The Internet Of Things. A Reality Check For Retail

As most people know, the IoT is not new. In fact, I first heard the term bandied about at the RFID Center at the Auto-ID labs at MIT, when I first became an analyst in 2002-2003. Back then, it was all about RFID. Now it’s about a little bit of everything when it comes to location-awareness, with everything from refrigerators to our mobile devices sending out “Hello World” beacons to anything or anyone who might want to pair with them.

Back in those early days of RFID, the opportunity to eliminate “line of sight” reads made everyone think of efficiencies. And the king of efficiencies, Walmart, created a mandate that all vendors tag cases and pallets destined for its distribution centers and stores with those IDs. The theory was that shrink would be reduced, the world would become more efficient, and it was only a matter of time (and economies of scale) before every can of peas had a tag on it.

Now, I would be happy to explain to you the problem Walmart’s mandate was solving, except I couldn’t figure it out then, and even today, I can’t tell you what the heck they thought they were going to accomplish. Maybe they could cut out a receiving clerk in each store? Grab a free scan when product was moved from the back room to the selling floor? Honestly, I never knew. What I did know was that the mandate would set back adoption by at least five years, more likely ten. I wasn’t wrong.

And that brought us to 2015…and the plethora of choices I mentioned above. And in 2016 we live in a world that seeks a better in-store customer experience. This was a major uber-theme at the show – seen on almost every booth: “create a better customer experience.”

That’s where the new generation of IoT comes in. There’s a sense that consumers will trade privacy for relevancy, and allow themselves to be tracked, promoted to, and marketed into a very happy experience.

Before I go further, I have to clearly state that the following views are solely my own. The fun part of working at RSR is we have no party line to tow. We have some strong IoT advocates, and at least one (me!) who thinks the consumer side of location tracking is a few years down the road.

Opinions aside, I am still a practical person. So here are the practical issues at hand, and also my thoughts on the highest, best, and closest in use of location-tracking in retail.

Issue #1: We still don’t have enough wifi enabled stores. In our most recent Store Benchmark report (dated August 2015), only 25% of respondents had wifi available for employees on the selling floor, and another 19% had wireless available for customers. Where is all that good data going to go? Even if beacons are just used up close and personal to deliver ads, how will we ever monitor their effectiveness? The infrastructure just isn’t ready yet.

Issue #2: Most retailers still haven’t finished implementing EMV. I know that Walmart, Target, Home Depot, Walgreens and CVS have got it going. A lot of independent retailers have it too. But most of the places I find myself shopping are still expecting me to swipe, rather than dip my card. And…more than half my cards still don’t have chips in any case. Finishing the implementation of EMV is going to take time and money. I’m not sure large retailers can do two major store projects at the same time.

Issue #3: Privacy remains a real and palpable issue. Because this is a pet topic for me, I check a lot of consumer studies on the topic of tracking. So far, it’s hard to find a majority of consumers in any age bracket or economic strata that are okay with being tracked. The closest thing I saw was one survey that had a “maybe” response in exchange for free (not cheap…free) stuff.

Okay, so that’s the bad news. But Leslie Hand of IDC gave me a much better suggestion: flip the model and tag the employees. Maybe she thought of it first (Ms. Omnichannel, thank you very much!) or maybe she heard it from a vendor. Wherever it came from, it’s a great idea.

One reason I like Uber is you can see exactly where your car is in relation to yourself. As a byproduct, yes, you’re revealing your location, but as a consumer of a service, you don’t even think about that. All you think about is the elimination of uncertainty. In fact, I learned that the NY taxi companies have created an app of their own that does much the same thing. Competition has brought them into the 21st century. They even take Apple Pay (something else I really like…although gloved hands proved challenging!).

So imagine yourself in a Target. You need help from an employee. Rather than wander the aisles looking for one, or finding a phone or a help desk, how cool would it be if you could fire up an app and see the closest one to you? You could walk towards them, or even put out a message saying “I need help.” That’s one customer experience I’d really enjoy.

It’s not going to solve issue #1 and issue #2, but it’ll put issue #3 to bed and finally, finally take price, or discounts, or free stuff out of the equation. We know from the same Store Benchmark I mentioned above that retailers really do know empowered employees are a big part of resurrecting the in-store experience. I wonder if we could not only help customers find those employees, but if stores might be able to make do with less of them if they were tagged and easy to find.

This is a lot easier than attempting to track every customer…and the analytics would be really interesting too. How fast do employees respond? Do sales increase overall?

But again, it brings us back to the very fundamental fact: wifi throughout the body of the store is today’s key imperative. It’s the enabler of the IoT (it IS an internet, after all), and it provides benefits we haven’t yet seen. So, start with infrastructure then bring the employees on board. That’s a problem looking for a solution.

And that’s my take on IoT.