SAG_Twitter_MEME_Retailers_Get_Dec17.jpgThere is still a lot of confusion out there about the Internet of Things, according to RSR’s September 2017 benchmark study on the state of IoT technologies in retail.


The study, The Internet of Things: Identifying REAL Benefits, reveals that there is uncertainty within the ranks about what IoT is and is not – and that uncertainty is a real inhibitor to adoption, even for a percentage of over-performing “Retail Winners.”

With senior management often scratching their heads over IoT, it has been hard to get meaningful projects moving past the pilot phase. But there are some very profound use cases with very real benefits.

RSR’s 2016 IoT benchmark revealed that retailers were beginning to focus on three general use cases to drive adoption: inventory visibility and accuracy, interacting with digitally enabled consumers in the physical store, and making the physical store more effective for consumers. By the time of the 2017 study, retailers were honing in on inventory visibility and accuracy first and foremost, followed by interacting with digitally enabled customers in the physical store, as the top-two objectives for IoT.

When asked what inhibits adoption of IoT in their companies, retailers say “that depends.” For fast moving consumer goods (FMCG) and general merchandise (GM) retailers, the top concern is that IoT technologies aren’t mature enough. For fashion and specialty merchants, the top concern is that the existing technology infrastructure won’t support IoT. And for all retailers there’s an external risk that supersedes internal barriers like integration of new and old technologies. That is, retailers are concerned that consumers are worried about their privacy.

These are big roadblocks that could excuse reluctant retailers from being first off the blocks with IoT. But those that do hold back will start off behind their more proactive competitors. Consider the following chart, showing the value assigned to several technologies associated with IoT adoption vs. “implemented & satisfied” status.”


Over-performing retail winners have clearly taken the lead when it comes to implementing the analytical capabilities needed to understand and act upon signals coming from an IoT-enabled selling environment.

What Will It Take For Retailers To Get In The Race?

 The three use cases that retailers identify present different levels of complexity affecting adoption. For example, “inventory visibility and accuracy” isn’t purely a function of implementing item-level RFID tags. There’s also the decentralized nature of many retailers’ legacy inventory management systems to consider, as well as all the conditions that can create “leakage” (paperwork errors, over- and under-shipments or miscounts, breakage, theft, returns, Point of Sale mis-scans, and system errors).

Digitally connecting with the customer in the physical selling environment has its own set of challenges, such as collecting and analyzing known vs. anonymous customer geo-location based data, links to CRM, digital marketing, and loyalty programs, and addressing potential consumer privacy and security concerns.

Asset management may be the least complex IoT use case, but many of the assets that retailers might be interested in deriving real-time alerts from (for example, cold boxes, HVAC and security systems, etc.) pre-date IoT enablement.

And overarching all of these complexities is the fact that many retailers have networks that are speed and bandwidth constrained.

But the underlying inhibitor to addressing all of these challenges is lack of internal expertise; whether it’s unfamiliarity with the new analysis tools needed to take advantage of the new data that IoT generates, the ability to properly design a network capable of handling IoT-related data traffic, or even finding the right place to start experimenting. It is for these reasons that RSR recommends starting small, working with a technology partner that can offer baseline software and network services to facilitate pilot projects and help retailers develop a roadmap to value realization.  Fortunately, many of today’s leading solution providers offer “cloud-based” solutions, enabling retailers to get started without big capital outlays or significant integration costs.

Fairly discreet use cases related to asset management, such as temperature monitoring, energy management, or GPS location of rolling stock, can be tested to help retailers learn about both the signaling technologies and the analytical tools – without big initial capital outlays. For example, early IoT adoption projects can help retailers to identify that freezers, stoves and HVAC systems are operating at optimal levels, or when it is time for preventive maintenance on distribution center equipment. Real-time alerts to real-time problems such as these are available now.

Once a level of familiarity with the new technologies has been reached, retailers should work closely with their technology partners to identify more complex, but more value-generating, projects like real-time inventory management or geo-location based marketing to consumers. As part of that, retailers must identify the costs and benefits associated with cloud-based “software as a service” commercial solutions vs. “platform as a service” vs. on-premise licensed solutions, or some mix of those options. Retailers should expect their technology partners to help guide them to the best solution set for their needs.

Retailers need to understand that not only are other industries using IoT technologies (in manufacturing, logistics, telecommunications, hospitality & travel, and banking) to manage their business environments in real-time, but retail winners are forging ahead too. Ultimately, the greatest opportunity will come from being able to harmonize the digital and physical selling environments into one seamless, customer-centered selling environment.

Todays’ consumers carry the ultimate IoT devices around with them in their purses and pockets, and they use those devices to interact with the physical world. To remain viable in the new era, retailers need to bring the store into the IoT story.

Read the Report

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