Widespread deployment of IoT technology in the retail sector will not happen until next year, according to leading retail and supply chain software vendor, JDA.
Software supplier JDA and management consultancy firm PwC recently published CEO Viewpoint 2017, their fourth annual survey of leading retailers across the US, the UK, Germany, China, Japan and Mexico. The survey found that digital transformation was the number one strategy among the 350 retail CEOs questioned about their technology priorities, with 69 percent saying they plan to increase their investment in digital transformation over the next year.
The digital transformation projects they are focusing on include improving their online presence, mobile strategies, social media, and getting the most out of their investments using big data.
However, JDA/PwC said the research showed that “automation and IoT are lower on the list for investment”, but did add they are “gaining momentum as they are perceived as true game changers”.
Around one-third (32 percent) of responses came from top 250 retailers with revenue over $ 5bn, with another 53 percent of responses from top 1,000 retailers – so CEO sluggishness around IoT deployments is certainly significant for the industry.
Big names in the retail world, including Tesco, John Lewis, Ocado, Amazon, Walmart and Target, have made a lot of noise recently about what they are planning around IoT, but if the big players aren’t moving particularly fast, then much smaller names on the high street won’t follow in any great hurry.
And if retailers don’t move soon they won’t enjoy many of the benefits that can be enjoyed from retail IoT use, including deeper consumer insights, smart device signage, improved customer service, loss prevention, personalised retail, smart shelving and just-in-time promotions, among other benefits.
However, Jason Shorrock, vice president of retail strategy at JDA, was keen to emphasise that the retail industry is not necessarily being a deliberate laggard around IoT, it is just keen to get it right.
Shorrock told Internet of Business: “All the main retailers are aware of what Amazon is doing around Amazon Go, so they know where things are potentially going through the use of IoT technology.”
Amazon Go allows consumers to walk into a store, take what they want, and then leave the store without paying at a till, after being charged for their items through in-store IoT sensors and an app.
Asked if retailers should move faster around such IoT deployment, Shorrock said: “Perhaps they should, as there is a huge opportunity to improve customer engagement and improve operations, particularly as labour costs are becoming more expensive.”
He went on to warn that the different types and amount of data that will be generated by IoT sensors mean retailers have to thoroughly plan and test systems, to make sure they can make full sense out of the data. They also have to move to more powerful cloud data processing platforms too, instead of keeping everything in house as they have often done in the past. Shorrock added that technology-focused IT vendors themselves will need to form technology alliances in order to better support the all-round needs of retailers.
JDA itself is developing its own retail technology ecosystem that involves Intel and Google, among others, and has also joined a similar ecosystem being developed by technology and consulting services firm Cognizant. A similar ecosystem for retail IoT solutions is the Acuitas Digital Alliance, which brings together BT, Intel, RetailNext, NexGen Packaging, SATO Global Solutions and Valmarc.
Shorrock said 2017 would see retail IoT “gain momentum” as big retailers finalised “major business transformation plans”, including firms with which JDA is currently talking.
“Contracts will be signed and pilots will start”, he said. Expect to see more customers being commercially served by such systems in 2018, said Shorrocks, and experiencing “better availability and assortment” as a result. Stores, meanwhile will enjoy “more efficient operations and pricing structures”.
IoT competes for attention
In separate research from the JDA/PwC report, a joint study by global advisory firm Oxford Economics and PwC has shown the progress of retail and other industries moving towards IoT deployments.
PwC worked with Oxford Economics in late 2016 to survey more than 2,200 senior business and IT executives from over 50 countries working in various industry segments, including retail.
The majority of those executives “expect IoT and artificial intelligence to bring about the biggest change” to their industry, said PwC, with 73 percent saying they are investing in IoT and 54 percent in AI.
But, PwC added: “Emerging technologies must compete for attention with yesterday’s game-changers, such as cloud, mobile and analytics, which still command sizeable spending and mindshare and which are often necessary precursors to the latest tools.
“Meaningful investments are flowing to the IoT and AI, however, and substantial growth is expected across a broader spectrum of technologies during the next three years, in both the enterprise and start-up communities.”
The Internet of Things possesses the ability to greatly enhance the ways in which retailers engage with their customers. Advanced beacon, RFID, sensor, AI, VR and wearable technologies are offering new ways to improve loyalty and increase revenue. However, disassociation between the business and digital sides of companies, coupled with previous project failures and negative consumer feedback, can place a strain on new IoT projects.
This 2nd Annual Internet of Retail event will present case studies from some of the world’s leading retailers – organisations that have overcome implementation pitfalls and are successfully harnessing IoT to heighten the customer journey.