IoT – the three big retail challenges

Industry commentators have been predicting for a while now that the IoT has the potential to revolutionise almost every part of our lives, from business to leisure. According to McKinsey, there will be 20 – 30 billion connected devices and a market worth up to $17 trillion by 2020, so there’s little doubt that the IoT is significant, it’s industry-changing and yet it seems that even the most switched-on C-level personnel haven’t really come to terms with it.

There are some clear messages coming through - we’re only at the beginning, data is the most important part to get right (who owns it, who looks after security, who can extract meaning and use it intelligently) and the fact that retailers know they have to do something but don’t know where to start.

Currently, the IoT can’t readily be pinned down to one single technology, activity or even definition. So what are the specific challenges facing retailers?

Challenge 1 - infrastructure

On the face of it, the IoT could improve efficiencies, free up resources and reduce costs. From a purely practical perspective, better asset management through connected buildings, improved safety through automated processes and reduced downtime through the IoT’s 24/7 capabilities can all contribute to a more streamlined business which is cheaper to run, but it leaves out the human element. What’s good for the business might not be good for the customer, and viewing assets as revenue-generating opportunities might be detrimental to the overall customer experience.

On the plus side, increasing revenue through increased efficiencies has the potential to give retailers the opportunity to employ more people in different roles. Automating some run-of-the-mill tasks could free up colleague time for the development of more sales value through creative and innovative customer experiences.

Challenge 2 - data

With the advent of the IoT, having a single customer view is more important than ever – the intelligent use of cross-channel data will allow for predictive analysis for stock/consumption as well as personalisation. Opening up access to data gives retailers all kinds of opportunities – but who is responsible for it, especially when it involves third parties?

Data presents a huge challenge for everyone involved in the IoT – users, developers and businesses. It’s great to have a single customer view, whether they’re in-store, online or elsewhere in the journey to purchase, but working out who’s responsible for their details isn’t that easy, especially when you’re relying on third parties to deliver at least some of the experience. The management, security and ownership of data is possibly the biggest issue for retailers, because it requires a commitment to co-operation across not only the businesses themselves but anyone involved in the purchase journey who touches on customer data – that includes manufacturing, logistics, outdoor advertising, shopping mall management and more. It’s a cross-industry concern, especially with the introduction of the EU General Data Protection Regulation (GDPR) next year, with its sweeping new requirements for the control and management of personal data as well as punishing fines for non-compliance – something which has yet to be tackled in a comprehensive way.

Challenge 3 - the Board and beyond

Being on a retail C-suite in the era of IoT can be a challenge in itself. Board members are listening and reacting to what they hear from the industry, but they are finding it hard to make the right decisions quickly and don’t want to back the wrong horse. What they need is reassurance that while the IoT is about tech, it’s also about value. Enabling the IoT and ‘connecting the dots’ using development platforms is the only way to deliver superior customer experiences and exciting innovations like chatbots and virtual concierges. And, while this will touch every part of the business from logistics to HR and operations, the most important IoT assets are people – customers, sales colleagues, buyers, designers and anyone involved in the retail chain can be empowered by the right kind of technology.

While it’s clear that a widespread inability to precisely define what the IoT is and to quantify its benefits may be holding some retailers back, there’s no denying its magnitude and the scale of its potential, if only retailers can overcome their fear of making the wrong decision. And they need all the help they can get to do that, from hiring the right staff to choosing the right tech to free up their data and make it work properly in a secure, compliant, customer-focused way.