Winter 2020 - Inside Outdoor Magazine

Inside Outdoor | WINTER 2020 26 Tech Savvy I t seems like just yesterday tech- nology pundits started talking about a not-so-distant future where ordinary objects of all types, from cars to cameras, would become interconnected in a system known as the IoT, or Internet of Things. It took roughly a decade, but the IoT is now evolving into a mainstream business and consumer trend despite ongoing issues surrounding interoper- ability and security. According to McK- insey, the number of businesses using IoT-enabled devices has expanded from 13 percent in 2014 to about 25 percent today. Explosive growth is predicted in the coming years, too, with 43 billion connected global de- vices expected to be in operation by 2023. McKinsey predicts this growth will be driven by advancements in mobile connectivity, computing power and connected sensors. Indeed, the IoT is expanding across all vertical markets, particularly in retail where a growing number of businesses are using connected de- vices to streamline store operations and drive profits. During the early days of the IoT, retailers primarily used connected devices to transition away from traditional spreadsheet- based inventory management sys- tems. The IoT made it possible to automate inventory and asset tracking using radio frequency identification (RFID) tags, which provide real-time stock visibility and ordering alerts. Inventory management remains a top IoT use case today. However, research shows that retailers are in- creasingly shifting their emphasis to the customer experience (CX), with many companies looking to track in-store con- sumer behavior in addition to inventory. For example, Retail System Re- search found that retailers are more interested in using the IoT for insight such as tracking customer flow and monitoring dwell time over improving inventory management – a noticeable change from years past and an indica- tor of where the industry is headed. As store environments become in- creasingly connected and data-driven in the coming years, IT decision mak- ers will face more pressure to keep up with competitors, which will in turn fuel retail IoT growth. Striking a Balance That doesn’t mean that businesses should go overboard with the IoT, though. While there is a strong case to be made for using the IoT to track shopping behavior and improve CX, re- tailers should exercise some restraint when implementing advanced tracking and monitoring systems or they could risk alienating shoppers. According to Oracle, for instance, more than half of consumers are un- comfortable with the way stores use technology to improve personaliza- tion in their shopping experience. Only 5 percent of consumers said that robots and chatbots are technol- ogies they most want to utilize while shopping. Oracle found that consum- ers are more open to self-checkout kiosks, virtual reality try-on systems and mobile payments. “No one wants to talk to a robot to shop,” Oracle explained in its report. “Although 79 percent of retail execu- tives believe chatbots are helpful to customers, 66 percent of custom- Riseof IoT at Retail By Gerald Baldino HowWouldYou Rate the Importance of IoT to Support the Following Capabilities in Retail? (“HighValue”) Source: Retail Systems Research (Percent of respond nts) What percentage of your sourcing volume will come from n arshoring in 2018 and 2025? Source: McKinsey & Co; Sourcing Journal 0-5% 33 3 18 15 15 22 5 18 4 14 3 4 21 24 >5-10% >10-20% >20-30% >30-40% >40-50% >50% 2018 2025 Tracking customer flow nearby the store Improving wait time to service (e.g. at checkout) Monitoring dwell time within the store Tracking customer flow through the physical store Better inventory management across the enterprise Improving in-store customer interaction (marketing, promotions) Enabling whole new ways of interaction with customers o utside the store Systematically optimized operating costs in the supply chain Increasing promotion effectiveness 89% 70% 83% 58% 80% 70% 77% 70% 74% 68% 73% 62% 71% 55% 66% 72% 57% 59% Retail Winners All Others