These are especially difficult times for the retail industry.
For starters, several of retail’s marquee names announced store closings or layoffs following a disappointing holiday sales season. Retailers simply haven’t benefited from cheaper gas and a relatively strong overall U.S. job market —retail sales declined 0.1 percent in December from the previous month, according to the U.S. Department of Commerce.
Making matters worse, brick-and-mortar retailers are quickly losing ground to online giants like Amazon. According to a recent article in The New York Times, Amazon captured almost a quarter of all U.S. retail sales growth last year.
The retail industry’s comparatively low IT spending has also placed it at high risk of disruption by technology-savvy incumbents and digital-native upstarts. In fact, according to the Global Center for Digital Business Transformation (DBT Center), retail ranked third among 12 industries studied in terms of potential for digital disruption over the next five years.
Clearly, all of this should send a strong message to the retail industry. Yet, at least from a “digital transformation” perspective, the industry doesn’t appear to be listening. Although 56 percent of retail executives say digital disruption is a board-level or CXO concern, fewer than one-quarter are doing anything about it by actively disrupting their own businesses.
It is not altogether surprising, then, that according to a new Cisco study, retailers captured just 15 percent of their potential Digital Value at Stake in 2015. By comparison, financial services realized almost twice as much digital value.
There are, however, some excellent examples of effective digitization in the retail industry.
A perfect case in point is F&F, the clothing brand of U.K. grocery retailer Tesco.
F&F needed to address multiple challenges: limited floor space, little visibility into what customers did in stores, and poor customer awareness of F&F online.
Using a combination of in-store Wi-Fi and integrated mobile and tablet access for shop associates, F&F management can now track customer journeys and gain insight into customer behavior. Free Wi-Fi gave F&F the ability to track customer journeys in greater detail. It also provided a means to deliver curated content and context-specific offers directly to customers’ mobile phones, incorporating connected advertising.
Over three months, the number of customers logging onto Wi-Fi increased 50 percent. Customers spent roughly 30 to 50 percent of their physical dwell time online on personal devices, while also engaging with push offers. This engagement changed customer behavior, increasing dwell times and sales.
F&F was also eager to build its online customer base to augment its relatively small physical floor space. Key technologies in the store made this possible. Interactive kiosks allowed customers to order items online and have them delivered to the store or their home. This reduced the number of customers leaving empty-handed because their size or preferred style wasn’t in stock at the store. It also offered a strong introduction to F&F online—and to styles customers might not otherwise have seen. The brand has experienced a steady increase in online sales as a result.
F&F has also piloted “remote expert,” a means of providing virtual access to a style advisor who isn’t physically present in the store. Although associates on the floor are armed with tablets to help advise customers, remote experts offer personal styling advice. Using the same kinds of technology tools as next-generation workers, remote experts employ video conferencing to increase customer engagement—supporting sales, especially on higher-ticket items—and to promote F&F as a fashion brand.
For many retailers, the biggest challenge in becoming a digital business is figuring out where to start. Here are three steps to take:
- Evaluate where you are on the journey—are you using digital capabilities to enable operational efficiency, differentiate through improved business processes, or define new business models? There’s a good chance that you already have key elements of the required digital foundation.
- Build an investment plan to meet your business objectives. Prioritize the biggest areas of payback and plan short-term gains that can fund ongoing investment.
- Finally, use this investment plan to close the gap between the
digital capabilities you need and the outcomes you want. While the fundamentals will remain the same, your objectives and priorities may change over time.
The time for retailers to act is now.
Tags: Cisco, DBT Center, digital, digitization, Disruption, Global Center for Digital Business Transformation, retail, thought leadership, transformation, value at stake
If ever there was an industry and a time that epitomize “disruption,” it is the oil and gas industry today. Price declines of more than 50 percent since June 2014 have upended the sector, and dominate the agendas of industry executives. In fact, a new Cisco study identified “energy price volatility” as the external market force causing greatest concern for the industry today. The study, “A New Reality for Oil & Gas: Complex Market Dynamics Create Urgent Need for Digital Transformation,” shows an industry ripe for transformation by the Internet of Everything (IoE).
In the past, oil and gas (O&G) companies have attempted to address oil-price declines by resorting to short-term cost-cutting measures to see them through the slump. But this time is different. For one thing, it does not appear that prices will recover any time soon—if at all. Demand is down, and new production technologies are driving efficiencies that will increase production and keep prices low for the long term. This time, O&G firms will need to do more than cut costs – they’ll need to change their operating models through digital transformation.
For the study, we interviewed oil and gas executives, consultants, and analysts in 14 countries about the industry’s challenges, opportunities, and priorities. These experts identified intelligence from data as the key area needed to improve operational efficiency, and data analytics as the No. 1 driver of faster, better decision-making.
Additionally, the survey named faster problem resolution, better process control, and improved worker safety as the top three business benefits of IoE-powered technologies. The top three IoE-driven operational benefits were improved production efficiency, reduced downtime, and equipment performance optimization.
As an industry, oil and gas has been “digitized” for some time. True digital transformation, however, now requires adoption of the Internet of Everything — the networked connection of people, process, data, and things — throughout the value chain. Innovative firms are using today’s turbulent market landscape as an opportunity to grab competitive advantage by harnessing new IoE technologies. Read More »
Tags: analytics, CERAWeek, Cisco, Cisco Consulting Services, data, Digital transformation, GDP, Internet of Everything, IoE, oil and gas, oil price volatility, value at stake
In the Internet of Everything (IoE) economy, innovation is the name of the game.
IoE demands constant innovation and to keep pace companies must access creativity wherever it may arise. According to The Wall Street Journal, more than 34 percent of today’s workforce comes from outside our organization, and their fresh perspective can support innovation. Indeed, cross-pollination of industries is a key to innovation.
This scenario was illustrated in the below story shared by physicist David Matheson last week at the Frost & Sullivan’s GIL 2014: Silicon Valley conference, which I was honored to attend as a presenter.
Decades ago, a group of engineers were working late in the research lab run by their Silicon Valley employer when they noticed a cleaning man doodling his way through a dinner break. But these weren’t just ordinary doodles. The man had enormous artistic talent. Just the sort of talent the engineers — and the company — needed to depict their technology solutions on the printed page.
Excited at their discovery, the engineers rushed to their bosses the next day Read More »
Tags: Cisco, Cisco Consulting Services, employee productivity, Frost & Sullivan, GIL, innovation, Internet of Everything, internet of things, IoE, IoT, job creation, value at stake
The Internet of Things continues to add new things daily to a growing list of already connected things; and these “things” have the opportunity to completely change our world. Capabilities like context awareness, increased processing power and energy independence have all been made possible as more people and new types of information are connected. And each day, society gains and learns from these innovations, all a part of the Internet of Everything – a network of networks where billions of connections create unprecedented opportunities as well as new risks.
When it comes to the actual physical devices that are moving the Internet of Everything forward, most think of traditional conduits such as laptops, phones and “wearables.” But, the connections that are creating the Internet of Everything come in forms many may not even consider, from toothbrushes, trashcans, power tools – even entire cities. And while all of these connections amaze with their technology, the value that they create is the real story, for what it means now and for the future of our society.
Much is at stake when discussing the value that the Internet of Things holds. At this year’s CES Conference, it was estimated that the Internet of Things would become a $19 trillion market over the next several years. The number of mobile-connected devices will exceed the world’s population by the end of this year and by 2018, 96 percent of mobile data traffic will originate from these smart devices. The amount of these connections, coupled with reduced technology costs, has created possibilities for the future of the Internet of Things that are seemingly limitless:
- Sensors all along the food supply chain, together with Big Data analytics and the intelligence of the cloud, will help us optimize the delivery of food from “farm to fork.” Sensors in the field will be combined with weather forecasts and other data to trigger irrigation and harvest times for each crop. And sensors on the food itself will alert merchants and consumers about when the “sell by” and “use by” dates are approaching to prevent spoilage. All of this will significantly reduce food waste—which today amounts to about one-third of total world food production.
- A blue-tooth connected toothbrush that connects to a smartphone app is just one of the many devices on the market that promote a better quality of life through improved healthcare. Wearable technology like fitness trackers, health monitors, insulin pumps and even “smart” clothing can measure consumed calories, heart rates, the amount of medicine in a person’s body and transmit that data to patients and medical professionals in real-time. And 71% of Americans claim these types of devices have improved their overall health.
- The city of the future will be “smarter” as sensors turn street lights, waste receptacles and cameras into tools that will help municipalities operate on more efficient levels. Wim Elfrink outlined how Barcelona has used a network of sensors that transmit real-time data on temperature, noise and other conditions in one of the city’s most popular areas. Kansas City, Missouri has used the network of street lighting and interactive digital kiosks in conjunction with a $114 million streetcar project to promote the city to both residents, and companies potentially looking to relocate their operations.
Serving as a link to the Internet of Everything, all of the connected things that make up the fabric of the Internet of Things are leading to new economic opportunities, increased personalized connections and more importantly, positive intersections of technology and the human experience. Far beyond the monetary values that it can present to society, the Internet of Things is powerfully changing and improving quality of life for people across the globe, with billions of opportunities awaiting us all.
What impact has the Internet of Everything had on your life, professionally or personally? Thinking futuristically, in what ways can you dream of that use the Internet of Things and the Internet of Everything to change our world?
We want to know what examples of the Internet of Everything you see in your own City of Tomorrow – your neighborhood! Join the conversation online by tagging your photo and video examples with #InternetofEverything and #CityofTomorrow. How is the Internet of Everything changing your city?
Review the Cisco Visual Networking Index: Global Data Traffic Forecast Update, 2013
Tags: Cisco, cloud, Erica Schroeder, Internet of Everything, internet of things, IoE, IoT, mobility, Smart Devices, value at stake, wearable technology
This week I’m excited to participate in an event we are organizing in Chicago, home of the 2014 Internet of Things World Forum. We’re meeting with some of our partners and customers as we make a few joint announcements – including a new IoE Innovation Center in Barcelona, and showcasing some new solutions built on our platform by some of our partners. Additionally, I’m getting a preview of some of the amazing smart & connected deployments in Chicago – a preview for the IoT World Forum.
I am writing this blog as I gear up to lead Cisco’s Internet of Things (IoT) Systems & Software Group. Over the last few weeks I’ve spent time getting to know the group and have been struck by the tremendous energy and focus on customers and partners the team has. I’m also excited about how dynamic the Internet of Things space is.
While we’ve calculated the total economic value at stake for Internet of Everything by 2020 – $19T – and the number of potential connected devices – 50B – these nearly unfathomable numbers may, honestly, not pan out exactly to the decimal. The Internet of Everything could be smaller or, more likely, much much larger – but the overall point is that more and more people, process, data, and things are connecting. Professor Michael Nelson of Georgetown University has said that “Trying to determine the market size for the Internet of Things is like trying to calculate the market for plastics, circa 1940.” At that time it would have been nearly unfathomable for the numbers of existing things – milk containers, furniture, industrial components – to be made into plastic. And just as plastics have pervaded every part of our lives and enabled new industries, the connections created by Internet of Everything will too. I think that’s a great way to think about the untapped potential of this market. Read More »
Tags: Internet of Everything, internet of things, IoT, operational technology, OT, service providers, value at stake