Today’s retailers face a rising tide of change, disruption, and challenges, all driven by technology. As their business landscape is upended, many are struggling to adapt to changing consumer behaviors, competition from disruptive innovators, and exponentially increasing complexity.

The source of much of this disruption is the Internet of Everything (IoE). IoE is the networked connection of people, process, data, and things, and Cisco projects these connections to surge from 13 billion today to 50 billion in the next decade. For retailers, that means a sharp increase in the potential channels, devices, and shopping journeys that are available to consumers. Increasingly, retailers must meet new demands for relevant, efficient, and convenient shopping experiences, whether in-store or out.


But for traditional retailers, IoE also presents tremendous opportunities. At the National Retail Federation’s “Big Show” in New York this week, I have seen a great openness to change and innovation. As I see it, traditional retailers are ready to step into the IoE era, but they will need the right ecosystem of partners to guide them through the transformation and help them make the right investments.

To better understand these opportunities and the changing competitive dynamics in retail, Cisco recently undertook a comprehensive, three-pronged study consisting of original research, economic analysis, and interviews with retail industry thought leaders. Released this week, the first wave of primary research findings includes 1240 consumer responses from the United States and the United Kingdom.

A key theme that emerged from the research was that today’s consumers demand new kinds of digital experiences, both in-store and out. In our survey, we presented respondents with 19 concept tests — everything from digital signage and same-day delivery to mobile payments and augmented reality. Above all, we found that shoppers seek a hyper-relevant experience — more so than a hyper-personalized one. In short, efficiency and savings are more important to them than personal engagement.

In our survey, 38 percent of respondents identified greater efficiency in the shopping process (e.g., ensuring items are in stock, speeding checkout times) as the area retailers most need to improve. By contrast, 13 percent sought improvements that would lead to a more personalized shopping experience.

But what is hyper-relevance? We see it as a new paradigm that enables consumers to receive what they want, when and how they want it. Hyper-relevance is made possible by new IoE-enabled solutions and innovative business models that deliver value — whether greater savings, efficiency, or engagement — in real time throughout the shopping lifecycle.

In this new paradigm, insight is the new currency, and context is king. That requires an analytics-driven approach that applies intelligence to the context of the consumer (where he or she is, what he or she is looking to accomplish), thereby allowing retailers to dynamically provide the most suitable experience.

There is clear upside for retailers who adopt the technologies that will enable these new customer experiences. Our economic analysis estimates that for a $20 billion retailer, the total gross annual value opportunity associated with IoE is $312 million, representing a $219 million net margin increase and a 15.6 percent improvement in profitability.

But how do retailers get started? Here are a few first steps that I believe will set them on the road to capturing true IoE value:

  1. Focus on innovations that deliver hyper-relevance for consumers.
  2. Forget everything you thought you know about the digital consumer — traditional customer segments are breaking down (grandmothers may favor shopping with a tablet; Gen X can still enjoy the in-store experience).
  3. Leverage analytics to gain visibility into what your customers are experiencing in the moment.
  4. Build a dynamic infrastructure and create agile processes that allow you to deliver hyper-relevant experiences.
  5. Develop new business models that drive innovation and enable hyper-relevance.

I believe strongly that retailers that do implement these changes will not only survive, but thrive. However, in 2013, Cisco estimated that out of the total IoE Value at Stake for the retail industry — $179.6 billion — a dismaying 55 percent of that value went unrealized. The opportunity to capture more of that value still exists. But today’s opportunity to create innovative new solutions and experiences will be tomorrow’s table stakes. Those retailers that act now to transform will be the winners in the new IoE economy.


Joseph M. Bradley

Global Vice President

Digital & IoT Advanced Services