In the 1999 Disney Channel original movie Smart House, the Cooper family learned the dangers of living in a house that learns to cater to their every need. Less than 20 years later, Smart House seems more reality than fiction. Our Nest thermostats, Google Home systems and Echo Dots, wifi light bulbs, and Petcube cameras create an interconnected web of connected technologies called the Internet of Things, or IoT.
Retailers are now beginning to harness the power of IoT technology in their own operation. In the 2017 Retail Vision Study, 70 percent of retail decision-makers said that they are ready to implement changes to adopt the IoT in their stores. In fact, by 2021 many stores expect to be able to customize store visits for individual consumers. Thanks to technology like mobile location analytics and beacon technology, retailers will be able to tell when a specific customer is in the store, know what that customer’s needs are, and customize their store visit accordingly. Stores like Best Buy, Target, and Lowes are also increasingly using robots to monitor and control inventory. These robots can help reduce shrinkage and improve inventory accuracy by eliminating an element of human error. Similarly, RFID chips can help retailers maintain “smart shelves,” which can detect when inventory is low or automatically adjust product prices (for example, as grocery items are about to expire, or as part of a dynamic pricing strategy). And mobile technologies like cell phones and iPods can help retailers offer a quicker, more convenient checkout process. At many stores, particularly department stores, retailers are implementing mobile point-of-sale systems so that sales associates can scan items and accept debit or credit card payments anywhere in the store.
Optimizing the retail experience by harnessing the IoT can help retailers enhance customers’ in-store experiences, leverage customer data, and personalize and hone marketing and pricing strategies. These changes, however, do not come without risks to be taken into consideration. When technology is used to monitor customers, for example, retailers should take steps to inform customers that they are being monitored and explain how the data they collect is being used. Retailers should also be aware of how building their Internet of Things impacts their data security. The more web-connected components a retailer utilizes (especially when those devices are hand-held and easily misplaced) the more potential points of entry there are for potential thieves and hackers. This can be difficult in an environment of rapidly changing technology.
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