In 2014, Google bought Nest for more than $3 billion, one of the biggest names in home automation. In 2018 Amazon launched AWS IoT Analytics, a cloud-based platform for connected devices to communicate and analyze results.
IoT (Internet of Things) is used to personalize the in-store experience with offers related to purchase and navigation history. It provides valuable information about buying behavior, allowing retailers to surprise and delight consumers through different distribution channels. Clearly, the retail landscape is certainly more dynamic and interesting than the more traditional retail models of 20 years ago.
While businesses are now eager to obtain information from existing data, they are also looking for new sources of information as the benefits of Big Data analytics become more widely available. One way to maintain a competitive advantage is to deploy IoT in retail: an industry that, according to a new research report from Global Market Insights, Inc., is expected to reach more than $30 billion by 2024. With 77% of retailers believing that IoT solutions help improve the customer experience, we can expect to see many more brands using IoT and analytics in their future strategies.
Help with personalization and premiumization
IoT ultimately helps a brand build strong relationships with consumers, not just based on pricing strategies. If a consumer’s data is used effectively, a brand can be more competitive and improve customer “buy-in” by truly understanding what the consumer wants.
This approach fits well with the current retail climate in which consumers are more attentive to the brand. In the retail business, the focus is now also on refining brand culture, aesthetic details, quality, product personalization, premiumization, connection building and the entire cycle experience. Artificial Intelligence can accelerate the adoption of all these elements.
Reduced churn and increased concentration on the customer
We already know that attracting a new customer costs up to seven times more than keeping an existing customer. The IoT and Big Data application makes it easy to remember information about past purchases, previous searches and orders, suggesting additional products, and ensuring that delivery information is accurate. The data can also provide insight into the habits of long-time customers.
Using clustering algorithms, they can divide customers into groups and help businesses identify potential customers, customize promotions, and ultimately build customer loyalty by providing better consumer satisfaction, focusing on person as such.
Plan and anticipate
Big data can also have a positive impact on a company’s long-term vision and help brands quickly tailor promotions and offers to the latest market demands. If a retailer is able to analyze purchasing patterns more closely, more appropriate price models can be created instead of sticking to the traditional end-of-season sales model. For example, many online travel sites have already used highly adaptive pricing models based on the popularity of certain destinations and the location of the customer identified by browser cookies.