Estimated reading time: 3 minutes
Out-of-stocks, overstocks and returns are costing retailers a whopping $1.75 trillion per year, a number to which, if you’re customers are not effectively managing their inventory, are contributing to. Retailers that manage their inventory using spreadsheets or other antiquated systems are costing themselves a lot of time, which is ultimately money lost.
It appears the Internet of Things has emerged as a key solution for retailers looking to thrive in this time of radical transformation. As insights from connected devices and data analytics behind some of retail’s greatest success stories come to light, retailers are finding that IoT-based solutions are saving money, delighting customers, improving inventory accuracy, and helping employees make smarter decisions faster.
IoT holds enormous potential for retailers, but IoT solutions are still far from widespread in the industry. Many retailers may not be sure how to start an IoT initiative, even if they know an investment in the technology will yield returns. Too many retailers still rely on physical inventories and the results are time consuming, imprecise, and corrections are little more than guesses. Retailers are often unaware of how big the problem is and this is apparent in two conflicting stats. Retailers will tell you that they are in stock 92 percent of the time because that’s what their systems are reporting. But according to IHL Research, customers find what they are looking for only 75 percent of the time.
One key IoT technology that can improve the retailer’s inventory management is RFID, and depending on the type of readers used with RFID, retailers can achieve inventory accuracy up to 99% in real time. Many of these readers will even tell you where the inventory resides in the store, making locating of misplaced inventory extremely easy and ultimately more efficient.
Since eliminating out-of-stock incidents leads to an average 2.7 percent increase in category annual sales, it’s worth your customers’ effort to manage their inventory more effectively. Consumers don’t appreciate stockouts, and helping your customer make this information immediately available to their customers will avoid frustration at checkout, keep customers coming back, and potentially avoid any negative sentiments towards their brands.
Another cool benefit of IoT in retail is seen through the combination of real-time, intelligent CRMs communicating with IoT devices throughout the store. Consumers today expect something in return for sharing their personal data with retailers. With IoT devices Customer data paired with in-store beacons, sensors, and Wi-Fi lets you provide awesome personalized shopping experiences. Research shows that less than 50 percent of enterprise retailers use customer profiles in real time at the store level. But the retailers that do use CRM profiles in real time see an 87 percent higher sales increase on average than those who don’t or can’t. Retailers now know what the consumer was looking at online, when they are in store, what aisle they are walking down, and what item in that aisle they are likely to buy. This in conjunction with digital signage software like can allow for delivery of powerful personalized promotions for each consumer that walks into their store. Retailers can effectively upsell in store just like online, boosting order size by 25% or more.
With IoT, retailers can understand how customers walk through their stores, where they stop, what they pick up and what they put back. Sensors, beacons, and cell phone tracking apps, allow retailers to capitalize on insights and buying habits to create customer-shopping experiences their customers crave. With improved inventory tracking and providing custom experiences like those mentioned above, retailers have a chance at combating even the largest of the online only retail giants that were once stealing market share in mass.
Co-contributor: Victor Pierson