In his recent Budget, British Chancellor Rishi Sunak placed a focus on the concept of the “digital economy” and its role as a “key driver of future growth” for the UK. Global business, strong competition, changing nature of the workforce and sophistication of consumers have influenced the need to transform the traditional economy into a digital one.
This has particular implications for the UK retail sector. The total volume of retail sales dropped by 1.9% last year, the biggest drop since records began and as part of the post-Covid rebuild, progressive retailers are raising their game by harnessing the power of new technologies to create new experiences for consumers; one that keeps them coming back time and again. Against this backdrop, it is unthinkable to plan the process of transforming the retail sector and exploring the market changes in the digital economy without considering IoT; a market set to grow to $520 billion this year.
Much of the importance of IoT comes from a recognition that it is not just a collection of connected devices and systems; instead. its value lies in data. Specifically, it lies in the ability to capture vast amounts of information, 79 zettabytes by 2025, via fixed and moving sensors and the subsequent processing of that data to help businesses successfully develop their strategies – and adding around £11.1 trillion per year to the global economy . However, there remains one area where the business sector can benefit from this information in its raw format – location data.
Location information’s value in business IoT deployment lies in the contextual analysis of the data to achieve an intended outcome – the ability to place massive amounts of information within the critical context of where. Whether its tracking assets as they move through the supply chain or providing security data for business and companies, that information can provide insights, patters and relationships that were previously unrecognised.
So, what does this look like in the actual retail world and across different sectors?
Take companies that deal in freight and logistics; a sector that contributes 5% of total UK GDP. IoT already provides a vital service in delivery planning, stock monitoring, the compilation and viewing of schedules and much more. But in combination with location data, not only can a supplier monitor positioning but they can also assess factors like condition and status of delivery. Also, by tracking the products within the warehouses and distribution centres, operation teams can ensure that the speedy loading of the right products on the right matching truck. It can also help with reverse logistics. – if a specific product needs to be recalled, its origins can be tracked down to a granular level, resulting in more selective recalls and better efficiencies.
This is particularly applicable to perishable goods and produce, especially given the recent series of Brexit-related delays. Food items often need to go from a farm to retail in a limited period of time and the suppliers need to track information about them as they move from the field to a warehouse to multiple final destinations. A successful IoT deployment can be used to understand not only where the product is in the supply chain and how long it took to get there.
The effect can also be seen in physical retail stores, an environment that McKinsey claims will reap IoT benefits from $410 billion to $1.2 trillion per year by 2025. The inclusion of location data is already being used to reduce inventory error, optimise supply chains and decrease labour costs.
For example, the tracking of shopping carts allows retailers to analyse the amount of time people are spending looking at particular shelves and aisles, as well as the times and movement patterns of customers in a store; turning casual shoppers into actual buyers. This information means they can also analyse more than purchasing behaviours, but travel patterns and shopping location choices as well. IoT based location intelligence helps them build accurate pictures of where to place their stores, where to advertise, and how to market to potential customers more effectively. That, in turn, increases in-store traffic and improves sales.
IoT-based location proximity also means that customers can receive discounts, special events, or other reminders when they’re near a shop and have previously downloaded the store’s app. It can also recognise which area of the store a consumer is in — so if you’ve entered the makeup section, the app will remind you of the makeup brands you liked online. Along with helping customers in-store, the technology can combine to also send alerts to passers-by. This can be used to effectively advertise promotions or in-store events.
Retailers are also using IoT technology to save money by tracking inventory, from goods to lost shopping carts and baskets. Tracking these assets can help stores reduce the cost of having to replace them by placing sensors on them, allowing tracking to their exact location and receive status updates and alerts if they’re damaged. This can help retailers improve customer experience by ensuring they always have enough products.
IoT is a key to disrupting modern-day retail, but its benefit can be maximised by location information. It is a component that pulls all the data together, grounding all information, predictions, actions, and decisions in the common language of geography.
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