We live in a world defined by emerging technologies, yet retailers still struggle to keep pace with the times. Mobile is the main catalyst for digital transformation, and it’s rewriting the connection between brands and customers. We usually consider the Internet a connection between people, but there is a separate use that doesn’t rely on humans. It is the Internet that connects ‘things’: the Internet of Things is destined to change the way companies create, distribute and sell their products. The retail customer experience will evolve accordingly.

The Internet of Things is the final frontier in connecting users’ entire physical life to the digital world, a further step in the evolution started by mobile devices. We are surrounded by increasingly intelligent devices and objects able to talk to each other without human intervention. This interconnection will affect retail strategies, and determine how we make purchases (i.e. NFC and one-touch payments) and experience brands and stores.

Mobile revolution has brought us to a shift from passive consumers to empowered customers, but sometimes companies still plan their marketing for the old world, counting on traditional - and inefficient - funnels. According to Gartner, by 2020 Internet of Things is expected to grow to 26 billion installed units, and to generate incremental revenue exceeding $300 billion, mostly in services. It’s easy to see why it is rapidly capturing the imagination of the retail world.

The retail industry has witnessed its biggest disruption with e-commerce, but the I-o-T has the potential to cause an even bigger revolution, altering the rules of a fragile equilibrium. While some of the impact areas are yet to emerge, there are many predictions about the effect the Internet of Things will have in the coming years on companies and retail customer experience.

  • Product and Sales Management: there are many business processes that I-o-T will help retailers with, but production, supply chain, inventory and logistics are perhaps the ones where the impact will be most felt. It’s already happening before our eyes, and we can find brilliant examples of the I-o-T at work in the product and sales management of A-list companies like Amazon and Walmart (automated warehouses). In the coming years this process will be taken to the next level with even more significant supply chain and inventory improvements. Of course, this will also affect the purchasing process: the way we search for a product, the way we order it, how it gets delivered to us and, finally, how we pay for it.

  • Impact on Customer Experience: the phone was the first ‘thing’ made intelligent by Internet. Every smartphone now has many ways of seeming sentient (gyroscope, accelerometer, proximity sensor). These sensors capture and transmit all sorts of information and adapt to create a unique user experience. The connection between smartphones and emerging technologies - such as smartwatches, activity trackers, widgets - will allow retailers to reinvent loyalty through personalized content (iBeacon), real-time promotions (push notifications), location-based offers, a seamless purchase process (Apple Pay), gamification dynamics and social connections.

  • Real-Time Analytics: analytics is where technology meets Big Data. Retailers are more and more able to track how users interact with the store, the website and the app. As physical store go digital, giving birth to the digital brick-and-mortar, the possibilities are endless. Using connected devices to gather customer data, they are able not only to improve efficiency, but also to tailor-make promotions and experiences. New technologies also mean new tools and metrics to dive through this massive amount of information and measure business efforts. With one big concern: privacy. Balancing data and privacy will be vital to effectively implement an analytics platform in the retail industry.

The path to innovation starts with the need to reinvent the physical store. The Internet of Things will lead retailers through digital transformation, but you should never forget that the future of retail lies in the hands of customers: your ability to win their trust, to create engagement and foster loyalty will ultimately decide your success.

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