Stores Magazine featured an article in their May/June 2017 issue about the adoption of Internet of Things(IoT) sub-titled: "The reality of IoT in retail may look more familiar than you think." Steve Rowen, a managing partner at RSR, the firm who did the research below, says "IoT is being enthusiastically received in retail, but until now, there has a been a question of how it translates into real-world use."
Do merchandising displays qualify as a strong opportunity as an Internet of Things application? What conditions make an IoT application ripe for adoption? From BCG's article titled Winning in IoT: It's all about the Business Processes:
- "First, the business process is not optimized, but is proven to be important..BCG."
One of our Board members, George Garrick, with experience at IRI and Nielsen, says:
"The CPG brands and retailers have known for a long time the best way to drive incremental sales is with displays. There's been plenty of data on that for 10 or 20 years now. The problem is all that data has been on a fairly aggregate basis. It hasn't been store by store. It certainly hasn't been display by display. A major CPG is going to have dozens or more brands. The question is which brands do you promote? Some brands respond to promotion, some don't. The best approach is to develop a plan optimized for the brands that respond best. In some cases, the programs can be improved while they are live, and in other cases, it will be better the next time than it was the last time you ran it." Another issue is that displays only make it to the selling floor 40-50% of the time.
- "Second, the real value is in the top 2 layers of the technology stack; that is services and IoT analytics and applications...BCG
Shelfbucks can measure sales lift by program and the on-floor rate. Now, CPGs and retailers can know which programs worked and which didn't. Shelfbucks can allow you to view the display as it moves thru the supply chain, and notify store managers if they have display inventory in the back room that should be moved to the selling floor.
- "Third, the use case is in the sweet spot for IoT; for example, you need "much greater insight into the status of inventory and where it is in the supply chain...BCG"
It's well known that merchandise displays are valuable in generating revenue, but it's also well known that they only arrive on the selling floor about 40% of the time.
An article from SHOP! in July 2016 titled "A Display is a Terrible Thing to Waste"...had this to say,
"Having the greatest offer, eye-catching graphics and ground-breaking shopper insights doesn’t count for much, however, if the P.O.P. display fails to reach the sales floor. It’s like leaving money on the table—quite literally. And the sad reality is that even the most creative programs often fall short of expectations due to the challenge of in-store compliance execution."
A report by HPE published in March of 2017 claims that:
"Eight in ten retail organizations (81 percent) said IoT has improved the overall customer experience, and for 88 percent it has boosted business efficiency."
Where are you on the road to adopting IoT in retail?