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Is IoT in retail giving customer experience a jolt?

Is IoT in retail giving customer experience a jolt?

Lauren Horwitz

by Lauren Horwitz

Managing Editor, Cisco.com

IoT in retail has created new ways to shop, including smart fitting rooms and virtual reality-enabled customer experiences. But consumers haven’t fully embraced connected technologies yet.

As consumers grow more discriminating, retailers have turned to technology to create more personalized, in-the-moment service.

Increasingly, consumers have higher expectations for their shopping experience. They want more efficient service, higher-quality products, bigger discounts—and they want retailers to meet their needs in the moment.

Using technology to create more tailored service can yield ROI. According to DigitasLBi’s Connected Commerce survey, 62% of consumers purchase more items more often when they receive personalized service.

Further, shifts in consumer shopping patterns have placed a greater burden on retailers to close the gap between online and in-store experiences.

“Consumers actually want to walk into a store and do more than just shop,” said Kiki Del Valle, senior vice president of Commerce for Every Device, MasterCard at the IoT World 2018 conference. “They want it to be a destination that seamlessly blends digital technology. . .  with the physical environment.”

Retail sales have grown, in part because of a jolt from technology. In 2018, U.S. retail sales are expected to increase between 3.8% and 4.4%, according to the National Retail Federation.

IoT in retail drives new customer experiences: Smart mirrors and beacon technology

As a result, retailers now strive to interact with consumers through technologies such as Internet of Things (IoT)–assisted smart fitting rooms and virtual reality (VR)–enabled headsets for browsing and shopping. IoT devices include sensors that can gather data about their environment and transmit that data back to stores for insight, for example, about consumers’ pathways and time spent in locations of a store. These kinds of new experiences can create in-the-moment, contextual interactions with consumers that prompt repeat visits, higher volumes of purchases and greater customer satisfaction. In the report “State of the Market: Internet of Things 2016,” retailers said that they expect IoT devices to improve the customer experience (75%) and enable them to gain insight into customer preferences (74%).

But fancy gadgetry alone won’t enhance the customer experience. Connected devices succeed only when they unify consumers with brands and products.

Consider smart mirrors, which retailers hope will strengthen the connection with customers. High-end retailer Neiman Marcus, for example, outfitted a New York–area store with smart mirrors, which can search for other sizes or colors for a product, suggest companion items, or even show how a product might fit without having the patron try on the item.

By providing more information and a frictionless customer experience, Neiman’s smart mirror drove conversion rates and incremental sales, Del Valle said.

Data suggests that retailers are building connected technologies into their plans. By 2021, 70% of retailers will introduce Internet of Things (IoT)–connected devices to enhance customer experience, according to Zebra’s 2017 Retail Vision Survey.

Retailers also see value in gathering in-store data analytics via tools such as beacon technology. Through sensors that communicate with mobile devices, such technologies give retailers the chance to identify consumers’ location, determine which products they browse in a store and even send “proximity marketing” offers or product information to their smartphones.

Beacon technology gets mixed reception from consumers, though.

More than 60% of shoppers say they are not receptive to mobile phone-based notifications from retailers or in-store mobile tracking. Though 67% of consumers say it could improve their in-store shopping experience if they received discounts, according to the Walker Sands “Future of Retail” study. At the same time, 64% say they hadn’t yet opted in to mobile offers because of data-privacy concerns.

Virtual reality connecting customers?

Virtual reality-enabled-devices also strive to create new and unique customer experiences in retail. But VR, too, has some hurdles to overcome.

Swarovski, which makes jewelry and home accessories, used a virtual reality to create new kinds of customer experiences, such as watching the process of product creation via a VR-enabled headset. A consumer could, for example, track the process to create a chandelier or pay for a product, all without removing the headset.

Volvo uses VR headsets to give customers a feel for being in a new model and how it performs on the road. Retailers IKEA and Lowe’s have launched VR experiences for home design.

Del Valle said that VR headsets provide consumers with an immersive experience that can solidify customer relationships to “actually drive a connection between the brand and the consumer.”

But VR technology can be expensive, and many consumers may not be set up hardware-wise at home to support high-quality virtual reality. For companies themselves, investing in VR gadgetry won’t make sense if they don’t have a compelling product or experience in the first place. Fulfilling the need should be clear. Further, for some, VR headsets can cause motion sickness or even anxiety from extensive use, so the technology remains early stage.

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Lauren Horwitz

Lauren Horwitz is the managing editor of Cisco.com, where she covers the IT infrastructure market and develops content strategy. Previously, Horwitz was a senior executive editor in the Business Applications and Architecture group at TechTarget;, a senior editor at Cutter Consortium, an IT research firm; and an editor at the American Prospect, a political journal. She has received awards from American Society of Business Publication Editors (ASBPE), a min Best of the Web award and the Kimmerling Prize for best graduate paper for her editing work on the journal article "The Fluid Jurisprudence of Israel's Emergency Powers.”