How to harness the IoT of retail technology

Digitally connected brick-and-mortar retailers have gathered an enormous amount of data regarding their consumers’ preferences via Internet of Things (IoT) hardware such as mobile devices, cameras, smart lightbulbs and beacons, but this data often remains underutilized without driving questions.

The key to achieving a truly connected overall marketing strategy lies in integrating the information acquired by a retailer’s omnichannel strategy with their mobile strategy, as well as their retail supply chain (i.e., inventory, in-store customer engagement strategies, and real-time mall activity).

But how can these multiple layers of complex data be properly integrated, and how are retailers currently faring at this task?

Tracking behavioral responses

Many retailers are overwhelmed by the amount of data they have collected regarding their consumers. To better engage potential customers, machine learning is being used on large amounts of data to identify patterns in shopper behavior.

For example, the IBM platform, Watson, can parse through data contained in social media profiles or Twitter streams to pinpoint specifics about an individual’s demographics, affinities and even their personality.

For a retailer, this information can be particularly valuable for assessing how best to communicate with a consumer. Are they more of an introvert? Then they might not enjoy being approached by a sales representative in-store.

Do consumers like to do their research before they purchase? Then maybe it would be best to push some links and helpful recommendations their way.

The IoT of hotels

Many hotel chains now have mobile apps that allow check-in and checkout on a smartphone, expediting what is often the most tedious part of a hotel stay.

In addition to bypassing check-in at the front desk, both Hilton and Starwood Hotels and Resorts now allow customers to use an app on their smartphones to unlock their rooms with a “digital key.” Such a convenient bypass can be beneficial for the weary traveler who is tired of standing in line and just wants to get to their room.

The use of an app to manage a hotel stay allows the gathering and integration of many customer data points. Hotel chains are becoming more sophisticated at tracking habits and preferences during a stay, noting which parts of the hotel customers are visiting and what they’re buying in particular locations.

Hotel chains can distribute more targeted offers to their clients as a result. For instance, if a customer visited the spa, the hotel might send them discounts related to their specific spa services to encourage a follow-up appointment.

Integration in apparel

An example of a highly integrated shopping experience is Rebecca Minkoff’s “digitally connected” store. The store uses a “connected glass shopping wall” in fitting rooms to guide the shopper through their experience.

The wall can be used to adjust lighting and to communicate with sales associates who know exactly which items are in the fitting room based on radio-frequency identification (RFID) tags.

The sales associates can gather other coordinated items for the shopper based on what is in the fitting room. Through the shopping wall, the shopper can also see if a particular size or color is available in the store, and if it’s not, they can get the items shipped directly to them rather than having to wait for the sales associate to place the order and call them when the items arrive.

Here, the retailer has integrated customer engagement with their omnichannel strategy and in-store inventory to elevate the consumer experience.

The personalized experience

In addition to the kind of individualized experience that Minkoff’s stores are providing, retailers are looking for other ways to deliver a more personalized shopper dynamic. Some stores are starting to explore in-store communication, where shoppers can leave digital notes for friends regarding particular items — which are only visible to the shopper and recipients.

Apps like Foursquare incorporate preferences and suggest places to visit, rewarding the shopper for sharing their experiences with others. Mobile devices are being used for value exchange with the customer, and the integration of the mobile and omnichannel strategies reduces the friction between connections.

Pitfalls

While retailers are still figuring out how to harness the power of all of the data they have collected regarding consumer behavior, it’s important to note there are some places where it is easy to fall short in the process.

The biggest obstacle to success is requiring active opt-in, whether it is to download an app or provide personal information to join a loyalty program. The percentage of shoppers who will actively opt in is extremely small.

Second, and equally important, is the need to respect consumer privacy. Retailers are constantly trying to strike a balance between personalization and privacy.

Consumers are wary of giving out too much personal data (whether actively or passively), so if retailers want to be successful in their approach, then they need to be aware that overpersonalization might scare some consumers off.

While people might like all of the information that their Fitbits provide them, the jury is still out about whether or not they want a retailer to have that level of detailed information as well.

For a retailer to take advantage of a truly connected marketing strategy that integrates omni-channel and supply chain, the information exchange has to be of direct value to the customer without making them feel that they have sacrificed their privacy.