Will M2M / IoT Be Able to Transform the Customer Retail Experience?

The number of cellular M2M connections in the retail industry reached 18.4 million worldwide in 2013, according to a new research report from Berg Insight.

Many retailers have already increased efficiency in routine operations and developed innovative methods of engaging with the customer with vending machines, digital signage and mobile payment solutions, all of them using M2M technology.

At the risk of sounding repetitive, my opinion is that the challenge in retail sector is to improve the customer experience in each interaction based on new business models and the Internet of Things. Please do not misunderstand: I take into account other important aspects like integration of the supply chain and production plans as they relate to the customer’s expectations. The retail sector, more than other sectors, is heavily dependent on a well-managed and coordinated production and distribution channel.

No matter how many sensors, devices or screens we install in a store, warehouse or in vehicles, and no matter how much sensor data we collect and process, we will not leverage all the potential that new uses of M2M/IoT/Big Data technologies can address, unless we think in terms of how new machine-to-machine devices can intelligently communicate and how they can be used to offer a unique experience to shopaholics, potential buyers or loyal buyers.

It is not about deploying more technology in order to transform our shop to the best or smartest store in the mall; the challenge is to implement new “machine-to-machine-to-buyer” oriented processes that really influence and impact customers’ desire to buy.

Returning to the present reality, the main challenges facing retailers in which M2M /IoT/Big Data can help are as follows:

  • Availability of adequate stock
  • In-store Management
  • Building relationships with customers

Let’s discuss in more detail these three areas of technological changes in the Retail industry:

Vending Machines

M2M technology is being used in Vending Machines to reduce the number of visits and downtime, get real-time information on products and amount of cash, and adjust settings or change prices. The more innovative Vending Machine applications I’ve seen or read about until now have been provided by SAP and Axeda.

  • Axeda has developed an application that tracks an ice cream machine’s most popular flavors and mixes, as well as total ice cream served. The application also features a Twitter feed of consumers’ favorite flavor suggestions, so that they can meet customer needs and generate increased revenue.
  • Watch the live demo from Mobile World Congress showing SAP’s Internet of Things solution in action.

(Note: Be careful with these new use cases, as not all of them are sustainable in the long term. Consider the emotional attachment with the brand and customer experience. This lesson was learned by Coca Cola a few years ago: http://www.slideshare.net/pranitprakash/case-study-cokesmart-machine.)

Digital Signage

Digital signage is another pillar of the technological changes that the Retail industry is going through. Posters are replaced by screens that can show different messages, both in the shop or outdoors. These can change depending on the hour of the day or the kind of customers that visit the store in a given period of time. According to IMS Research, the worldwide digital signage market will total $7 billion in 2013.

The Retail sector is aware of the impact of connected digital signage experiences. M2M, IoT and Big Data technology will play a key role in this market’s rapid growth as businesses are discovering the benefits of delivering real-time information to connected screens.  Innovative Solutions based on these technologies will revolutionize the sector by making it possible to alter messages on one or several screens to target customers with relevant information. This eliminates time- and cost-intensive manual changes. It is easy to adapting content quickly for special situations or audiences, both in-store or through outdoor digital advertising spaces.

Mobile Payment

The M2M Point-of-Sale (POS) is the clearest example of how wireless connections are becoming a day-to-day technology for retailers. As far as retailing goes, M2M POS allows shop assistants to provide better customer service thanks to a more flexible payment method which overcomes physical restrictions and boundaries.

Berg Insight forecasts that the installed base of cellular POS terminals will grow at a compound annual growth rate of 21.4 percent between 2011 and 2017 to reach 29.4 million units worldwide by 2017.

Cashless payment by means of credit/debit cards or the NFC functionality featured in today’s mobile phones is gaining acceptance. Mobile GSM technology is also increasingly employed in this area. This trend is being facilitated by the existence of SEPA (Single European Payment Area), a project with the aim of introducing cashless payment practices to 31 countries in Europe.

With M2M mobile payments, everyone wins: consumers get enhanced flexibility to purchase using their preferred method (credit or debit card with their associated frequent purchase discounts or perks); store owners receive immediate payment with little potential for fraud; employees are more secure by not needing to carry cash. Operating expenses from cash handling and distribution are also eliminated for the merchant.

Simplify the Retail Value Chain

Retailers will stand to benefit from collaboration with Mobile Network Operators (MNOs), Big Data Service Providers, Device vendors, Industry Solutions vendors, Advertising Agencies and Smart Cities Open Data services.

Their combine technical and business strength and experience, and will provide value-added benefits for retailers and facilitate new customer shopping experiences.

Summary

Cisco says retailers can exploit sensor data and device opportunity by connecting previously unused (or “dark”) data assets, such as video surveillance cameras, social media, the Internet and customers’ mobile signals. The result? Better prediction of new trends, employee empowerment and improved profitability.

Companies like Shopperception analyze the shopper’s behaviour in front of a shelf, generating metrics and real time events to drive more conversions. They use visual heatmaps based on shopper actions to discover what spaces are underperforming and reducing retailers’ overall revenue.

To avoid the fragmentation of the IoT / Big Data industry on the evolution of the Retail sector, I encourage Software and Device vendors, M2M Network Operators, System Integrators and Smart Cities to work together to develop innovative and integrated solutions that provide both a secure and easier way of paying and better customer service. As Dr. Nadia Shouraboura, a tech entrepreneur and the CEO of Hointer, says, “Improving the customer experience means people will try more items, more quickly, and go home with a higher percentage of them in a shopping bag.”

This article was originally published on Francisco Maroto’s personal blog. To learn more, please visit his blog or connect with him on LinkedIn.

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