Retail IoT Will Spur New Business Opportunities
Advanced analytic capabilities are crucial for retailers to compete in the digitalized marketplace, according to new research from Gartner, which adds that retailers without advanced analytic capabilities will struggle to capitalize on internet of things-driven revenue opportunities.
“Consumers have taken control of the shopping process, and there is no sign that they plan to let go,” said Robert Hetu, research director at Gartner. He believes as Iot continues to expand over the next 4-5 years, the effects on multichannel retailers will be more disruptive than anything seen to date and will require advanced analytics capabilities to cope with this disruption.
Hetu cites the example of a customer’s refrigerator that can sense the need to replace its water filter is an example of the retailer’s need to compete and the associated need for advanced analytics.
These advanced analytics tools enable deeper insights and discovery that will challenge business assumptions. They also put information in the hands of business analysts and business users and offer significant potential to create business value and competitive advantage.
“While today the retailer may feel confident in that customer’s repeat purchase — perhaps because the customer acquired the appliance from the store or is comfortable locating the filter in the physical store — the refrigerator, seeking the replacement on its own, has neither loyalty to the retailer nor concern about finding the item,” explained Hetu.
“As a result, the “thing” (in this case the refrigerator) will seek the best combination of price and availability. This change will require the retailer to evaluate the potential transaction in an instant and determine a course of action to save the sale or allow it to pass to others,” says Hetu.
Retailers without advanced analytic capabilities may be toppled by their inability to capitalize on IoT-driven revenue opportunities. In a world where customers are no longer humans, but “things” that band together with other things to negotiate prices, the retailer must reconsider its role.
This is an evolutionary step not dissimilar to the disruption of digital media that impacted retailing of books, music and video, creating a myriad of opportunities for disintermediation from Amazon, Netflix and others, while eliminating traditional market leaders such as Borders and Blockbuster.
The impact of digital business and the IoT will require advanced analytics to support real-time decision making to take advantage of momentary business opportunities. These opportunities will demand a different approach to marketing, merchandising, pricing, distribution, store operations and every other internal process.
Ultimately, the retailer will need to be able to decide in a split second if an opportunity is potentially desirable or should be passed up in favor of the next momentary opportunity. Success will require retailers to use a combination of knowledge, innovation, speed and strategy to maintain and grow market share in the digital economy.
Gartner believes that the need to improve real-time business decision-making will force retailers to acquire self-service and big data discovery capabilities. With big data discovery, the entry bar to explore big data sources will be lower. Analysis will be delivered at a lower cost and faster, by a broader and less-skilled set of users, ready for consumption by a broader audience.
“Big data discovery tools will also make it easier to establish interactive analytic processes that will speed up results. “This will allow big data sources to be explored more often, feeding valuable information into the business and yielding faster results,” Hetu concludes.
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