While the Internet of Things can streamline operations, optimize inventory and assist in cutting costs, the most important benefit retailers can gain is improving the customer experience.
The road to ruin is littered with retailers that cut costs at the expense of customer service. New York City based department store Abraham & Straus (A&S) comes to mind, and, although it departed 20 years ago, its decline was so dramatic that its worth sharing briefly, as a cautionary tale.
A&S opened its doors in 1893, which means it was able to withstand the Great Depression, among other economic crises. But by the early 90’s, the store was starting to show wear and tear. Competitors such as Macy’s used “one day sales” and loyalty prmotions to lure away customers. A&S tried to step up, but sales were plummeting and there was no incentive to invest in what was becoming a rapidly outdated shopping experience. There was nothing special or unique at A&S and shopping there was largely unsatisfying as the store continued to cut back on associates and inventory. The displays were scantily stocked and, in the event a product was available, no employee could be found to ring up a purchase.
So, in 1995, after numerous closings and some store conversions to Macy’s, A&S closed up shop.
It’s easy to think that technology is the means to all success, but, in reality, happy customers are the key. Technology is the set of tools that can get a retailer there, with added benefits of streamlining and cost cutting. But, for instance, while kiosks can save a retailer the cost of a cashier or two, it should consider reivesting that savings into well informed associates that can function as personal shoppers (thanks to data analysis) or into personalied messaging offering unique discounts or shopping access (thanks to beacons). As a recent Gartner study discussed, the basics — well stocked shelves, relevant products, helpful associates and smooth checkout — should be in place for success. Those can each be improved by using technology; however, the focus must always remain on customer satisfaction.
“Well established technologies, such as electronic shelf labels and RFID used in the past in the back office for stock management, are now being used in innovative ways at the front end to enhance the customer experience,” said Miriam Burt during Gartner Symposium/ITxpo 2015.
It’s important to note she said “enhance the customer experience,” rather than “reduce cost of carrying inventory.” Electronic shelf labels (ESLs) can be extremely helpful in managing inventory, but that is not a strategy for long-term success. If a retailer’s goal is solely to maintain little to no inventory rather than to track customer trends, the result will be sparsely populated shelves with customers potentially turning to the competition should the size or style be unavailable. Instead, retailers should implement such technologies with the goal of improving the customer experience; tracking buying trends using ESL will ensure a store is aware of popular items and can stock accordingly.