How IoT Can Dis­rupt the Tra­di­tional Retail Busi­ness

Voice&Data - - COVER STORY - Su­nil Jose

If the In­ter­net of Things (IoT) is caus­ing a wave of dis­rup­tion across the mar­ket then the retail in­dus­try is poised to ride the crest of that wave. Un­like any other sec­tor, the retail in­dus­try has a direct con­tact with one of the largest pop­u­la­tion of po­ten­tial con­sumers that fully em­brace tech­nol­ogy and in­no­va­tion. Re­tail­ers need to stay cur­rent with the lat­est tech­nolo­gies to earn the loy­alty of the next-gen­er­a­tion con­sumers and cap­i­tal­ize on emerg­ing busi­ness op­por­tu­ni­ties. Ac­cord­ing to a re­cently re­leased TechSci Re­search re­port, ‘In­dia In­ter­net of Things (IoT) Mar­ket Op­por­tu­ni­ties & Fore­cast, 2020’, the IoT mar­ket in In­dia is pro­jected to grow at a CAGR of more than 28% dur­ing 2015-2020.

Ac­cord­ing to Bos­ton Con­sult­ing Group and Re­tail­ers As­so­ci­a­tion of In­dia re­port ti­tled ‘Retail 2020: Ret­ro­spect, Rein­vent, Rewrite’, In­dia’s retail mar­ket is cur­rently eval­u­ated at $600 bn and is ex­pected to dou­ble to $1 tn by 2020 largely driven by in­come growth, ur­ban­iza­tion, at­ti­tu­di­nal shifts, and most im­por­tantly the growth and pen­e­tra­tion of the In­ter­net across the coun­try. Mod­ern trade is ex­pected to grow three times to $180 bn in 2020 from $60 bn in 2015 and eCom­merce to grow at an even faster pace to quadru­ple in the same time to be­come a $60-70 bn mar­ket. The dig­i­tal plat­form is also shap­ing the way con­sumers buy and data sug­gests that there will be a rapid in­crease from the 35 mn peo­ple buy­ing on­line to about 100 mn in the next two years.

IoT: Driv­ing In­no­va­tion for Retail

IoT is viewed as a ma­jor driver in the In­dian retail sec­tor. There is no ques­tion that the con­nec­tiv­ity of ‘things’ will only con­tinue to af­fect how busi­nesses run in the fu­ture.

Some of the ma­jor IoT im­pact ar­eas in retail could be: In­ven­tory man­age­ment, fleet man­age­ment, lo­ca­tion based pro­mo­tions and of­fers, lo­ca­tion-based ad­ver­tis­ing, con­nect­ing the store shelf and the back room, im­prov­ing the trace­abil­ity of in­ven­tory be­fore and af­ter the point of sale, re­duc­ing fraud and shrink­age along with max­i­miz­ing in-store flow man­age­ment, etc.

In the retail sec­tor, con­sumer en­gage­ment is the pre­req­ui­site for sales and brand eq­uity. How­ever, con­sumer re­ten­tion can hap­pen only if the sup­ply chain is agile and smart to keep re­tail­ers up and run­ning. The sup­ply chain ex­e­cu­tion can be in­tact and flaw­less if pre­dic­tive main­te­nance and ‘self’ heal­ing min­i­mizes the down­time of the ma­chin­ery and equip­ment in­volved. IoT is the key to the ef­fec­tive func­tion­ing of the same. To­day re­tail­ers us­ing the IoT to gen­er­ate an ‘ecosys­tem’ which is poised to gain mar­ket ad­van­tage and truly cap­i­tal­ize the op­por­tu­nity.

IoT of­fers re­tail­ers op­por­tu­ni­ties in three crit­i­cal ar­eas: Cus­tomer ex­pe­ri­ence, the sup­ply chain, and new chan­nels and rev­enue streams. In fact, it is es­ti­mated that re­tail­ers seek­ing to cap­i­tal­ize on IoT tech­nolo­gies will spend ap­prox­i­mately $2.5 bn in hard­ware and in­stal­la­tion costs by 2020 which is nearly a four­fold in­crease over this year’s es­ti­mated $670 mn spend.

The main chal­lenge re­tail­ers face to­day is with re­gard to the enor­mous vol­ume of data which is gen­er­ated—the stor­age, anal­y­sis, and ap­pli­ca­tion of this data is es­sen­tial for re­tail­ers in the com­pet­i­tive mar­ket to­day. IoT en­sures easy ac­cess to data while big data an­a­lyt­ics and re­lated so­lu­tions ben­e­fits re­tail­ers with re­gard to man­ag­ing the scale, ve­loc­ity and va­ri­etyof data gen­er­ated. The bet­ter the man­age­ment and anal­y­sis of this large amount of data, the more ef­fec­tive the strate­gies for growth and in­creas­ing mar­ket share.

The IoT in the In­dian con­text is how­ever not with­out its fair share of chal­lenges. Some of the hy­giene fac­tors that broadly gov­ern the IoT land­scape which are a con­cern in the In­dian con­text are in­ad­e­quate telecom reach, er­ratic power sup­ply, se­cu­rity and pri­vacy of data, IoT stan­dards and above all af­ford­abil­ity, which is the most im­por­tant fac­tor that will en­sure large scale adop­tion of IoT for an In­dian re­tailer. This is the most cru­cial time for In­dia to fo­cus on hard­ware and soft­ware prod­ucts. There will be tremen­dous op­por­tu­ni­ties to in­no­vate from com­po­nents to de­vices to sys­tems to soft­ware an­a­lyt­ics to ser­vices. To par­tic­i­pate and suc­ceed in IoT, In­dian re­tail­ers needs to in­no­vate. Prod­uct level in­no­va­tion and ecosys­tem is the key for suc­cess and this is what will pro­vide or­gan­i­sa­tions with a com­pet­i­tive edge. Re­tail­ers that take the lead in this space stand to gain an im­por­tant ad­van­tage in an al­ready com­pet­i­tive en­vi­ron­ment. Early adopters will be po­si­tioned to more quickly de­liver IoT-en­abled ca­pa­bil­i­ties that can in­crease rev­enue, re­duce costs, and drive a dif­fer­en­ti­ated brand ex­pe­ri­ence. (The au­thor is Man­ag­ing Di­rec­tor, Ter­a­data In­dia) vndedit@cy­ber­me­dia.co.in

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