Forecast of the IoT market, where to implement, advantages, practice, technological solutions.
The implementation of the Internet of Things has 3 advantages for retail and traditional trade. It is time for business to invest in the development of the IoT concept.
Globally, the Internet of Things in the retail market is estimated at $35.63 billion in 2020, the projected growth by 2026 is $67.60 billion. The average annual growth rate will be about 11.3% over the forecast period (2021-2026). The world of retail is seeing a significant impact and benefit from the IoT, offering the retail business more omnichannel experiences and greater profitability.
IoT allows you to gain insight into the effectiveness of a product and how to interact with new and existing customers. Some companies (one of them the well-known Zara) have launched smart devices to improve the customer experience. They collect big data for analysis, which they use to evaluate consumer preferences and in sales planning.
Two important factors set the growth trend of the Internet of Things in the next 5 years:
I. Companies are looking for advanced ways to analyze the large amounts of data generated by smart devices. Investments and costs for analytics with the existing network infrastructure will be high, and IoT can reduce them.
II. The ease of shopping and the penetration of smartphones into retail is driving the growth in the use of e-commerce platforms.
Where should IoT be implemented?
The idea of the Internet of Things in retail is currently feasible only in large economic centers – million-plus cities. The complex and important process of urbanization is strongly influenced.
On average in the country, we have been at the level of 74-74.5% for the last 8 years. The picture for the federal districts is more interesting – the Central, Ural, North-Western and Siberian regions are in the lead, with an average of 83.1%. Other regions are noticeably behind, but let’s not copy-paste Rosstat – the idea is important to us.
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What does it mean? 74% and 83.1% – indicators of urbanization – increasing the number of urban population, improving the quality of life and developing cities in various areas. It is cities that aggregate the largest share of innovation and technology adoption. And as we know, everything innovative has an attractive investment return (this is a key cost-effective factor for business) and high added value, which is good for companies in relevant fields, specialists and developers. Everyone is on the plus side!
The growth of online shopping is due to how popular it is now, not only because of the pandemic. The increase in the frequency of orders due to the loyalty of consumers to technologies (remember urbanization) and online stores is strongly influenced by the relatively low prices, since the costs of the same marketplaces are lower than those of traditional forms of retail.
Minimization of losses and theft
Checkpoint Systems estimates the annual loss of domestic retail at about $ 3 billion, which is ~ 1.1% of the total turnover in the country. Traditional methods of combating shoplifting are not enough, but existing IoT technologies are already able to close these gaps and increase control over shoppers. Amazon Go is proof of that.
IoT streamlines supply chain management, reduces inventory errors, and lowers labor costs.
Important! Ultimately, the Internet of Things can help traditional stores, which are on the verge of disappearing, compete with today’s online shopping world by dramatically improving the customer experience and reducing unnecessary costs.
Domestic and foreign practice of IoT in retail
America’s Amazon Go, an offline chain of self-service stores, is showing impressive results thanks to technical developments. The principle of operation is simple: there are turnstiles at the entrance to the store, which open when the customer logs in to the Amazon account via a QR code. You go in, you choose whatever you want, put it in a bag, you go out. You don’t have to pay anything yourself.
Thousands of sensors, surveillance cameras, artificial intelligence and machine learning see absolutely everything! Even the most cunning and invisible attempts to steal the system will detect and write down the goods in the check, which will automatically close when you leave the store, by debiting money from your Amazon account.
The exact investment in the Amazon Go project is unknown, but we can say with confidence that creating its analogue or private tools for solving specific problems will cost many times less.
Is the system applicable in modern realities? Yes! X5 has launched a pilot analogue of Pyaterochka with You – a large-scale opening of fifty stores is scheduled for 2021. Magnit also plans to develop an application for self-scanning products and buying them. However, under the “Magnet” system, thefts can only increase. Additionally, you need to develop a new or update an existing security system. The economics of such a project can be much more wasteful than Pyaterochka to Go.
IoT software solutions to improve the retail sector
NFC-enabled on-the-go technology creates exciting opportunities for retailers and merchants to inform shoppers and drive demand for products. For example, the American supermarket chain Kroger Co. experimentally introduced smart tags on shelves to display product information. The consumer can get all the comprehensive information about the product and is highly likely to buy it. In this information, you can work out the possible objections of the buyer and convince them of the correctness of the decision to buy the product, but this is already a marketing task.
All in all, NFC solves the problems associated with offline, powerless objects by providing the simplest and most intuitive way to indicate a user’s interest in performing an action. At the same time, the connection process is clearly beneficial for business and easily implemented by IoT specialists.
Data management platform (DMP) is a multitasking data management platform. Its main functionality is to collect data from different sources about consumers. In retail chain stores, special sensors for collecting, storing and transmitting data are installed, which determine the position of the client by the signal of his phone, using common wi-fi, triangulation in case of access to data from microcells nearby, data from surveillance cameras, etc. The system remembers which shelf of goods he stood next to, for how long, which goods attracted attention, how long it took to make a purchase decision, etc. This data is often used for marketing purposes. Integrating with MyTarget, VK, Facebook and Yandex, the DMP system sends targeted advertising to specific users and increases sales of relevant products (the same ones he was standing next to) or automatically works with objections, promoting similar products with those properties that were not enough client.
The system is actively used, but the cost for small companies and manufacturers is often very high. Therefore, it can be simplified to achieve a specific goal and stimulate sales in shops, kiosks, small stores where local brands are represented, which, no less than large ones, need affordable innovative promotion methods. This is just one of the priority areas for specialists in the field of IoT – the creation of a platform that is inexpensive to deploy, maintain and develop, through the use of a subscription format and data processing in a single point with a focus on small and medium-sized businesses. For example, this can be done in the cloud platform of the IoT solution manufacturer itself. A small store, Internet access, and an IoT platform plan are all you need to grow your sales!
Successful corporate solutions from American colleagues: ThinFilm NC, Gimble, Kaa Projects, Wise Shelf, Swirl, Memomi, Authentic or Not, Queuehop.
The growing need for data analytics and analytics integration will drive the use of the IoT market in the next 5 years. The increase in the urban population requires a developed infrastructure and innovative solutions.
The amount of wages in big cities, the number of residents (they are also consumers) and their loyalty to technology, the unfilled, almost empty IoT market in retail, the presence of local brands in shops and stores that need affordable business solutions – all this together is excellent motive for the widespread development of the Internet of things in traditional trade.
The benefits are significant, the implementation practice is positive, the market size in this area is estimated at millions of dollars.