Internet giants like Amazon and multi-channel retailers like Walmart are using data to cross-sell, up-sell and optimize the customer experience at every turn. Now it's time for conventional brick-and-mortar retailers to catch up by exploiting the promise of an increasingly wired physical world.
This was the imperative shared by Cisco on Wednesday as it unveiled "Internet of Everything" research that points to a huge potential impact on retail. The starting point for that research is the observation that retailers just aren't taking advantage of data already available.
"It's the data -- what you capture, correlate and compare -- that will be the differentiator for brands," said Jon Stine, North American lead of retail at Cisco Consulting, in an interview with InformationWeek. "The Internet of Everything presents an enormous opportunity to capture events and use that data to create new value."
Connected devices like point-of-sale systems are already delivering value, yet Cisco's research reveals that retailers are gaining less than half the value they might extract from the data available. The research led to five suggestions for doing more with the data available.
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Tap 'dark data:' Information often unused by conventional retailers includes customer comments in social media, mobile activity and even video surveillance feeds that can be correlated with in-store customer behavior. Social and mobile data opportunities are well known, but they're not exploited by retailers as much as they should be, said Stine. Use of video analytics is even rarer, but it can reveal a great deal about store traffic patterns, where customers congregate and what they are and aren't looking at.
Connect with customers: About half of customers (49%) are comfortable sharing personal information online in exchange for better, more personalized service, according to Cisco, so it suggests adding in-store opportunities to do the same through digital displays or mobile apps.
Get a grip on inventory: Best-of-breed retailers track materials and finished goods from the source to the factory to the store using RFID, barcodes and other sensors. This sort of transparent, real-time supply chain is exemplified by Hointer, a Seattle clothing store that lets customers scan display merchandise with a mobile app and have the item in their size delivered directly to a fitting room.
"You download the app, pick what you want, the app directs you to a dressing room and the store has a record of what you liked and didn't like," said Stine, who added that the approach also improves inventory accuracy and reduces stock shrinkage. "It's a remarkable use of technology that makes the store a living, breathing website."
Improve stocking: Availability of merchandize is critical to store performance. Shelf sensing is a connected technology that can help stores keep track of what's in the store and proactively order when inventories fall below certain thresholds.
Help employees be productive: Mobile apps for employees can be used to share best practices and leading indicators of store and individual performance. It's not just push, however, as stores can take advantage of employee social reports on what customers are saying about new products and how they're responding to sales and promotions. In a tout of Cisco technologies, the networking giant suggests videoconferencing as a way to share advice and best practices and foster collaboration among stores.
Where customers are concerned, the store loyalty programs that were once seen as an answer to Internet competition have become commoditized, said Stine. To stand out and compete, physical stores are going to have to sense and respond to customers by taking advantage of all available information.