Throughout history, retail technology has evolved in waves. With the industrial revolution and mass manufacturing, the mom & pop store transitioned to the supermarket. The massive amount of data on shipping trends, i.e. what's selling, placed the manufacturers at the center of controlling the information to drive retail sales.
Bar code scanning in the 1970s transitioned the knowledge power base to the retailer. The planogram, i.e. what to actually place on the shelf for sale, was now a retailer decision.
As discussed in a previous post, we are currently in the middle of the next major evolutionary technology wave re-shaping the retail industry. The foundational elements driving the new retail megatrends include:
- The Internet - 39% of the world's population or 2.7 Billion people are now connected to the Internet. 61% of USA households spent at least 3 hours per day on the Internet. In 2012, Google searches reached 3 Billion per day.
- Mobility - According to Gartner, 2013 was the year that worldwide sales of smartphones surpassed the sale of more basic feature phone devices. One in every 5 people on earth now owns a smartphone; one in 17 owns a tablet. It took 8 years to reach 1 Billion smartphone units shipped, but that volume will be double very quickly to 2 Billion by 2017.
The "Holy Grail" of retail is very simple. It is the matching of consumer demand with supply. It is going back to the mom & pop store where the owner knew personally the shopper by name and anticipated their shopping patterns.
In today's fast changing retail environment, the matching of consumer demand with supply takes place on the sales floor, often with no one around to help. Lots of technology has been applied at the peripheral of the retail store to improve operations. The sales floor itself, where the final buying decision takes place, is still highly under sensored.
The Internet and the accelerated mobility trends are the foundational elements for the future multi-sensored store. In recent years, the term that has been used to mirror the intensity of a "smart connected world" is the "Internet of Things (IoT) (*)".
The "Holy Grail" of retail will be delivered through IoT technology. RFID is an example sensor technology that is already driving inventory visibility for progressive retailers. Video analytics sensor technology already optimizes the layout for thousands of stores around the world. Apple's iBeacon is a store sensor technology that links to nearby smartphones and has the potential to enhance the shopping experience. Growing wearable technologies are other sensors that eventually will interact with the store. Even lighting will contribute to a connected store. At a Dusseldorf Store, Phillips is testing a lighting unit that includes a built-in beacon that can communicate with smartphones.
The "Holy Grail" connected world will need to balance privacy issues with improved delivery of the retail model. Opt-in strategies will be important, as will very open dialogue on what information is being collected and how it is being used. Connectivity will only succeed if it delivers the value that consumers are seeking from the conversation.
To reach the "Holy Grail" of Retail, how are you planning to add value to the retail IoT conversation?
(*) In 1999, Kevin Ashton coined the term "Internet of Things" at the MIT Auto-ID Center. IoT was the title of a presentation that Ashton delivered to Procter & Gamble (P&G) on linking the Internet to RFID.