Retailers across the globe are embracing the Internet of Things (IoT) and racing to implement Internet-connected sensors. Though retail is notorious for tough margins, close to 96% of decision makers in the retail sector are ready to make necessary changes to adopt IoT solutions, according to a recent Forrester Consulting survey commissioned by Zebra Technologies. In fact, 67% have already implemented an IoT strategy, and another 26% are planning a deployment in 2015.
This trend was on display recently at the National Retail Federation’s Annual Convention and Expo in New York. where retailers seemed to be in a rush to invest in innovation, strategically placing sensors in their physical stores and connecting them to electronic networks.
Retail may not be the first industry to adopt IoT, but it seems to be racing ahead at a fast clip. Why? Are retailers a more innovative, tech-savvy bunch, or do they have a better vision of how to integrate sensor technologies into their operations? What makes their supply chains ripe for the adoption of networked sensor technologies, and what can industrial companies learn from retail?
Change or be changed
The retail sector is accustomed to change. First credit cards and debit cards changed the way retail stores worked. And now it’s online and mobile commerce. Every wave of digitization has transformed the retail business model, and now retailers would rather ride the IoT wave than be crushed by it. The industrial world is in a similar boat. The digitalization of shop floors is opening up new business models. Companies in aviation, power generation and distribution, oil and gas, and manufacturing can tap into the Industrial Internet to start selling product-service hybrids in which intelligent physical goods produce data for use in digital services that generate recurring income streams. These digital services can also enable firms to make better decisions, gain better visibility into the value chain, and improve productivity.
Many retail companies are creating a seamless integrated omni-channel experience by fusing their online and offline strategies with shared inventories and a consistent customer experience. Bluetooth, wifi, GPS, and beacon technology help retailers replicate online experience in stores and assess their customers’ shopping interest as they browse the merchandise.Traditional industrial equipment producers need similar cohesive strategies to integrate digital and physical elements if they want to create connected devices for a generation used to smartphones and touch screens.
Inside shoppers’ minds
Smart retailers are also accustomed to using data for competitive advantage. They have already moved beyond just counting the number of visitors to measuring the conversion rates of customers who enter after viewing a store window. They are tracking shoppers to replenish inventory in real time and analyze their shopping habits to respond with personalized offers. Similarly, insights from the data created by smart industrial machines—on shop floors and in the field with equipment such as power and water lines—can be crucial in optimizing the operating environment and differentiating their organization from the competition.
Next steps for industry
Technology is paving the way for industrial companies to join the Industrial Internet. High-speed networks enable machine communications around the world. Sensors and cloud-based data storage capabilities are increasingly affordable. Big data analytics are getting smarter. It’s time to plug factory shop floors, jet engines, gas turbines, and water pumps into the Industrial Internet and join retail in riding the wave of the digitization to optimize operations and supply chains.