November 24, 2016 | Written by: Angela Huang
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With the overwhelming amount of advertisements everywhere, from social media, TV channels, to email and direct mail, it’s hard for us not to notice that the biggest shopping day – Black Friday – is happening. Black Friday not only drives one of the highest sales revenue per day, it also represents the first day of holiday shopping season.
According to the National Retail Federation, 30-40% of annual retail sales occur between Black Friday and Christmas. The National Retail Federation also predicts that American consumers alone will spend an average of $935.58 during the holiday shopping season this year, up 4% from last year and marking the second-highest level of personal spending in the survey’s 13-year history.
Facing the most critical sales battle in a year, it’s time for retailers to consider bringing new competitive advantages from technology innovation. The Internet of Things can help retailers to win by creating three key success factors:
Delivering the ultimate omni-channel experience
Even though 85% of holiday sales revenue still came from the physical stores last year, smartphones and tablets accounted for 36.1% of e-commerce orders on Black Friday, and generated $905 million in sales. And 86% of retailers expect their 2016 online holiday sales to increase. Shoppers are using complex channels to search, find, and purchase products. It has become a major challenge for retailers to provide customers seamless brand experiences in the purchase journey whether they shop in the digital or physical world.
Retailers must understand what each individual customer wants and provide personalized services. Research from Adlucent showed that 71% of customers prefer personalized ads. The billions of connected devices bring new data sources from each touch point with the customers. Using advanced analytics and natural language processing technologies, retailers will be able to receive new shopper insights from search histories, shopping behaviors, and social media activities. With 75% of shoppers used their smartphones for holiday season shopping last year, it became the essential approach to provide customized services to customers via mobile. The real-time customer insights from connected devices has helped retailers such as Macy’s and Target create holiday specific mobile apps to provide personalized interactive content and promotion.
Optimizing in-store operations efficiency
Shorter queues mean faster sale completion, and the ability to process more transactions in a shorter time. Inefficient queue management can contribute to a 5% loss of total in-store sales during Black Friday. Using real-time people tracking and store monitoring technologies, retailers can accelerate the checkout process in many ways. For instance, shoppers can use their phone or on-site machine for self-checkout.
Many restaurants have started using iPads or other tablets to have diners place and pay for their own orders. The trend of Fintech investments on mobile payment is also driving the future of self-checkout process in retail. Card issuers such as Visa and American Express have started to work with retailers to integrate financial services with mobile and wearable devices. The self-checkout implies better efficiency and productivity for both staff and customers during the busy shopping season. Additionally, sensors within the store can help to create customer heat maps that enable store managers to learn about in-store traffic and make better decisions on staff and queue arrangement. Store managers will receive alerts when there are more people waiting in line and open new registers to make sure customers get assistance in a timely fashion.
Boosting inventory turnover rate with smart merchandising strategies
It’s all about delivering the right product in the right place at right time. Retailers must get the right products that customers want. They also need to make sure there is enough stock to satisfy the demand. 75% of US customers experienced unavailable products in-store, and 58% of them became lost sales. With sensors, beacons, and RFID chips, retailers can gain a real-time visibility of inventory. They can therefore make quick responses such as to offer discounts on products that don’t sell well and to order more items from vendors when there are not enough in the stock room. Analyzing all the IoT data can also unveil patterns of buying behavior that help retailers to forecast trends and make future merchandising decisions.
The 2016 holiday sales are expected to increase 3.6 percent this year, and the majority of consumers start shopping now in November. The Internet of Things could be the most effective tool to help retailers get well prepared. The connectivity has proven value to make retailers more efficient on customer engagement, store operations, and merchandising management. Learn more about how Watson IoT is revolutionizing the retail industry by creating a seamless shopping experience, new level of store operational efficiency, and smart merchandising and supply chain network.