IoT in Retail: Reaching Your Connected Customer via Proximity Technologies & Smart Automation

The Internet of Things (IoT) provides many exciting ways for retailers to make their brick and mortar stores into technologically advanced, convenient customer-centric spaces. A network of various unobtrusive devices positioned strategically around the store can enable a retailer to understand customers’ emotions, needs and preferences.

Streams of data transmitted from beacons, cameras, pressure mats in the floors, augmented reality mirrors and the like can be interpreted immediately and used to enrich customer experience and, as a result, increase sales. Discounts, displays of the complete color range for an article or suggested accessories can be sent to the customer's smartphone in real time, using data both from the current situation and accumulated historical data.

It can start before they even set foot in the building. For example, with geofences for customer engagement campaigns around the store to recognize customers in the vicinity and invite them in for a special offer. Another example of IoT in retail is in-store beacons suggesting to sample a new food product as customers are nearing the shelf, with an emphasis on a personalized discount.

This is known as proximity marketing, and it creates an engaging experience for the customer who is "connected" to the store via a smartphone, a mobile app, or any IP-enabled device. An item is out of stock? The customer can be directed to the store’s website to purchase it. Better still, a brand mobile application can be used instead; a retail app combining any number of features like an online storefront, customer tag and profile id, notification delivery system, chat options, discounts and special offers informing, home delivery status tracking, and other added-value services. This requires enterprise mobile application development and continuous support, but the benefits are immense. If done right, it’s better customer tracking and complete digital CX control tied to user-centric UI and loyalty program identifiers (if included), all wrapped in a single package. In short, something customers will use often and won’t delete any time soon.

Widespread adoption of IoT in retail is largely still a dream; however, more and more retailers are pursuing it and realizing increased sales and better customer engagement. Although there are many other industries that are exploring the possibilities, vendors, brand chains and shopping malls are still top of the list when it comes to technology implementation. Unacast's Proxbook 2018 focuses on retail and shows which industries are contracting service providers to implement a proximity solution.

There is only one problem with this ideal future; most retailers are not geared up for building a sustainable and enjoyable customer experience. This is not merely a matter of investing in some hardware and software. It requires deep introspection on how close the company is to understanding their customer's needs.

It is also non-negotiable that a retailer who wants their stores to still be in place on the local high street or in a nearby mall will have to become digitally literate. It is not enough to have a great website, the stores must be just as inviting.

Brick and mortar stores are very far from being dead; Amazon would not be moving into physical stores if this were the case. However, to stand out your venue should provide a personalized, smartly advertised, hyper-local, convenient experience for your customers. Offer unobtrusive service tailored to your visitors—from friendly humans, IoT devices, and smart tech alike.

All companies claim to be customer-centric; in reality, few of them are even close to understanding their customers. Where initiatives have started to map customer journeys and build personas, these are often done as marketing exercises and do not touch the core of the business.

To truly understand your customer, you need to design your business model and your processes around customer experience. This is not new thinking: it was developed and used in the 1980s at Scandinavian Airways (SAS). Consultant Richard Normann was the brains behind the concept; Jan Carlzon, CEO of the airline, wrote the book, "Moments of Truth".

A "moment of truth" (or MOT) is an interaction between a customer and the company ("customer touchpoints" is a synonym, but does not have the same emotive power of MOT). This can be person to person (P2P), machine to person (M2P) or machine to machine (M2M). Every MOT can enhance or damage customer experience. While the idea of a MOT is not new, the significance of M2M has a new importance with the emergence of the Internet of Things (IoT). Practices such as customer journey mapping are based on finding the MOTs in the customer journey. The "Outside-In" business model is an expansion of the original idea, where the customer really is at the heart of the business.

Normann and Carlzon were way ahead of their time. In an interview in 2006 with Customerthink, Carlzon said:

What is so remarkable about what Carlzon accomplished in the 1980s is that so many companies today are still struggling to implement similar solutions in their own businesses. If a company wants to become digitally literate, they need to understand that each time their device connects with the customer's device of choice, that is a M2M MOT, and that the experience should be positive.

The conversations between machines (in the internet of things) will explode in volume in the next five years. Businesses want to engage customers in meaningful conversations, not distract and annoy them with incessant chatter. From this angle, connected omnichannel architecture, predictive analytics, and smart automation are crucial.

Still, according to Adobe, most retailers consider personalization (along with targeting) their priority number one, on average compared to other sectors:

The power of IoT in retail is that it generates huge volumes of unstructured data about each customer. This means that big data databases are required, not to mention the analytics that support them. Again, most companies are struggling to get to grips with both the analytics and the velocity of such data, as well as combining it with their traditional data stores. Most companies are implementing hybrid solutions, using a mix of on-site servers and cloud storage, but this might not be enough.

It does not help that your customer is in-store and you are receiving data about them, which you are filing away to use at a later date. You need to get and analyze that data while they are in-store and use it before they leave. If you are using the cloud for your big data store, issues like bandwidth can compromise your ability to analyze that data in time, and should be considered as fog.

The IoT market will provide huge volumes of data from all sorts of devices and sensors, streaming to all categories of industries in all regions.

These connected devices will bring us zettabytes of data. Cisco estimates that by 2022 global annual traffic will reach 4.8 zettabytes. The graph below shows a considerable portion of traffic will be generated by IoT devices.