deep dive: iot in retail— · iot applications in retail consist of connected devices mainly used...

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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

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InternetofThings(IoT)technologyhasthepotentialtotransformthewayretailersoperatebrick-and-mortarstores.Inthisreport,we:

1) OutlinetheapplicationsofIoTtechnologyforretailersandtheadvantagesofadoptingsuchtechnologyinbrick-and-mortarstores.

2) IllustratehowretailersincludingAmazonandWalmartareplanningtoapplyIoTtechnologyintheirstores,andwhatIoTproductstwoindustryspecialists—CatalystandSmartrac—providetoretailers.

3) ProposeaseriesofrecommendationsthatretailersshouldconsiderwhenimplementingstrategiestoadoptIoTtechnologyintheirphysicalstores.

Deep Dive:

IoT in Retail—Digitalizing Brick-

and-Mortar Stores

Deborah Weinswig

Managing Director,

Fung Global Retail & Technology

[email protected]

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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TableofContents

ExecutiveSummary.........................................................................................................................................3

Introduction....................................................................................................................................................4

IoTinRetail:TrackingStorePerformanceandInteractingwithCustomers......................................................4

AdvantagesofIoTinRetail..............................................................................................................................8

TechnologiesthatCanChangeStoreRetailing.................................................................................................9AmazonGo:TheStoreRunbyAI........................................................................................................................9EngagewithShoppersThroughLightwithVLC................................................................................................10RebeccaMinkoffConnectedStore...................................................................................................................11RazorshopbyRazorfish....................................................................................................................................12ShopWithMebyWith.Me.................................................................................................................................12WalmartandPanasonicSmartShoppingCartSolutions..................................................................................13

FurtherExamplesofIoTApplicationsinRetail:CatalystandSmartrac............................................................14Catalyst:InventoryControlforRetail...............................................................................................................14SmartracRetailStoreOptimization:Metrics....................................................................................................16

Recommendations:ActFast,HandleDatawithCare,ReviewRelationshipwithSuppliers..............................17ActFast,asCompetitorsareAdoptingNewTechnologies...............................................................................17SetUpClearPoliciesontheHandlingofConsumerData.................................................................................18RedefinetheRelationshipwithOtherSupply-ChainStakeholders..................................................................18

KeyTakeaways...............................................................................................................................................19

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ExecutiveSummaryIoTtechnologyhasthepotentialtotransformthewayretailersoperatebrick-and-mortarstores.WedefineIoTasanydevicethatisInternetconnected,capableofsendinginformationtoacloudstoragesystemand/orcaninteractwithotherInternet-connecteddevices.Inthisreport,wefocusonlyonphysicalstores,excludingthesupplychain.

Wedistinguishbetweentwotypesofsolutionsaccordingtothemainfunctionoftheconnecteddevice:1)technologythattracksinventoryand/orconsumerbehaviour—oneexampleisRFID-enableddevicesthattracklocationsofitemsin-store;and2)technologythatinteractswithconsumers—forexamplesmartmirrorsthatcandetectwhatacustomertriesonandinteractwiththembysuggestingdifferentcolorsorotheritems.

TheapplicationsofIoTtechnologytobrick-and-mortarstoreenvironmentsbringmanyadvantagestoretailers,suchasmakingoperationsmoreefficientthankstotheconnecteddevices’abilitytotrackinventorylevelsinrealtime,orthepossibilityofimprovingthecustomer’sstorejourneybyincreasingthemerchandiseengagementthroughdevicessuchassmartmirrors.

CompaniessuchasAmazon,WalmartandRebeccaMinkoffareapplyingIoTtechnologyintheirphysicalstores.Amazontestedanewgrocerystoreformatthatusesartificialintelligence(AI)toprovideacheckout-freeshoppingexperience,whileWalmartplanstointroduceasmartshoppingcartthathelpsshopperstonavigatethroughthestoreandfindproductsontheshelves.

Li&Fung’sretail-technologyfirmCatalystandDutchtechcompanySmartracofferfurtherIoTproductstohelpretailersmanageinventoriesmoreefficientlyandengagewithcustomers.Forexample,Catalyst’sSmartScreenisatouchscreenthatallowsuserstointeractwiththeirgarmentsonthescreen,whileSmartrac’sMetricsisaretailstoreoptimizationsystemthatusessensorstotrackstoredata.

IoToffersmanyopportunitiesforretailerstoimproveefficiency,increaseconsumerengagementandultimatelygeneratemorerevenuefromin-storesales.WhenimplementingstrategiestoadoptIoTtechnologyin-store,webelievethatretailersshould:1)actfast,asthecompetitionismovingquicklytowardsadoption;2)setupclearpoliciesconcerningthehandlingofconsumerdata,asthedatagatheredbyIoTtechnologycouldraiseissuesintermsofdataprotectionorcomplianceregulations;and3)endeavourtoworkwithsuppliersthatcanembracetheincreasedefficiencyachievedbythedigitalizationofstoreoperations.

IoTtechnologyhasthepotentialtotransformthewayretailersoperatebrick-and-mortarstores.

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IntroductionIoTtechnologyhasthepotentialtotransformthewayretailersoperatetheirbrick-and-mortaroperations.OurdefinitionofIoTisanydevicethatisInternetconnected,capableofsendinginformationtoacloudstoragesystemand/orcaninteractwithotherInternet-connecteddevices.Whilesimplertechnologies,suchasbeacons,donotstrictlyfallwithinthisdefinition,weneverthelesssummarizetheseinthisreport,forcompleteness.

IoTapplicationsinretailconsistofconnecteddevicesmainlyusedtotrackinventoryandconsumerbehaviorortoimprovetheconsumer’sshoppingexperiencebymakingitmoreengaging.Thisreportfocusesonlyonin-storeIoTusage,anddoesnotconsidertheretailsupplychainorlogistics.

ApplyingIoTtechnologytoaphysicalstoreenvironmentcanincreasetheefficiencyofoperationsandunleashnewrevenueopportunities,amongotheradvantages.

Here,weprovideexamplesofhowretailers,includingAmazonandWalmart,arechangingstore-basedretailingthroughIoT.WealsoillustrateIoTsolutionsthattwofirms,CatalystandSmartrac,offertoretailers.

Finally,weformulateaseriesofrecommendationsthatretailersshouldconsiderwhenimplementingstrategiestoadoptIoTtechnologyin-store.

• Readersmayalsobeinterestedinourreport,AnOverviewoftheDigitalizationoftheApparelSupplyChain,whichcanbefoundonFungGlobalRetailTech.com.

IoTinRetail:TrackingStorePerformanceandInteractingwithCustomersWecandistinguishbetweentwocoretypesofIoTretailtechnology,accordingtothemainfunctionoftheconnecteddevices:

• Technologythattracksinventoryand/orconsumerbehavior:Thisincludesdeviceswithradio-frequencyidentification(RFID)sensorsthatcantrackthelocationandmovementofitemsin-store,aswellastrackconsumerbehaviorin-store.

• Technologythatinteractswithcustomers:Thisincludesdevicesthatmakeshoppers’experienceeasierandmoreengaging,suchassmartmirrorsthatenablecustomerstovirtuallytryonclothing.

TheapplicationofIoTdevicesinstoresispartofthebroadertrendthatisseeingtheadoptionoftechnologyinbrick-and-mortaroperations.InFigure1,welistselectedtechnologiesthatarefindingapplicationsinbrick-and-mortarstores.SomeofthoselistedareborderlineIoTormaynotbeconsideredIoTwithinourdefinition,buttheyareadjacenttoand,insomecases,interchangeablewithIoTproducts.Beacons,forexample,operatearelativelysimplesystemoflocalizedBluetoothtransmissions;the“work”isdonebytheuser’ssmartphoneinresponsetothosetransmissions.

ApplyingIoTtechnologytoaphysicalstoreenvironmentcanincreasetheefficiencyofoperationsandunleashnewrevenueopportunities,amongotheradvantages.

TheapplicationofIoTdevicesinstoresispartofthebroadertrendthatisseeingtheadoptionoftechnologyinbrick-and-mortaroperations.

https://fungglobalretailtech.com/research/deep-dive-overview-digitalization-apparel-supply-chain/

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Figure1.ListofSelectedIn-StoreTechnologiesandTheirApplications

Technology Description Application

SmartLighting/Thermostat

Sensorsthatdetectstorelightingandtemperature,collectdataandfeeditintoalgorithmsabletocreatepatternsthatregulatelights/temperature.

Thetechnologyisusedtoimprovetheenergyefficiencyofthestore.

Source:Trendhunter.com

VisibleLightCommunication(VLC)

FluorescentlampsorLEDsthattransmitsignalsthoughvisiblelightthatcanbereceivedbyasmartphonecamera.

RetailersuseVLCtocommunicatewithshoppersinstore,forexample,helpingcustomerstolocateanitemontheirshoppinglist.

Source:Futuristech.info

Beacon Wirelesstransmittertechnologythatcancommunicatewithcompatiblesoftware,includingappsinstalledonsmartphones,byusingBluetoothsignals.

Retailersusebeaconstosendcustomerstargetedmessagesontheirsmartphonedevices.

Source:Obeyproximity.com

NearFieldCommunication(NFC)Tags

NFCisashort-rangewirelessconnectivitytechnologythatenablescommunicationbetweendevices.

RetailersusethetechnologytoprovideinformationaboutanitemwhenthecustomerscansthecorrespondingNFCtagwithaNFC-enabledsmartphone.

Source:Rfidjournal.com

RFIDDevices RFIDusesradiowavestoidentifyandtrackitemsandtoenablecommunicationbetweendevices.

RetailersuseRFIDforinventorymanagementandforintegrationofin-storeconnecteddevicessuchasRFIDtagsandinteractivescreenssuchassmartmirrors.

Source:Rfidglobal.org

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SmartShelves Smartshelvesareelectronic,connectedshelvesthatdetectthelevelofinventory,usingtechnologysuchasRFID.

Smartshelvesareusedtoimproveinventorymanagement.

Source:Pccwsolutions.com

ElectronicShelf-EdgeLabels(ESL)

ESLconsistofconnecteddigitalpricetagsthatcancommunicatewithastoremanagementsystem(suchasaserverthatstoresdataandsoftwarethatallowsmanagerstovisualizedataandtomakedecisions).

RetailersuseESLtochangethepricingofitemsontheshelvesinrealtime.

Source:Electronicshelflabelling.co.nz

SmartRobots Autonomousmobiledevicesthatcannavigatethroughthestoreandcompletesimple,repetitivetasks.

Retailersusesmartrobotsforinventorymanagement,suchascheckingthelevelofstockandtoreplenishtheshelves.

Source:SimbeRobotics

SmartShoppingCarts Sensor-enabledcartsareabletocommunicatewithotheritemsin-storesuchassmart-taggeditemsandtosenddatatoacentralserver.

Retailersusesmartshoppingcartstohelpshopperstonavigatethestoreandtolocatetheitemstheyaresearchingfor.

Source:Roboticstrends.com

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InteractiveFittingRooms

FittingroomsfeaturingconnectedinteractivescreenswithtechnologiessuchasRFIDproductrecognitionandtouchscreens.

Screensininteractivefittingroomscandetectwhatitemtheshopperistryingonandinteractwiththem,forexamplebyshowingotheritemsthatmatchwithit.

Source:OakLabs

SmartPackaging PackagingwithconnectedtechnologysuchasNFCthatcanmonitorthefreshnessofaproductorcansendinformationaboutanitemtotheshopper’ssmartphone.

Retailerscanusethetechnologytoimproveinventorymanagementandcustomerengagement.

Source:Packagingdigest.com

VirtualReality(VR) VRenablesuserswearingapieceofhardware(oculusrift)toexperiencearealisticsimulationofa3Denvironment.

VRenablesshopperstoexperienceanitemorservicevirtuallybeforepurchasingit.SeveralcompaniesalreadyuseVRtohelpinthepurchasingprocess:carmanufacturerVolvoofferscustomersVRtestdrives;customersatpackageholidayproviderThomasCookcanuseVRtoexperiencewhatitfeelslikebeingatoneoftheholidayresorts.

Source:MicrosoftHoloLens

Source:FungGlobalRetail&Technology

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AdvantagesofIoTinRetailEssentially,theapplicationofIoTtechnologyhelpsretailersmakeinventorymanagementmoreefficient,measurestoreperformanceandimprovethecustomerexperience.Inparticular,IoTinretailcanbringthefollowingadvantages:

• Optimizationofstoreoperations:AmajoradvantageofIoTinretailisthedigitizationofin-storeinventory.Thismakesitpossibleforretailerstotrackinventorylevelsandlocationofitemsin-storeatanytimeinordertoavoidmisplacedstock.Thisimprovesstorereadiness,increasestransparencyandvisibilityoftheoperationsandmakesitpossibletorunsystemsthatimproveefficiency,suchasautomatedalertsforstockreplenishment.

• In-storeanalytics:Datageneratedbytrackingthemovementofitemsin-storeandconsumerbehaviormakesitpossibletorecordmetricssuchasconversionratesandtomakedecisionstoimprovestoreperformancesuchasincreasingthevisibilityofthebest-performingitems.Forexample,usingsensorstotrackthemovementofitemsin-store—suchaswhichitemsaretriedonandbroughttothecheckoutforpurchasing—canhelpmanagersimprovestorelayoutbyplacingmorepopularproductsinhigh-trafficareas.

• Closerintegrationwiththerestofthesupplychain:In-storeinventorytrackingthroughIoTenablescloserintegrationwithotherstagesofthesupplychainsuchasdistribution,supportingmoreefficientoperations.Weprovideanoverviewofthebenefitofanintegratedapparelsupplychainthroughdigitalizationinourreport,AnOverviewoftheDigitalizationoftheApparelSupplyChain.

• Improvedconsumerexperience:In-storeconnectedtechnologyincreasesmerchandiseengagement—forexamplebyusingsmartmirrorsthatenablecustomerstovirtuallytryonitemsorthroughNFCtagsthatsendinformationaboutanitemtothecustomer’ssmartphone.

• Newrevenueopportunities:Byincreasingtheopportunitiesforcustomerstoconnectandinteractwithretailers,IoTcanhelpretailersgrowrevenues.Forexample,usingin-storedigitalscreens,shopperscouldordersizesorcolorsthatarenotinstockin-store.

InFigure2,weillustrateatangibleexampleofhowIoTtechnologyimprovesretailoperations—comparingthelevelofinventoryaccuracybetweenbarcodedandRFIDsystems.

IoTtechnologyhelpsretailersmakeinventorymanagementmoreefficient,measurestoreperformanceandimprovethecustomerexperience.

https://fungglobalretailtech.com/research/deep-dive-overview-digitalization-apparel-supply-chain/

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Figure2.HowIoTinRetailImprovesOperations:Barcodedvs.RFIDStockFilingAccuracy

Source:smartrac-group.com

Byincreasingtheefficiencyofretailers’operations,IoTgeneratesvaluegrowthfortheretailindustryasawhole.TheadoptionofIoTtechnologiesisexpectedtobringtotheretailindustryanestimatedtotaleconomicbenefitof£4.5billion(US$5.6billion)intheperiodfrom2015through2020,accordingtothebusinessanalyticssoftwareorganizationSASInstitute.However,unlikethebrick-and-mortar-storefocusofthisreport,thattotalislikelytoincorporatebenefitsyieldedintheretailsupplychainandlogistics.

TechnologiesthatCanChangeStoreRetailingIoTinretailhasthepotentialtotransformthewaybrick-and-mortarstoresoperate,howtheyaremanagedandhowtheyinteractwithcustomers.Signsoftheprofoundimpactthatdigitaltechnologieshaveonbrick-and-mortaroperationsarealreadyvisible.Inparticular,thenewconceptstoreAmazonGoshowshowtoprovideafrictionlessgroceryshoppingexperiencewiththeuseofAI.

AnotherremarkableapplicationofIoTinretailisVLC,whichpromisestorevolutionizethewaytheretailerengageswiththeshopperin-store.OtherexamplesofhowIoTchangesthewaycustomersshopinbrick-and-mortarstoresincludeRebeccaMinkoff’sconnectedstore,RazorshopbyRazorfishShopWithMebyWith.Me,andWalmart’sandPanasonic’sSmartShoppingCartsolutions.Inthissection,weprovideshortprofilesforeachoftheseinnovativeconcepts.

AmazonGo:TheStoreRunbyAIOnDecember5,2016,AmazonannouncedthelaunchofAmazonGo,anewconceptstorewithoutcheckoutlines.AmazonGouseAItoprovideafrictionlessshoppingexperience.Theideaistoeliminatewaitingtimeandlinesatthecheckoutsbyeliminatingphysicalcheckouts.

Barcoded:60%‒70%accuracyrangedependingoncycleofrecmficamon

RFID:98%accuracymeasuredinrealmme

Thehighdegreeofaccuracyminimizesrevenuelossduetoout-of-stocksituamonsandenablesmulmchannelscenarioswherecustomerscould

checkavailabilityonlinepriortotravelingtoastore

Byincreasingtheefficiencyofretailers’operations,IoTgeneratesavaluegrowthfortheretailindustryasawhole.

Signsoftheprofoundimpactthatdigitaltechnologieshaveonbrick-and-mortaroperationsarealreadyvisible.

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Source:Amazon.com

UsinganAmazonGoapp,shoppersswipetheirsmartphonesonturnstilesastheyenterthestore.Asystemofcomputervision,sensorfusionanddeeplearningdetectswhichproductstheshopperpicksupandwhichonesarereturnedtotheshelvesandchargesthecustomeraccordingly.Thetotalbalanceisthenchargedontheshopper’sAmazonaccount.Thecustomercanjustwalkout,aspaymentwillbetakenautomaticallyfromthebankcardfiledwiththeaccount.Amazonpointsoutthatsimilartechnologyisbeingusedinself-drivingcars.

Thefirst,1,800-square-footstoreisinSeattle.Atthetimeofwriting,thestoreisstillnotopentothepublic.Theopeningisexpectedinearly2017,accordingtomediareports.

EngagewithShoppersThroughLightwithVLCVLCisatechnologythatuseslightsourcessuchasLEDlightbulbstosendinformationthroughvisiblelightthatcanbereceivedandreadbydevices,includingsmartphones,throughtheircamera.Thesystemcanactasanindoorpositioningsystem.Inbrick-and-mortarretailing,VLCcanbeusedtosendlocation-basednotificationstoshoppers’smartphones—forexampleinformationaboutpromotionsordirectionstohelpcustomersnavigatethroughthestoreandlocatetheitemstheyarelookingfor.

In2015,FrenchretailerCarrefourintroducedVLCinitshypermarketEuraLilleinLille,France.Thetechnology,fromDutchelectronicsfirmPhilips,wastestedbytheretaileraspartofapromotionalcampaign“PromoC-où”tohelpconsumerslocatepromotionaloffersin-store.Throughanapp,shopperscouldcompileashoppinglistofitemsonoffer.Oncein-store,VLCwouldsenddirectionstothecustomers’smartphonetolocatetheitems.Thetestlasteduntiltheendof2016,whenthepromotionended.

AmazonGousesAItoprovideafrictionlessshoppingexperience.

VLCisatechnologythatuseslightsourcessuchasLEDlightbulbstosendinformationthroughvisiblelight.

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Source:Philips

RebeccaMinkoffConnectedStoreFashionfirmRebeccaMinkoffoperatesaConnectedStoreinNewYorkthatfeaturesconnectedwalls—asystemofscreensthroughwhichtheshoppercanbrowsethecollectionandorderitemstobesenttothefittingroombyastoreassociate.Thefittingroomsfeaturedigitalmirrors—mirroreddisplaysthatuseRFIDtorecognizetheitemsintheroomandthatsuggestwhatothersizesorcolorareavailableinstock.Throughthemirrors,theshoppercanaskforotheritemstobebroughttothefittingroom,andrequeststorepersonneltosendtheselecteditemstothecheckoutforpurchase.Thedigitalmirrorgathersdataaboutthecustomerswhichwillenablethedevicetogivetheshopperstylerecommendationsbasedontheirpastshoppinghistory.

Source:Digiday.com

Thefittingroomsfeaturedigitalmirrors—mirroreddisplaysthatuseRFIDtorecognizetheitemsintheroomandthatsuggestwhatothersizesorcolorareavailableinstock.

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RazorshopbyRazorfishUStechcompaniesRazorfishandAdobehavedevelopedRazorshop,adigitalretailenvironmentthatenablestheprofilingofcustomersinordertopositivelyinfluencetheirshoppingbehaviorandprovidethemwithapersonalizedshoppingexperience.Theservicecombinesaseriesofproprietarytechnology:

BluetoothLowEnergyExperiencePlatform(BLEEP):BLEEPrecognizesashopper’ssmartphoneandsendsinformationaboutitemsinstockasthecustomerentersthestore.

In-storeCustomerEngagementApplication(ICE):ICErunsontabletsthroughwhichthestoreassociatecanbrowseinformation—storedinasecuredcloud—aboutacustomer’sshoppingbehavior,preferencesandhistory.

AdobeSoftware:Thisisusedbythesolutiontoprovidestoremanagerswithanalyticstoimprovestoreperformanceandthecustomers’shoppingexperience.

Thesmartshopalsofeaturesotherdevices,includinginteractivedisplaysthroughwhichthestoreassociatecanshowtheoutfitoptionstocustomersbasedontheirpreferences.

Source:Razorfish.com

ShopWithMebyWith.MeShopWithMeisaninteractivestoreinChicagodevelopedbyretailtechcompanyWith.Me.TheoutlethousescollectionsfromTOMSShoesandRaven+Lily,andfeaturesa30-foot-longpixelwallwithinteractiveshelvesthatcanmovetowardcustomersastheybrowse.Thesystemsuggestsitemstoshoppersaccordingtotheirindividualpreferences,basedondatagatheredbythein-storetechnologywhichmonitorsthebrowsingbehavioroftheshoppers.Dottedthroughoutthestoreareinteractivetables—tableswithaninteractivescreenthatgivesinformationaboutitems,whichareRFIDtagged,astheshopperplacesthemintheproximityofthesurface.

Razorshop,adigitalretailenvironmentthatenablestheprofilingofcustomersinordertopositivelyinfluencetheirshoppingbehavior.

ShopWithMeisaninteractivestoreinChicago,developedbyretailtechcompanyWith.Me.

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Source:ElectricRunway

WalmartandPanasonicSmartShoppingCartSolutionsWalmart:USretailerWalmartiscollaboratingwithtechcompanyFiveElementsRoboticsonthedevelopmentofasmartshoppingcartthatwillhelpshoppersnavigatethroughastoretofindproductsontheshelves.Thecartoperatesthroughanetworkofsensorsthatsenddatatoacentralcomputerthattracksinventoryandmatchesthecustomer’sshoppinglistwiththeavailableinventory.Thecentralcomputerwillthensenddirectionstothesmartcartsaboutthelocationoftheitemsonthelistwithinthestore.ThepatentwasfiledinMarch2016,butthetechnologyisstillnotoperationalinWalmartstoresatthetimeofwriting.

Panasonic:JapaneseelectronicsfirmPanasonichasdevelopedasimilarsolution,asmartshoppingbasketdesignedtodetectitemsinacartandcalculatethebill.Atthecheckout,thebottomofthebasketopensupandtheitemsslideintoashoppingbag.ThecompanytestedthesolutioninaLawsonstoreinOsakaandannouncedthatthesystemwillbefullyoperationalbyFebruary2017,accordingtoTheWallStreetJournal.

Source:ANNNews

WalmartiscollaboratingwithtechcompanyFiveElementsRoboticsonthedevelopmentofasmartshoppingcart.

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FurtherExamplesofIoTApplicationsinRetail:CatalystandSmartracInthissection,weprovideanoverviewofIoTproductsbytwocompanies:Li&Fung’sretailtechcompany,Catalyst,andDutchtechcompanySmartrac.ThetwocompaniesareworkingtogetheronanewRFIDpartnershiptoofferin-storeproducttracking.

Catalyst:InventoryControlforRetailCatalystprovidesinnovativeRFIDproductstohelpretailersmanagingretailinventories.TwooftheseproductsareCatalystScanandRFIDInventoryRobot:

• CatalystScan:CatalystScanisanefficientinventorymanagementproduct,consistingofanRFIDhandheldreaderthatuploadsdatadirectlytothecloud.Thescannerpairswithasmartphonethroughwhichtheusercanopenanapp,createaninventoryorcontinueanexistinginventoryandpopulateitbyscanningtheitems.Italsoenablesvisualinventory,asinformationabouttheitems—photosanddescription—canberetrievedfromthecloudduringthescanning.

Source:catalyst-direct.com

• CatalystRobot:TheCatalystRobotisanRFIDinventorymanagementproductthatconsistsofanautonomousandmobilerobotcapableofcompletingstoreinventories.Theroboteasilynavigatesaroundretailspacesandprovidesstockavailabilityandlocationdataonaregularbasis.

CatalystalsoprovidesRFIDproductsthatenhancecustomerengagementin-storeandimprovetheshoppingexperience:

• CatalystSmartScreen:Aninteractivetouchscreenthatallowsuserstointeractwiththeirgarmentonthescreen,viewthe‘completelook’andviewthegarment’sproductinformation.Toactivatethescreen,thecustomeronlyneedstoholdthegarmentclosetothescreen,whichdetectstheRFIDtagattachedtothegarmentandpullsassociatedcontentdownfromthecloud.

CatalystprovidesinnovativeRFIDsolutionstohelpretailersmanageinventories.

CatalystalsoprovidesRFIDsolutionsthatenhancecustomerengagementinstoreandimprovetheshoppingexperience.

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RetailerssuchasBurberryandRebeccaMinkoff(asdiscussedearlierinthereport)alreadyusesimilartechnologyintheirstores.Burberry’sRegentStreetflagshipstoreinLondonfeaturesdigitalmirrorsthatuseRFIDtechnologytoidentifythegarmenttheshopperpicksupandshowsonthescreenfurtherinformationsuchasoutfitideas.

• CatalystSmartTray:Atraycombinedwithaninteractivetouchscreen.WhenacustomerplacesaproductthathasanRFIDtagontheSmartTray,thelatterdisplaysarangeofinformation,includingproductfeaturesandbenefits.Thetechnologyistypicallyusedforcosmeticsorfootwear.


Burberry’sRegentStreetflagshipstoreinLondonfeaturesdigitalmirrorsthatuseRFIDtechnology.

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SmartracRetailStoreOptimization:Metrics DutchtechcompanySmartracoffersMetrics,aretailstoreoptimizationsystemthatusessensorstotrackstoredata.

Smartrac’ssystemcanalsoshowstoremanagerswhathappenswhenanitemistakentothefittingroomandhowwellemployeesareengagingwithcustomers.Thesystemprovidesbrick-and-mortarretailerswithawealthofinventoryinformationtoimprovestockkeeping,displaysandsalesconversion.

Source:smartrac-group.com

Metricsconsistsofanetworkofsensorsthatcollectstoredata.Informationisgatheredthroughmotionsensors,RFIDdevicesandPointofSales(POS)datafeedback.Alltheinformationgatheredisthenstoredinthecloud.

Thesystemprovidesthesamelevelofanalyticsavailableinane-commerceenvironment,including:

• Insighttohelpexecutivesimprovestoremanagement.

• Actionsforemployees,suchasalertsthattellwhenanitemisoutofplaceorwhenreplenishmentisneeded.

StoremanagerscanusetheinformationtotrackKPIs,including:

• Howlongittakestoreplenishthesalesfloor.

• Howlongittakestostockanitemthatisreceived.

• How“clean”thestoreis(howmanyitemsaremisplaced).

IoTsystemssuchasSmartrac’sMetricsalsoenableexecutivestomeasureconversionfrombrowsingorfromtryingoninfittingrooms.Andmanagerscananalyzehowwellemployeesengagewithconsumersinordertoincreaseconversion.

Currently,retailersknowwhatsellsbasedonsalesdata.However,in-storeIoTsystemscangivefurtherinformation,suchasidentifyingitemswithalowconversionratio(itemspickedupmanytimes,yetarenotpurchasedoften),orconversely,whichitemsdonothaveenoughvisibilityrelativetotheirpotentialbasedontheirconversionratio.Thisinformationcanhelptoimprovethelayoutofthestorebyincreasingthevisibilityofmerchandisewithpotentialformoresales.

DutchtechcompanySmartracoffersMetrics,aretailstoreoptimizationsystemthatusessensorstotrackstoredata.

IoTsystemssuchasSmartrac’sMetricsalsoenableexecutivestomeasureconversionfrombrowsingorfromtryingoninfittingrooms.

Metricsconsistsofanetworkofsensorsthatcollectstoredata.

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Recommendations:ActFast,HandleDatawithCare,ReviewRelationshipwithSuppliersIoTinretailoffersmanyopportunitiesforretailerstoimproveefficiency,increaseconsumers’engagementandultimatelygeneratemorerevenuefromin-storesales.WhenimplementingtheirstrategiestoadoptIoTtechnologyin-store,webelievethatretailersshouldconsiderthefollowing:1)actfast,ascompetitorsareadoptingnewtechnologies;2)setupclearpoliciesonthehandlingofconsumerdata;and3)redefinetherelationshipwithothersupply-chainstakeholders.

ActFast,asCompetitorsareAdoptingNewTechnologiesRetailersthatwishtoremaincompetitiveshouldactfastanddeployanadoptionstrategyforIoTtechnologyin-store.

IoTinretailisstillinitsearlystage,butretailersareadoptingtechnologiesquickly.Only4%ofUS-basedapparelretailershadachievedfulladoptionofRFIDtagsasofJune2016,accordingtotheAuburnUniversityRFIDLab.However,theremaining96%ofretailerswereworkingtowardtheachievementoffullRFIDadoption,asshowninFigure3.Consequently,inthenearfuture,weexpectthatmostapparelretailersintheUSwillhaveRFIDtechnologyin-store.

Figure3.USApparelRetailAdoptionofRFID—June2016

Source:AuburnUniversityRFIDLab

Retailersareactingfastinadoptingthetechnology:forinstance,intheUK,retailershada21%IoTtechnologyadoptionratein2015,accordingtotheSASInstitute.ConsideringtheeconomicbenefitsintermsofincreasedefficiencythatIoTbringstoretailoperations,itcomesasnosurprisethatmostplayersintheindustryareundertakingstrategiestoadoptthetechnology.

0%:FeasibilityAssessment

35%:ProofofConcept

22%:Pilot

39%:PhasedDeployment

4%:FullDeployment

RetailersthatwishtoremaincompetitiveshouldactfastanddeployanadoptionstrategyforIoTtechnologyin-store.

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SetUpClearPoliciesontheHandlingofConsumerDataRetailersthatadoptin-storeIoTtechnologyneedtoconsiderthelegalimplicationsoftrackingconsumers’data,makeitcleartoconsumerswhendataisrecordedandforwhatreasons,anddefinecleardatahandlingresponsibilitiesandcomplianceprocedureswithintheorganization.

Thecollectionofconsumers’datathatIoTinretailmakespossiblecouldraiseconcernsamongshoppers.AccordingtoasurveyundertakenbyresearchorganizationComRes,69%ofrespondentsvoicedconcernsaboutthecollectionanduseofpersonaldatabyorganizationsthroughconnecteddevices.

Figure4.LevelofConcernTowardtheCollectionandUsageofPersonalDatabyOrganizationsThroughConnectedDevices:%ofRespondents

Base:1,000UKadultsaged18+.Period:February18,2015toFebruary23,2015.Source:ComRes

Moreover,dataprotectionregulationscouldundermineretailers’abilitytousedatagatheredbyIoTtechnologyforconsumerbehavioranalytics.Forexample,theGeneralDataProtectionRegulation(GDPR),anewregulationthatwillregulatedataprotectionintheEUandcomesintoeffectfrom2018,introducesmorestringentprovisionsfororganizations—includingretailers—operatingintheEUandusingdataprocessingtechnology.

RedefinetheRelationshipwithOtherSupply-ChainStakeholdersRetailersadoptingIoTtechnologyshouldredefinetherelationshipwithotherstakeholderswithinthesupplychain,andchoosebusinesspartnerswithoperationsthatarereadytoeffectivelymeettherequirementsoftheincreasedefficiencythetechnologybringstotheretailer.

WehaveseeninthereporthowtheIoTtechnologiesthattrackin-storeinventorycanbringacloserintegrationandbettercoordinationwiththerestofthesupplychain,makingtheretailers’operationsmoreefficient.Forexample,in-storesensorscanbeusedtotrackinventoryinrealtimeandtoprocessordersmoreswiftly.Figure5summarizesthecloserintegrationbetweentheretailerandthesupplierenabledbyIoTtechnology.

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Retailersthatadoptin-storeIoTtechnologyneedtoconsiderthelegalimplicationsoftrackingconsumers’data.

RetailersadoptingIoTtechnologyshouldredefinetherelationshipwithotherstakeholderswithinthesupplychain.

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Figure5.IoTinRetailIncreasesEfficiencyintheRetailer/SupplierRelationship

Source:FungGlobalRetail&Technology

Inordertocapitalizeontheseadvantages,retailersshouldpartnerupwithsuppliersthatcanreceiveandrespondpromptlyandefficientlytothefrequentorderstriggeredbytheretailer’sreal-timeinventorytrackingsystem.

KeyTakeawaysIoTtechnologyhasthepotentialtotransformthewayretailersoperatebrick-and-mortarstores.RFID,NFCandVLCareamongthetechnologiesofferingpromisetoretailers.

IoTbringsmanyadvantagestoretailers,suchasmakingstoreoperationsmoreefficientduetotheconnecteddevices’abilitytotrackinventorylevelsinrealtime,orthepossibilityofimprovingthecustomer’sstorejourneybyincreasingthemerchandiseengagementthroughdevicessuchassmartmirrors.

CompaniessuchasAmazon,WalmartandCarrefourareapplyingIoTtechnologyintheirbrick-and-mortaroperations.Wecanexpectotherretailerstofollowsuit,inabidtocatchupwiththeindustryleaders.

RetailerslookingtoadoptIoTtechnologyin-storeneedtoconsidertheimplicationsofhandlingshoppers’datagatheredthroughIoTtechnologyinordertoavoiddataprotectionbreaches.Moreover,retailersshouldalsoendeavourtoworkwithsuppliersreadytohelpthemcapitalizeontheincreasedefficiencybroughtbyIoT.

CompaniessuchasAmazon,WalmartandCarrefourareapplyingIoTtechnologyintheirbrick-and-mortaroperations.Wecanexpectotherretailerstofollowsuit,inabidtocatchupwiththeindustryleaders.

Retailer’sInventory

Supplier’sWarehouse

IoTTechnology

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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected] ResearchAssociate

HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017

FungGlobalRetailTech.com

deep dive: iot in retail— · iot applications in retail consist of connected devices mainly used...

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