GoT summit: Taking retail everywhere with connected commerce

By | 3 minute read | February 16, 2017

IBM Munich HQ

Steve Laughlin, General Manager, Consumer Industries, IBM and Paul Wilkinson, Head of Technology Research, Tesco Labs, explore how connected commerce is changing the face of retail.

Changing customer expectations

While 85% of consumers still prefer to shop in-store, their expectations are shifting. Now, they are demanding experiences that transcend physical and digital boundaries.

The retail industry landscape reflects this emerging need: margin pressure is increasing, with a 1.9% profit decline despite a 4% spending increase this holiday season. Technology is advancing dramatically, and 52% of retail CEOs are concerned about the pace of technological change. The competitive landscape is shifting too, and 60% of CEOs now expect more competition from other industries.

With the help of the IoT, retail is expanding beyond simple online transactions and in-store shopper experiences. Let’s look now at some of the top areas of IoT value creation.

Top areas of IoT value creation in retail

  • Retail operations:
    • Predictive maintenance: instrumented devices in-store can monitor the health of physical assets
    • Inventory management: a real-time picture of stock levels
    • Staff optimization: using staff members’ time more effectively
  • Customer experience:
    • Individual engagement: via personal devices
    • Associate clienteling
    • Automated checkout: no more waiting in line
  • Business model transformation:
    • IoT commerce
    • Fulfilment innovation
    • Data monetization

The future of retail

A connected world brings retail experiences to the individual wherever they are. Connected appliances such as smart washing machines can automatically order detergent when you run out. Developing infotainment systems in vehicles mean customers can shop from their cars, or receive reminders to pop by the store on their way home. Items can be delivered by drone.

The brick and mortar store still matters, but it needs rethinking. A store instrumented with IoT devices can impact:

  • Food freshness
  • Energy use management
  • Foot traffic monitoring
  • Shopper insights
  • Real-time stock-out monitoring
  • Item location tracking
  • Smart signage / pricing
  • Security
  • Assortment optimization

Connected store solution components

How companies are creating value

Ikea, Staples and General Motors shared their experiences. Commenting on IBM’s retail operations solution, Ikea said:

“The solution helps improve the overall property lifecycle process…helping uphold the IKEA brand, reputation and pricing that our customers know and expect.”

And from Staples: “We wanted to remove constraints and make the process of ordering supplies as simple as possible.”

General Motors commented on how the IoT is effecting business model transformation: “IBM and GM are changing the whole notion of where daily rituals occur.”

Demonstrating the connected store

Next, Steve talked us through a demo of a connected store. He explained that the landscape is shifting: the recently announced Amazon Go, for example, will enable automatic transactions so that shoppers simply select the goods they want, put them into their bag and walk out of the store, without needing to queue.

Add to this the fact that Amazon plan to open 2,000 brick and mortar stores, and the need for integrated physical and digital experience becomes apparent.

The connected store is all about providing a foundation to the customer experience. At the bottom layer is store wellness: ensuring that the temperature is maintained, that the shop is clean, and that the equipment works as it is supposed to.

On top of this base layer come efficient services and personalisation capabilities, such as IBM Pay – a white label payment app tied not just to the customer’s mobile device, but to a store’s loyalty programme as well.

IBM’s retail solutions are connecting the dots, creating an ecosystem that brings together all aspects of the shopping experience via the Watson Platform: location tracking to determine most visited parts of the store, sensors to track how long shoppers wait in line, security, product availability tracking, instrumented lighting and refrigeration systems, even smart mirrors that allow you to try on an item and see how you’d look in different colours, without removing it.

How do you get started?

The IoT has a lot to offer the world of retail, but how do you get started? Here are three key suggestions:

  1. Partner to innovate
  2. Pilot in store
  3. Scale based on real ROI

Getting results

Stores that have implemented IoT capabilities report clear positive outcomes. At Tesco, real customer pilots around food freshness and shopper insights have led to up to a 40% cost reduction and up to 5% productivity improvements.

Learn more

To find out more about IoT-enabled shopping experiences and the connected store, take a look at the Give Us A Store Pilot Program. If you’re interested in working with IBM and discovering how our retail solutions could help you, speak to a representative today.