In these times of digitization, EuroCIS 2016 shone a spotlight on the big megatrends – for instance, the Internet of Things, IoT. The chance to make individual products “visible“ online, offers the retail industry great potential, especially in the areas of production and supply chain management. We spoke with Ralf Schienke, Retail Marketing Manager Germany at Fujitsu, about the current situation and the future of the IoT in retail.
Mr. Schienke, how strongly will the Internet of Things influence the retail industry?
The Internet of Things (IoT) will have a similarly large effect on our daily lives as the Internet already exerts today. In the future, more and more animate and inanimate objects, that being buildings, clothing articles, groceries, plants, and animals will have IP addresses and computing power and therefore, be able to provide information about themselves and their environment.
According to the latest estimates by consulting companies like IDC, from an IT perspective, Earth will gain approximately 50 billion new “inhabitants“ by the year 2020. This change will strongly alter the society as a whole and subsequently also the retail sector.
What new specific services are possible in retail by using the IoT?
The Internet of Things will emanate a strongly disruptive power on products and the services industry: these products will be linked to the IoT during their entire lifecycle: during their development, distribution, sales and during use by the consumer.
In the long run, it makes no difference whether we talk about food retailing, textile retailing or other areas. The integrated IoT services will hugely influence the design, cost and value for the customer. This will also significantly change the character as well as the potential of products and services.
Let’s take food expiration dates for example that incorporate the real conditions of storage and the cold chain. Or products that are able to provide information about their origins, ingredients or their proper application. The IoT creates an added value. This is why a key question for retail will be who provides the services for this and who creatively uses and monetizes them.
How exactly do customers benefit from the new possibilities?
Think of the goods that need to be at the right place at exactly the right time or products that better meet the individual expectations of their users. Patients receive individualized medical care because relevant information can be utilized thanks to wearables. Daily shopping is automated and become services that make daily life drastically easier.
The so-called omnichannel strategy is an important preliminary stage for this, but the Internet of Things also significantly increases the number of channels and touchpoints that need to be integrated. In light of this, the “omni“ moniker has perhaps been assigned a bit too early.
What retail areas can especially benefit from this?
The Internet of Things will greatly influence production and the supply chain: thanks to new information value loops, inefficiencies will be eliminated at many steps in the value chain, making significant cost and time savings possible. Sales data is transferred faster and more accurately into production and is going to help in saving energy and raw materials. Overproduction and the subsequent write-offs will be drastically reduced.
Customer behavior such as motion patterns in the store will become better trackable and allow very accurate conclusions about the optimal store layout. Processes in warehouse and distribution centers most notably have lots of room for improvement as was already evident in several realized projects by Fujitsu.
What is the best way for retailers to proceed if they want to take advantage of the new possibilities?
We suggest identifying attractive pilot applications that allow concrete improvements in efficiency. We also recommend developing new products and services in fast test cycles and involving partners such as Fujitsu early on in the process to gather experience faster. This lets you quickly scale the application areas.
The Iot will give the retail industry a strong competitive edge. However, it is essential to include and inform those people affected by this type of reorganization by using successful change management. Regardless of whether those are employees or customers.
