (e.g., convenient and efficient), providing relevant information during the purchase decision, providing a drive-to-action event (e.g., offers).
If the retailers think about and deliver what the consumers wants they will get improved sales and loyal customers.
Twelve years ago I made a visit to Metro’s Future Store in Rheinberg, Germany which featured many of the concepts we have come to call IoT today. The pilot store used RFID technology to deliver personalized shopping suggestions and to keep real-time track of shelf inventory and drive store replenishment.
Today, IoT takes the experience and potential from inside the four walls of a store and extends it to everything we do anywhere and anytime. IoT breaks down the boundaries between physical and digital, work and play, personal and professional. The potential for the store and the customer experience is grounded in connecting and integrating the store with everything the customer wishes to do.
Combined with the Generation Flux, IoT will transform not only the way we shop but how we define private and public and the relationships we have with one another. A dozen years from now we’ll look back and giggle at the arcane way we shopped in 2015.
What is it that consumers want to know when shopping in a store—Where is something located? Are other colors available? Is the size they want available? More product information? Where is the restroom? Where is customer service? Where can I find a chair? Where can I find something to drink? IoT can be useful. What about those people who are waiting in line, waiting for someone to make a selection, or waiting while someone else tries on clothes? Could a device provide entertainment?
Ask not what retailers can do for IoT, ask what IoT can do for retailers.
IoT is an infrastructure investment and retailers make those investments like their lives depended on it. If Cisco believes this is a category worth developing, then give “Lisa Fretwell, the managing director for Cisco’s Internet of Things division,” more money so she can invest less in ambiguous surveys and more in robust pilots, involving all the stakeholders, in various sub-segments to produce and publish better data that can help us answer this very fine question.
As I recall in the last big infrastructure project involving the supply chain, there was a level of involvement on the vendor side that was enlightened and cooperative. On the retail side old hatreds were set aside and charged-up people wearing khaki pants met in lousy hotels to re-imagine the boxes and arrows that made up the supply chain cloud. I recall the energetic shepherding by various industry associations and consulting organizations who helped retailers develop ROI justifications, and in the process created a full employment act for consultants and specialists (those were the days!)
But that was the back office and front office innovations mean we have to understand real people and design according to their needs, behaviors and motivations. But how do you design systems when people themselves haven’t figured it out? This sounds like the chicken and egg story. Also, how would an industry-wide reset be accomplished if it involves a retailer’s secret sauce—namely how they design their business models to serve the customer?
Anyway—A future IoT-enabled industry will change how and why we (customers) buy, what we buy, where we buy, when we buy and who we buy from. All of that represents a problem/opportunity and I guess it starts with surveys. So my answer: I like the idea of drive-thru, but I ride a bike to work. Insert smiley face here.
I don’t care so much if we use the IoT or whatever. The objective is to understand the customer’s various paths to purchase and meet them there. This starts not with segmentation but with journey mapping. The technology used along the way will need to meet customer expectation at each identified touchpoint of the journey.
And that’s my 2 cents.
The key to this—and related—questions is to understand the power of technological integration as a single entity, not as a series of connected processes. In other words, the answer here is to change mindsets about technology, not add or subtract technologies.
The first step is to measure these parameters against the companies’ needs and market proven priorities. Cost effectiveness is demonstrated by weighing the investment against the burden placed on price points in both product categories and items. This should not eliminate the need to provide shipping costs for the consumer. In fact, shipping costs should be made available for both items and order. Many retailers are doing these things with many more seemingly not interested.
Cisco’s investment in time and resources open to the public is at best only thought provoking, simply because of the surveys have very shallow investigation levels. Large retailers and marketing companies have reason to study these findings not on face value, but because the need to find answers for e-consumer wants and market trends is moving faster than ever. Those in search of increased market share will find the best opportunities by placing themselves in pole positions for this race.
Buy Online Pickup In Store, BOPIS, was a #1 in our studies as well. Home delivery, not so much. In any case, it is interesting to see how differently tech people think about improving store experience vs designers or creatives. So much talk about gadgetry can come down to simply providing a cool place to hang out with Wi-Fi, IMO. All in all though, I’m glad the topic is hot; needs to be in order for physical stores to survive and stay relevant.
The data on consumer propensity to use the different services is interesting and encouraging. However, I hope that retailers take the profit increase claim with a grain of salt and don’t fall into the trap of assuming IoT will be a quick fix for what’s ailing their omnichannel efforts.
In our experience, too many retailers drop new technologies into their retail environments without first thinking through the service design around the technology. When this happens store staff avoids using the tech, consumers are confused and the devices end up broken or forgotten. To do this right you have to design the experience you want to enable and then figure out which technology will support that experience rather than picking the technology first and letting it dictate the experience.