A report from IDC titled, "Business Strategy: Developing IoT Use Cases for Retail," evaluates the current and future state of Internet of Things (IoT) technology in retail.
According to the study, some IoT technologies have matured and others are still being nurtured, but the use cases are well defined. Cloud- and mobile-based solutions improve ROI, reducing the barriers to implementation and speeding adoption.
In fact, almost 10% of all IoT investments in 2013 were made by retailers, and by 2017, annual investments will surpass $466 million.
"Consumer demand for convenience, product availability and personalized and contextualized interactions will drive retailers to adopt multiple IoT technologies. This beckons a fresh evaluation of IoT opportunities in retail, as the challenges diminish and the consumer demand for interactive, engaging, and convenient retail experience trump any hesitance to invest in IoT," said Leslie Hand, Research Director, Supply Chain, Merchandising and Demand Management Strategies, IDC and author of the new report.
Other topics discussed in the report include:
Current and future adoption trends in the five primary areas of IoT investment in retail: product tracking/traceability, interactive consumer engagement and operations, mobile payments, asset management, and fleet and yard management.
How to develop a strategy for deploying the foundational components of IoT.
How to understand how the use cases intersect and maximize the return on investments.
Retailers need to establish the foundation by which to meet immediate omni-channel retail demands while planning for continual innovation. The IoT is already playing a role in consumer location-based interactions and in retail supply chain and asset management applications.
IoT connects the digital and physical experience of products, companies and the world to improve through data-driven analytics the ability to find, buy and utilize things optimally.
Investing in technologies that make a marked difference to the consumer makes sense. Consumers want to be connected and engaged if it saves them money or time. Privacy and security are potential adoption inhibitors but consumers will increasingly develop a need for instrumented and intelligent interactions.
Also, enabling improved inventory management, sample management, loss prevention, on-shelf availability and asset management with RFID suddenly makes sense—as doing this is consequential to consumers' ability to find and buy what they want at their convenience.
Retailers are discovering the value in leveraging sensors associated with product, assets, and ID badges as a result.
IDC recommends that retailers interested in engaging the omni-channel consumer with consistent personalized and increasingly contextualized physical and digital interactions should consider how to build the architecture for IoT that will continue to adapt to consumer interaction patterns and needs.
Meanwhile, tech vendors and service providers have an opportunity to help retail enterprises define and understand the IoT opportunities and the path forward. Systems integrators and professional services firms can play a pivotal role in shaping use cases and revealing the benefits from investing in an IoT solution.
The industry vertical expertise brought by these ecosystem players is a critical success factor in many IoT cases.