Navigant Research Blog

Online to Brick-and-Mortar and Back Again

— July 5, 2017

As I strolled down Pearl Street, the center of local commerce, it was hard not to notice the shifting face of a small city undergoing an economic boom. Storefront overhauls and new construction flank the street from the east to west end. One newcomer caught my eye this week and made me think again about the debate of the potential death of brick-and-mortar retail. Warby Parker, the online eyeglass retailer, is setting up to open its doors on Pearl Street, bringing its cult following from cell phones to the door. This store is part of the company’s seemingly aggressive 2017 expansion to 70 storefronts nationwide.

So, what is happening? Amazon, the online retail giant, bought Whole Foods for $13.7 billion. Walmart is set to buy Bonobos Menswear for a reported $310 million. Do the big companies see online or in-person shopping as the future? I’d argue that the future is choice and technology-enabled convenience.

Smart Technologies to Redefine the Shopping Experience

Seamless access to products from our cell phones to the store counter plus technology-enabled in-store experience: this is the future of retail. The mobile/online access to goods has been the threat to the storefront for a few years at this point. What the recent moves by the retail giants tell us is that choice is critical. Taking a deeper look into the future of in-store shopping, the winners will offer a tech-enabled experience for convenience and fun.

Intelligent building technologies were long touted as solutions for cost savings via energy efficiency. While this foundational benefit remains important, the framing of solutions around the Internet of Things (IoT) changes the value proposition. Once a facility—in this context, a storefront—has been equipped with a backbone of sensors, gateways, and controllers to feed analytics and services, the IoT applications can offer wide business insight. Store managers can suddenly track shopper movements to optimize product placement and speed up checkout times, yet ultimately make the experience more enjoyable for their customers to keep them in the store as long as possible.

Evolving IoT Retail

This IoT approach to facility optimization has many energy and operational benefits, but the change in the experience for the customer is key for retailers. A few recent examples of IoT for retail showcase a new tech-enabled experience and provide a spotlight on what the future of shopping may look like for the stores that survive.

There has been a lot of speculation on the integration of Amazon Go and Whole Foods. As one article explained, “Amazon Go is clearly a new benchmark for IoT retail. With its system, a store can at once know the real-time status of every item, attribute these items to individuals, and then instantly bill them for it. The behavioral analytics potential of linking all stages of the supply and purchasing funnel is immense, allowing Amazon to pursue a more agile and responsive brick and mortar retail strategy. Customers might even be able to get real-time suggestions based on their shopping lists, or even get coupons for items they’re mulling over—all because of identity.”

What we know is major investments are shaking up retail. Any major retailer that fails to embrace technology faces real threats to its long-term viability.

 

Can IoT Redefine Your Shopping Experience?

— February 9, 2017

CodeThere is a lot of hype surrounding the Internet of Things (IoT). The challenge this presents is in deciphering how an IoT solution can deliver better information—not just more data—and tackle specific pain points that lead to customers entertaining a new investment. Navigant Research believes the significant benefits associated with IoT are transforming commercial facilities into intelligent buildings; two specific business benefits of IoT can be highlighted by exploring the application of IoT in retail spaces.

First, IoT can help shoppers spend where their dollar aligns with their green priorities. In 2015, Nielsen released the results of a global survey that demonstrated a shift in willingness to pay and purchasing trends among millennials, the largest segment of the population. About 72% of respondents reported they are “willing to pay more for products and services that come from companies who are committed to positive social and environmental impact.” This was an increase of 17% from 2014—if the trend continues into 2017, close to 90% of millennials will be putting their green where the green is.

Demonstrating Sustainability

IoT can be the technology backbone to qualify the sustainability claims of retailers. Accurate tracking of energy consumption and equipment performance made possible by IoT infrastructure can help retailers quantify their efforts with data. Energy efficiency efforts can be monitored and verified with real-time data to inform annual reports and marketing efforts on sustainability.

Second, an IoT solution can improve the shopping experience by improving customer service with data-directed sales support. An IoT solution can provide retailers with detailed data on customer traffic, illustrating the flow of customers throughout their stores and even the time spent browsing in specific locations. If store managers utilize this data, they can be proactive about staffing and create new strategies for product placement and incentives to move customers throughout their stores. The efficiency of speedy checkout and the product placement enhanced by this occupancy data can help enhance the shopping experience, which suggests a new avenue to create return and long-term customers. Carrie Ask, Levis’ EVP and president of Global Retail, recently explained the concrete benefits of deploying IoT solutions. “On the opportunity side, we were underestimating the potential within our store traffic to drive sales and conversions. … And on the stakes side, we also realized that when we’re out of stock, not only do we lose in the moment the chance to drive a planned or impulse purchase, but the disappointed consumer may decide that the trip to the store was not worth it—jeopardizing future traffic,” she said.

Interested in hearing more about the role of IoT in retail? Join Navigant Research along with Rick Lisa, Director of IOTG America’s Sales at Intel; Greg Fasullo, CEO at Entouch Controls; and Craig Robinson, Partner at Traverse Ventures Partners for a roundtable conversation exploring how the IoT is redefining the retail experience on February 14 at 2 p.m. ET. Click here to register.

 

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