Connected consumers, IoT and what retailers need to do now
By Anne-Lindsay Beall, SAS Insights Editor
Doing your laundry and notice you’re low on detergent? That used to mean a trip to the grocery store. Now, you now have options: You can order it online; you can press your Tide Amazon Dash button to have it ordered automatically, or you can ask Alexa to order it for you. But in the future, you won't need to do anything. Your smart washing machine will sense and track how many loads you’ve washed since your last detergent purchase and place the order automatically so that you never. Run. Out.
It’s coming, and sooner than you think. Consumers are connected, devices are connected; it’s the Internet of Things (IoT), and it’s going to have a massive impact on our lives. It’s already having an impact in retail, with more to come as retailers adopt new technology and uses.
“The IoT does three things for retailers,” said Lori Schafer, Executive Adviser for Retail and CPG at SAS, speaking recently at SAS® Global Forum. “It helps you sense who the customers are and what they’re doing; it helps you better understand customer behavior and buying practices; and it allows you to then act upon customer insight to create a better overall experience for the customer.”
And while that creates a better customer experience, IoT applications have to translate to bottom-line profitability. Schafer brought together a panel of experts – Steve Brown, Senior Industry Adviser for Retail, Hospitality and Consumer Goods at Intel; and Ed Jimenez, Director of Customer Experience for Retail and Hospitality at Cisco – to discuss what’s happening now, and what needs to happen if retailers are to profit from IoT. Here are the highlights from that discussion:
What’s Intel currently doing with IoT in regard to retail?
Steve Brown: More retailers are making business decisions based on data instead of gut instinct, so there are a lot of folks at Intel who help gather that data. The IoT is a big piece of that, and then analyzing that data and turning it into action.
Another thing we're looking at is what we call mobile knowledge. How do you empower the front lines – store associates, call center staff, servers in a restaurant – with the information they need right now to better serve the customer, make more efficient decisions, to know what to do next?
What about Cisco? What's your retail division exploring in terms of IoT?
Ed Jimenez: A lot of our retailers are really trying to figure out this whole connected customer. Who is that? How do I engage with him differently?
And for us that really means two things. One, that it's a mobile customer. On average, people in the US look at their phones 1,500 times a day and spend an average of 177 minutes a day looking at their smart device.
That tells us that the environment has changed. People are different in the ways they communicate and engage. And it's really tough for our retail customers to figure out: “How do I engage with that?”
The second thing we talk about are the expectations of connected customers. We call it “Amazoning.” People have that Amazon expectation of all of their engagements. You expect a certain level of interaction. You expect people to know who you are and have some context. Most of our retail customers are looking to provide a contextualized engagement with their customers. That's what people are looking for, so how can I leverage technology to do that?
Schafer: When you think of IoT it’s a triangle: the sensors, the network and the analytics – sometimes real-time analytics. And that's where the three of us come in. We’re all are in the same type of role, meaning that we're not out selling; we're really helping to define best practices and work with the early thought leaders in retail in terms of bringing the latest technology.
Many retailers feel IoT is for “later.” Can you give some good examples of what retailers are doing with IoT now?
Jimenez: When you think about what IoT really is, it's about sensing, predicting and responding. In retail we see a lot of activity around sensing devices, sensing phones, sensing consumers – that's happening today.
At Cisco, we engage with roughly 53 of the largest retailers in the US. And a good half of those have significant deployments of this type of sensing: Who's coming into my store, what are they doing, where are they going, what are the traffic patterns, how can I provide different types of customer experience for those individuals? So it’s not a future thing – we absolutely see it happening today.
Brown: I worry for the retailers that aren’t on this already. Because at Intel we have retail customers who are all over this stuff. They realize that this is going to make or break their business targets.
And I see other retail customers who’re looking at their peers and saying, “Well, I'm going to wait until they do it.”
They're looking at the wrong benchmark. Because they're comparing themselves to peers who are also going to also be put out of business by Amazon, by Alibaba, by the people who are investing in IoT.
So, what type of investments are your retailers making?
Brown: Sometimes it's simple stuff. In China there’s a partner of ours who sells Wi-Fi and other services into retail and hospitality companies, restaurants and bars. If you go into a Starbucks, or a Haagen-Dazs, or any of the restaurants in China that they’re in, they have a service that senses and counts the MAC addresses in the establishment. If there are a lot of MAC addresses, that means it's busy, and you want to get the people in and then get them out so you can serve more customers. So they change the music; they play rap music or something else with a faster beat to speed things up. If there aren’t many people in, they play Frank Sinatra or soft jazz to make people stay a little bit longer and relax. That makes the store look more full and draws more people in. And it's all very precisely measured.
That’s a simple application, but more sophisticated applications are coming. Like smart fitting rooms that sense the style number and sizes of the clothes you’ve brought in with you and helps you shop by having different sizes and items brought to you.
One application everyone wants to know about is next-best offer. Is anybody doing that now?
Brown: Pizza Hut in Hong Kong and China uses geofencing. So if you're a Pizza Hut customer and have the Pizza Hut app on your phone, they can sense when you're near their store, and they’ll push you an offer: “Come in right now for 20% off pizza!” They also geofence their competitors, so if you walk near a Domino’s, they’ll send you an even more aggressive offer than if you were near a Pizza Hut. So people are doing it, but they're doing it in different ways.
How do you walk the line between being useful to the customer and being creepy?
Jimenez: It’s a fine line between helpful and creepy. So I think it comes down to how you present it. You present the information that, at least with some people, they've opted in for, so they're not shocked by it. They’ve asked you to track them, to understand them better, to provide you with that level of personal attention.
As we all know, you can't wait another four years to invest in this. You need to start now. As a company just starting out, what would you recommend?
Jimenez: One big area is ROI and feedback. We're working with a big retailer that does a lot of analysis that’s helped it make more and more accurate predictions about its business and its market. It’s getting better and better and further out with predictions, and that's enabled it to create efficiencies on cashiering and labor. The grocer we're working with was able to save 5% in the cash-wrap area alone.
And from a customer experience standpoint, it was able to cut wait times in half because now it’s flooding and pulling out cashiers by predicting the need in advance.
Where do you see the retail world in five years and in 10 years, with respect to IoT and in general?
Brown: Five years from now we’re going to see more consumers buying more and more of their products online. Ten years from now, your home will figure out what you need and place orders for you. We’re starting to see this now with the Amazon Dash button.
Jimenez: All we've been talking about here is going to explode on a seismic scale. Things are just getting smarter and cheaper. Most locations have access points, and Cisco and other companies are embedding beacons into them, so you're going to move from the fact that we know you're in this room, to the fact that I know you're sitting in this chair.
And video will be huge. MIT used off-the-shelf cheap cameras to zoom in on test subjects and check facial color change based on heart rate. Using that, they can determine mood. Just standard, off-the-shelf cameras can determine mood.
We're moving from a more connected world to a more informed world. And if you're a retailer that isn't informed, you're going to be at a big disadvantage.