Disruption, in an amplified form, is in store for retailers in the near future. Autonomous retailing, frictionless shopping, Conversational Commerce, and streaming supply chains will enrich customer experiences in retail. The Internet of Things (IoT) will be the centerpiece of this strategy, enabling companies to offer customized experiences to customers. However, there is a word of caution here, as customer data is sensitive and can be slippery. A recent survey by KPMG shows that 19% consumers would abandon a store after a breach, and 33% would not return for an extended period.
As Capgemini’s Digital Transformation Institute (DTI) “Unlocking the business value of Internet of Things (IoT) in operations” report points out, cybersecurity is one of the biggest concern for companies trying to move their data to IoT platforms. The report points out a few other hurdles in the adoption of IoT by consumer products and retail (CPR) companies. This includes lack of a clear business case, uninterested leadership, and failure to see IoT as a strategic business decision. The report also gives a few recommendations about how CPR companies can employ IoT intelligently to make their operations more digital. Let’s look at a few ways in which companies can align their strategy with IoT.
Treat your customer data with respect
With IoT, companies can now easily gather huge volumes of data. But are they analyzing this data intelligently? Most of them still depend on reactive analytics, which has its limitations. Successful CPR companies have turned their attention to predictive analytics to understand customer behaviour better. With predictive analytics, it is also easier to convince the leadership of the power of IoT. With new models like Software-as-a-Service (SaaS), companies can even use powerful analytical software on demand and look at the data from new angles.
Move from use cases to customer delight
The DTI report shows that many CPR companies are stuck with use cases and are not ready to take the first step. The failure of IoT pilot projects to take off has made companies apprehensive about large-scale investment in IoT. Many leaders believe that the heydays of IoT in retail got over with radio-frequency identification (RFID). But, Amazon Go proves that IoT can be a game changer in retail. It offers the kind of experience every shopper dreams of. Just go into a store, pick up products and leave! There is no checkout. Amazon has intelligently employed IoT and digital technologies to make autonomous retailing possible.
This should encourage CPR companies to invest more in IoT technologies and artificial intelligence (AI). Smart shelves which relay real-time stock updates to warehouse are a great example of IoT at play. Retailers should also invest in AI for the simple reason that machines can now learn better and faster. A few retailers are already using robots are already helping customers to navigate the store and get the relevant product information.
Invest in a demand-driven supply chain
Along with enriching the customer experience, IoT is transforming traditional supply chains to become demand driven. This helps companies to meet sudden demands from customers and even plan delivery schedules for perishable goods. This is especially important for CPR companies as their customers want instant gratification. They will pick up a competitor’s product if the product they are looking for is not on the shelf. With IoT technologies, CPR companies can reduce inventory in the warehouse, optimize transportation and fuel costs, and ensure that goods are replenished timely on shelves.
Find new partners in the value chain
As customer behavior becomes more unpredictable, CPR companies should collaborate with other players in the value chain. For instance, a retail store helped a major CPR company understand that customers considered conditioners as an unnecessary expenditure. The company then placed conditioners alongside shampoo bottles and this boosted sale of conditioners. The point of sale (POS) data is also a valuable source of information for consumer product companies as it helps them to know the exact demand for their products and plan accordingly. Along with collaboration, retailers should also provide platforms for innovation. A few retail companies are already tying-up with start-ups to develop solutions for business problems. An in-depth analysis of IoT applications in business and operation is available in the Capgemini DTI report.
Please click here to download the report.