We live in a time of tremendous and challenging technological disruptions. Yet it is also a time when the opportunities for business transformation are equally vast and impactful. This is particularly true for the retail industry.
The wave of change, which Cisco calls the Internet of Everything (IoE), is fast-moving, and retailers will need to adapt quickly or be left behind. After all, this explosion in connectivity — from 10 billion things today to 50 billion in 2020 — will demand a new paradigm: the IoE-Ready Retailer. And it will enable vast improvements in customer experience, employee productivity, and supply-chain efficiency, while allowing retailers to know their customers like never before.
Cisco’s research into this new dimension in connectivity among people, process, data, and things — and the overall Value at Stake over the next 10 years —presents some mind-boggling numbers: $14.4 trillion for the private sector overall and another $4.6 trillion for public sector organizations.
As per Cisco’s estimate, the retail industry will account for 11 percent of the total IoE private sector Value at Stake over the next 10 years — second only to the manufacturing industry. Cisco believes that success for retailers will hinge particularly on their ability to apply technology to improve the “people” and “process” aspects of their businesses, and to be able to offer unique, new connected experiences to the average shopper.
Cisco’s new research, which explores how the average consumer is thinking and adopting these connected experiences, uncovers some startling facts. Consumers now research, compare, and purchase products with one-click ease. The population of ever-connected, digital natives is increasing at unprecedented rates (60%+ year over year). This affords sellers with a wealth of real-time data insights that can help them stock the right products and present them in novel ways.
Here are just a few of benefits possible for the IoE-Ready Retailer, as discerned from Cisco Consulting Services latest research:
- Interactive displays help shoppers explore and purchase products.
- Retailers customize marketing and advertising for the customer, lifting sales by 3 percent.
- Video collaboration tools enable shoppers to receive personal advice from experts, no matter the location, size of the store, or type of device.
- Mobility, remote collaboration, and Bring Your Own Device (BYOD) drive higher employee productivity and improve profitability — by up to 9 percent.
- Out-of-stock reduction leads to 1 percent sales uplift.
- Wireless technologies connect retailers to partners, keeping products in stock and preventing lost sales opportunities.
- Cisco’s connected mobile experience technology delivers personalized marketing and product information to shoppers’ mobile devices.
- Innovative payments alone could contribute to a 1 to 2 percent increase in profitability.
- Taking advantage of IoE offers an average retailer 12 percent higher profits by 2017.
In our analysis of IoE Value at Stake, we identified five key value drivers applicable to any industry. Here’s how those value drivers will combine to create the IoE-Ready Retailer:
Customer Experience. Historically, retailers interacted with customers on an impersonal, one-size-fits-all basis. Today, through a wide variety of IoE innovations, it’s possible to have real-time, microtargeted, and location-/context- aware offers. This type of omnichannel customer service makes it possible to create the same intimate customer experience regardless of the touchpoint — at home, in the store, or just about anywhere.
Innovation. In the past, retailers made merchandising decisions around imprecise sales numbers and their own gut feel about what will be a hot seller. IoE enables a much deeper level of innovation driven by predictive analytics tied to individual customer behavior, rather than to mass demographic data. That way, the prompts and offers seen by a customer reflect his or her true wants, needs, and preferences.
Employee Productivity. For many retailers, people resources don’t always reflect the demand at hand. But an IoE-ready retailer makes staffing decisions on a dynamic basis, based on in-store customer traffic patterns and deep customer data. The result is improved service and lower costs.
Supply Chain. Out-of-stock items are often at the top of customer complaint lists. Today we can offer applications such as the Endless Aisle that give customers an unlimited range of merchandise. Not just what’s in the store but what is available through the organization’s entire inventory, which is now online.
Assert Utilization. The always-on model for lighting, heating, and other such support elements has long contributed to high operating costs. The IoE-ready retailer applies adaptable energy consumption based on the traffic and operational needs of a particular location.
Cisco Consulting Services is helping to create the next generation of IoE-ready retailers, while enabling the industry to capture tomorrow’s possibilities today!
Find out more about what increased connections will mean for your retail operation.