The eternal question for retailers in this age of digitalization is: “How can we get costs down by optimizing processes?” Turns out, the answer is simple: The Internet of Things.
“IoT can solve new problems brought on by the age of omni-channel retailing,” said a new study by Retail Systems Research, The Internet of Things: Identifying REAL Benefits.
Omni-channel creates new operational challenges; retailers have to deal with multiple channels and complex processes to offer customers a friction free and painless experience. At the same time, retailers want to save money and time by implementing operational improvements. According to a survey by Morgan Stanley of 200 global automation executives, the top perceived benefit of IoT was improving operational efficiency.
There are three main areas where winning retailers see IoT as able to assist in operational efficiency: inventory management, promotion effectiveness and optimization of operational costs.
As we noted in a previous article, IoT offers the ability to not only see where inventory is in the supply chain it also can help with other challenges. Managing, automating and aiding the returns management process is one area. Tracking products through the QA process and performing reverse logistics are others.
As RSR said in the report: “We cannot expect that apparel retailers, in particular, can continue to manage return rates over 25% - and avoid buying more inventory to compensate for their inability to accurately track where those returns are in their enterprise.”
IoT aids in monitoring operations; have the orders been picked up? If not then send alerts and escalate the issue. It allows in-store understanding of what is happening, allowing resources to be focused accordingly.
Real-time alerts are foremost on retailers;’ minds, said RSR, with 94% of retailers seeing value from real-time alerts to changing conditions within the business.
The good news is that both retail winners and laggards agree that real-time alerts are top priority. They “have an eye towards a virtuous cycle of process improvements driven by data” gathered from IoT.
The difficulty in real-time alerts comes with “perishable insights” – information that is useful but can be acted upon only if you know in good time. “IoT solutions need to be able to process and analyze all the new data that IoT can generate,” said the report. And IoT-fed predictive analytics can help to anticipate conditions or events even before they occur.
Automation is key: Cisco believes that 48% of retail processes can be automated with help of IoT.
This begs the question: Are retailers missing an opportunity to use IoT to address some of the complex operational challenges created by omni-channel? We think that retail winners are well on their way to doing just that.