Despite the freezing temperatures in New York City, one theme ran hot at the National Retail Federation 2016 Big Show: technology adoption within retail environments is increasing at a rapid pace. Although it wasn’t said out loud, it is clear that physical retailers are focused on reducing the technology gap with their online counterparts. After all, online retailers have made great strides in improving customer engagement and quite honestly, the brick and mortar companies are a bit jealous.
That’s not to say that physical stores lack their own competitive advantages. To this day, nothing beats the relationship that can be built with customers face to face, where it is possible to truly interact with products and services. However, the outstanding challenge still remains: how can physical retailers successfully incorporate technology to improve their operations and achieve the best of both worlds?
There was no lack of vendors offering solutions, including cutting-edge point of sale devices, location-sensing beacons, inventory tracking systems and content-rich digital signage networks. The choices can be overwhelming and over the course of the show another theme emerged: retailers lack a strategy to manage this ever growing list of technology.
More than one company I spoke with felt like they were experiencing technology overload. Each new system had its own management software, which did not immediately integrate with the rest of the store. These systems are also becoming critical to the operation of the business so an unexpected failure of a component can have a tangible negative impact, whether that be lost revenue or a poor customer experience.
In the cloud, where everything is virtualized, a broken machine is instantly replaced without human intervention. In the physical world, there is no equivalent. In some cases, retailers are turning to managed service providers, effectively outsourcing the management burden. I spoke with these companies too and they are faced with their own challenges: how can they scale their businesses without adding additional service technicians and trucks for each new contract?
Whether it be for the retailer or the managed service provider, the concepts behind the Internet of Things (IoT) movement have the ability to address these concerns. I’ve always described IoT as the convergence of technology in a way that leads to better business outcomes. The key is to create a comprehensive system that leverages the data generated by devices and sensors to move from a reactive to a proactive approach.
An industry insider told me that unplanned repairs can cost three times more than planned ones. This is an area where data analytics can be used to discover leading indicators to failure before it occurs. Combining this knowledge with real-time evaluation of device data enables the retailer to maximize the uptime of their technology. This is just as important to the quick serve restaurant (QSR) owner who fears that his kitchen equipment will fail in the middle of lunch rush as it is to the grocery store that needs to keep food at a certain temperature to ensure safety and reduce inventory loss.
The best scenarios are when you can combine data from all of your individual systems to make the best business decisions and this gets even better when you introduce automation into the equation. These are just a few examples of how IoT can help retailers adopt technology in a way that improves their businesses. Personally, I am very excited to see how the industry is evolving and I suspect this is only the beginning of the journey as retailers integrate the digital world into their physical presences.
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