Retailing used to be easy: research a market, find a product, rent a well-situated store and start attracting customers. But those good old days are gone and retailers today face an uphill battle to attract and retain customers.
Customer loyalty isn’t what it used to be and leading retailers use different technologies to attract, inspire and retain customers. Consumer behaviours have changed as a result of technology, and they will continue to evolve.
Today’s shoppers are highly connected and growth of connected devices is booming in Asia Pacific, with the region expected to be the biggest market by 2020. According to IDC Retail Insights Consumer Survey, 46% of consumers use retail mobile apps on a weekly basis and want to be engaged digitally.
So what is the Internet of Things (IoT), and why is it a big deal for retailers?
The Internet of Things
IDC defines IoT as a network of uniquely identifiable end points (or things) that communicate without human interaction using IP connectivity, be it locally or globally. The IoT ecosystem consist of devices, platforms, applications, analytics, security, service providers (telecommunication and consulting) and finally consumers.
The true value of the IoT in retail is the ability to build new sales channels by combining and analysing Big Data from household appliances, home security, health and wellness devices, and wearables into connected network that communicate directly to consumers about their consumption trends such as replacement of goods by monitoring perishable dates or daily diet.
This will require exploiting ecosystem value to generate seamless customer experiences that goes beyond the retail brand experience and put the consumer at the centre of the ecosystem.
Physical meets digital
IoT disrupts the retail business processes by converging physical and digital world, enables retailers to interact and engage consumers in real-time in physical and digital space. The IoT has rapidly expanded to “things” currently not connected to the internet providing services such as device charging, mobile broadband connectivity, and security.
IDC believes that by 2020 consumers interact with over 150 sensor-enabled devices daily and 25% of them are disposable. In addition, 60% of device interactions are passive as consumers accept information surfaced from intelligent systems and machine learning.
IoT in Asia Pacific
According to IDC, the Asia Pacific Internet of Things (IoT) industry will continue its strong growth, with the number of units, or “things”, connected to increase from 3.1 billion to 8.6 billion by 2020.
Over this same period, the total Asia Pacific excluding Japan (APeJ) market size will increase from USD250 billion to USD583 billion. China will continue to dominate the Asia Pacific region, accounting for 59% of the APeJ market opportunity by 2020, but also remain of the leading markets globally with nearly 1 out of every 5 units connected by 2020 to be in China.
However, the IoT market maturity is not the same as market size and we are only at the beginning of the retail IoT revolution. IoT adoption among Asia Pacific retailers is still in the very early stages and they have not started to form an IoT strategy.
However, those retailers who adopt IoT into their value chain will be positioned to deliver personalised capabilities that can increase revenue, reduce costs and drive a differentiated brand experience.