How the Internet of Things Will Impact Retail Sooner Than You Think

In the popular sci-fi film Minority Report, there’s a scene where the main character, played by Tom Cruise, walks through a mall and is bombarded by personalized greetings from digital billboards and holographic retail offers based on his previous purchases.

When Minority Report hit theaters in 2002, we were carrying around black and white feature phones and pagers–the Motorola Razr was still two years away from being released. If companies wanted to gather mobile data on consumers, they lacked the tools (or the network) to do so.

Thirteen years later, targeted, data-driven advertising is a reality, and personalized retail recommendations (at least online) are becoming increasingly sophisticated. Neither have really crossed over into the in-store environment.

How close are we to that vision of the near future? And is getting there worth the cost and effort?

I recently debated those questions onstage at San Francisco Design Week, where I sat on a panel focused on how retailers will use the Internet of Things to improve customer engagement both in-store and online. I was joined by panelists Matt Allred from Walmart.com, Scott Amyx from Amyx+McKinsey, Mariel Vargas from Macys.com and Kevin Weston from Float. Our moderator, Robert Burns Nixon, executive producer at the Retail Tech Summit, guided a wide-ranging discussion.

Highlights:

How do you define the Internet of Things/Internet of Everything in shopping?

The panelists had different definitions of IoT and IoE, based on their background, defining it as either:

  • A product or physical object that gives you information, knows you and reacts to you.
  • A networked device or object that gathers data or acts on data.
  • A body area network that connects to a connected home- or work environment, a wireless sensor network or wide-area ambient computing network.
  • Devices that are connected to the Internet that are either passive (data collectors) or active (they interact with the user).

What are the engagement opportunities for retailers who invest in IoT?

This was an area of some debate and disagreement, which made for entertaining discussion:

  • The Internet of Things can make things easy for consumers when it comes to shopping, such as the refrigerator telling me when it’s out of something, or that my shoes are wearing out. Many home electronics, such as televisions and home theater systems are already WiFi enabled; a WiFi-enabled refrigerator isn’t far off, from my point of view.
  • Inventory planning and returns for retailers, to improve production efficiencies and the demand-driven supply chain, allowing for just-in-time production and replenishment.
  • Miniaturization of sensors, to the point they can be embedded into consumer products to signal to the owner and the supply chain.
  • Consumers can get personalized experiences in the store (similar to the Minority Report example) through data collected by sensors and cameras.
  • Giving retailers the ability to measure the emotional impact of store displays through social media analytics and sensor data inside the store.
  • Addressing issues such as shopping cart abandonment in the physical store–which currently can only be done through embedded sensors.

What are retailers doing to address omnichannel and IoT?

  • A simple thing retailers can do today is making sure the merchandise buyers for their online and physical stores are the same, to maintain inventory consistency and efficiency.
  • Technology investments need to be made–either through a usage-based cloud model or through traditional licensing. Due to a retailer’s high volume of transactions, both models represent a significant investment.

What are the top challenges facing retailers in this space?

  • It’s difficult and expensive to get high-end network connectivity inside a retail store.
  • It’s expensive to produce omnichannel content (digital images, video and personalized messages).
  • There’s typically an inverse relationship with complexity–the easier that a retailer makes things for a consumer, the harder and more complex those technologies are to implement.
  • While retailers have steadily made investments and progress in online shopping and the supply chain, the technology powering in-store experiences hasn’t changed much over the past 10 years.
  • Retailers cannot afford to lag behind their peers; consumers dictate the pace of how stores and shopping will change.

Ultimately, it’s about overcoming the inertia of past practices and investing in technology that drives hard metrics: revenue-per-square-foot inside stores and better data leading to higher revenue online.

I’d like to thank the Retail Tech Summit for inviting me to speak on the panel, and my fellow panelists for a spirited and educational discussion. For more thoughts on IoT and to read posts from other Avaya executives on the subject, visit http://www.avaya.com/blogs/archives/tag/iot.

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3 CX Stats That May Change How You Think About Digital Transformation

Technologies like Artificial Intelligence, automation, big data, and the Internet of Things have made digital transformation an absolute necessity for organizations. With people, processes, services and things more dynamically connected than ever, companies are feeling relentless pressure to digitize, simplify, and integrate their organizational structures to remain competitive.

But there’s a big hole in the fabric of most digital transformation (DX) plans: the customer experience (CX). The problem isn’t that companies fail to understand the importance of the CX in relation to digital transformation. Rather, most fail to understand their customers well enough to envision a truly customer-centric, digitally-transformed environment. Just consider that 55% of companies cite “evolving customer behaviors and preferences” as their primary driver of digital change. Yet, the number one challenge facing executives today is understanding customer behavior and impact.

A massive part of digital transformation involves building a CX strategy, and yet customer centricity remains a top challenge for most. In fact, I encourage you to be your own customer within your organization. Walk in your customers’ shoes, contact your organization as your customers would. What was your web experience? Was the expert knowledgeable during a chat conversation? How well did the mobile app work for you? Did you have a connected experience? Given your experience, how brand-loyal would you be to your organization?

Here are three statistics that will get you rethinking your CX strategy in relation to digital transformation:

  1. 52% of companies don’t share customer intelligence outside of the contact center. In other words, over half of companies are limiting the customer journey to the contact center even though it naturally takes place across multiple key areas of business (i.e., sales, marketing, HR, billing). Businesses must ensure customers are placed with the right resource at the right time, whether it’s in a contact center or non-contact center environment. The key is being able to openly share customer data across all teams, processes and customer touchpoints.
  2. 60% of digital analytics investments will be spent on customer journey analytics by 2018. Customer journey analytics—the process of measuring the end-to-end customer journey across the entire organization—is critical in today’s smart, digital world. Companies are rapidly investing in this area to identify opportunities for process improvement, digitization, automation and, ultimately, competitive differentiation.
  3. 60% of customers change their contact channel depending on where they are and what they’re doing. This means organizations must focus less on service and more on contextual and situational awareness. Businesses must work to create a seamless experience—regardless of device, channel, location or time—supported by customer, business and situational context captured across all touchpoints.

The CX should influence every company’s digital transformation story. For more tips, insights, and impactful statistics check out our eBook, Fundamentals of Digital Transformation. Let me know what you think. We look forward to hearing from you.

3 Key Steps to Starting Your Company-wide Digital Transformation

Stats show that 80% of companies identify “digital transformation” as their top strategic priority—but only 5% feel they’ve mastered it. Why the gap? Achieving a digital experience to a point of competitive differentiation requires organizational alignment. Digital transformation represents a crucial paradigm shift across the entire organization, yet research suggests only a fraction of companies currently implement an enterprise-wide digital strategy. To successfully digitize, all lines of business (LOB) must be aligned and move in concert towards digital innovation. This involves communication and collaboration among key stakeholders, especially senior executives, across every business unit—even ones you wouldn’t typically include.

Put simply, digital transformation is more than just digitizing your infrastructure before your competitors do. Yes, it’s about serving the growing number of digital consumers faster and better. But, more importantly, it requires a shift in organizational mindset and redefinition of business processes. The starting point for any digital transformation initiative should be a clear understanding among all business leaders (not just IT) about the nature, direction and projected outcomes of the transformation.

What does the discovery process look like? It can be summed up in three key steps:

  1. Situational Assessment: Executives across every LOB need to weigh in and agree on business drivers and expectations. Insights derived from this assessment should be used to map out short- and long-term business goals and key digital strategies to ensure organizational alignment.
  2. Opportunity Prioritization: Identify target applications and technology architectures, then determine how these new solutions will affect existing technologies and align with core needs (i.e., operational savings, CX improvements). In parallel, use this time to identify, analyze and prioritize gaps between existing and planned processes.
  3. Roadmap Creation: A detailed roadmap helps you finalize digitization plans before implementation. It should outline phasing strategy sequences, risk mitigation plans, and project feasibility reports that define the timeline, dependencies, costs (and return) and controls of each digital initiative. Consider this your digital transformation playbook.

Digital transformation is the foundation of how organizations will succeed or fail. Check out our eBook, Fundamentals of Digital Transformation, to learn more about this discovery process—the first of a five-step plan for creating a foolproof digital transformation strategy. Let me know what you think. We are here to help and happy to discuss.

When it Comes to Your Customer Experience: Ditch Legacy, Go Digital!

The future of business, indeed the future of customer experience, is life as we know it—here and NOW. Organizational success right now, however, depends on one thing: digital transformation.

Digital transformation can mean many things, but includes a fundamental idea—applying digital technologies to all aspects of life. For consumers, they use their smart devices, laptops, tablets, and favorite apps to make it through the day. For organizations, this means figuring out how to leverage existing digital technologies (apps, processes, procedures) and resources (essentially the talent of your employees) within your business strategically to serve consumers on their terms at any moment—all the time. And to do so better than your competition. Digital transformation also means looking at your existing business applications, mobile apps, processes, procedures, and talent through a different lens.

A successful digital transformation requires a shift in organizational behavior and cultural mindset. It means creating a strategic road map that outlines implementation and ongoing process improvement. It requires executive buy-in, sponsorship, and steady leadership. Perhaps most daunting of all, it means companies working to truly know and understand their customers. It means enterprise leaders having a firm grip on the big data that infuses their organizations.

The reality of a smart, digital world is clear. Advanced technologies like IoT and virtual reality are no longer science fiction, but fact. So much so that in just three short years, it’s expected that 100 million consumers will be shopping in virtual reality, and up to 20 billion objects will be Internet-enabled. Meanwhile, automation and data analytics have evolved from luxuries to enterprise necessities. Driven by this rapid pace of digital change, analysts predict that 65% of children today will grow up to work in roles that don’t yet exist.

Companies need to successfully digitize to remain agile, integrated and future-proof enough to support this future of everything. The good news is that 80% currently identify “digital transformation” as their top strategic priority. The bad news? These same companies are seriously struggling to migrate from their existing aged processes and legacy systems and architecture. Consider industries like government, where 71% of federal IT decision makers still use old operating systems to run important applications. How can they go digital without having the latest platforms in place to support a digital environment?

Organizations can’t re-imagine operations, re-engineer critical processes, or align key business areas the way they need to while relying on antiquated technologies. But creating a migration path is easier said than done. We have said it before and we will say it again, it’s about more than just the technology.

Sounds challenging, but it’s not impossible. Our ebook, The Fundamentals of Digital Transformation, can help organizations get started. Take a look to learn more about the top challenges of taking legacy experiences into the digital world, as well as the five key steps organizations can take to minimize disruption and boost adoption of new digital capabilities. Let me know what you think. We are here and happy to discuss.