The reputation of IoT solutions and the enormous advantages they promise to bring are leading retailers put their money on the technology. According to Juniper Research, merchants around the world are expected to spend $2.5 billion on IoT technologies by the year 2020. That’s nearly four times last year’s estimated $670 million spend. This significant growth is a reflection of the great financial opportunity IoT holds. MarketAndMarkets has projected that the retail IoT market will reach $35.64 billion by 2020, and if you take diverse business models and objectives of IoT projects such as service revenue, spend and cost-savings into account, Juniper forecasts the IoT opportunity will approach $300 billion annually by the same year.
In the recently released IDC Spending Guide, the retail market was singled out as one of the high growth sectors. “A fairly close relationship exists between high-growth IoT use cases in consumer product and service-oriented verticals like retail, insurance and healthcare,” said Marcus Torchia, research manager for IoT at IDC’s Customer Insights and Analysis team. “In some cases, these are greenfield opportunities with tremendous room to run.”
Marketing Where the Decisions Are Made
Everyone knows that marketing is essential to the success of a retail business, and retailers are getting smarter about spending their marketing money where the decisions are made. Retailers are investing big on location-based marketing, a disruptive IoT-enabled technology that reaches customers in the moments that matter—when they’re in-store, actively shopping. Which makes a lot of sense, since according to Google research 84 percent of customers use their smartphone to help them make purchase decisions while they’re shopping in brick and mortar locations.
The retail market’s implementation of IoT-powered location-based technology is growing rapidly—specifically the use of beacons, the technology key to getting pertinent advertising to customers the moment they walk in the store. BI Intelligence, Business Insider's premium research service, expects the beacon installed base to increase from 96,000 in 2015 to 3.5 million in 2018. Target, Walgreens, Rite Aid, Neiman Marcus, Macy’s, Urban Outfitters, Best Buy, Walmart, and many, many other retailers are firmly on board the beacon bandwagon.
The success of this marketing tool has already helped numerous retailers take advantage of how their customers make buying decisions during busy shopping months. inMarket, one of the world’s largest beacon platforms, says its analysis shows its platform influenced $14.5 billion in consumer spending during the Black Friday weekend in 2016.
Getting Smart About Inventory Management
IoT is giving familiar RFID technologies a big makeover, extending its capabilities like never before. And since the technology is now considerably cheaper than it used to be, item level tagging is finally a financially reasonable option. In the early 2000s a single RFID tag might cost $1, while today it’s closer to 10 cents.
This IoT-powered RFID item level tagging is transforming how retail businesses manage their inventory. The new capabilities include the ability to automatically scan incoming deliveries rather than scanning by hand, enabling companies to access a real-time, comprehensive view of their inventory, whether that’s checking stock numbers available for online sales or locating a certain item in-store, automatically maintaining the environment for temperature sensitive objects, and much, much more. The possible applications are endless, and the benefits numerous.
The numbers don’t lie. According to a recent Retail Wire report, the use of RFID tags improves inventory accuracy by 32% and decreases out of stock item incidents by 50%, resulting in a sales increase of 18%.
All of this makes a persuasive case, eliciting a surge of adoption by retailers. Retailers used 5 billion RFID tags in 2016, and that number is expected to rise to 7 billion in 2017, according to IT Jungle.
Expanding the Realms of Possibility
IoT technologies hold amazing potential for meeting customers’ exhausting demands and producing money-saving efficiencies. From the ability to create personally tailored and immersive shopping experiences for customers in the store environment to improving distribution and inventory processes to transforming the purchase process, it is a solution-set whose time has come. And it has the ability to do all of this while producing a massive amount of valuable shopper data.
"Retailers are beginning to see an expanding number of use cases from among the rapidly expanding set of identified opportunities. Retailers are going to want to look more seriously at the IoT as a game-changing technology that can introduce significantly new productivity and efficiencies and new service capabilities into their enterprises,” said Robert Eastman, research manager, Retail Omni-Channel IT Strategies, in IDC’s recently released perspective paper on IoT and retail.
Learn more about how Intel can help your retail customers take advantage of the growing benefits of IoT-powered solutions.