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Transforming the Retail Experience Using IoT and the Cloud

By Bharat Popat, Industry Solutions Director, Worldwide Retail & Consumer Goods, Microsoft on August 16, 2017

Filed under Retail & Consumer Goods

Transforming the Retail Experience Using IoT and the Cloud

Successful retailers that attract today’s millennial shoppers have three key ingredients in their retail experience delivery:

  • Help find things that inspire
  • Help choose what is right
  • Help buy effortlessly

Online stores are increasingly better at attracting these shoppers and converting them into profitable customers. Physical storefronts are experiencing less foot traffic and conversion rates are lowering. The transformation challenge is thus clear. How can retailers deliver these same customer experience ingredients in the brick-and-mortar environment in ways that are simple, easy and memorable?

To drive traffic both storefronts focus on search and marketing. Ecommerce obviously has the advantage in terms of offering the customer convenience to explore the storefront anytime and from anywhere. For conversion, ecommerce storefronts focus on the following:

  • Extensive catalogs with digital content that showcases the merchandise.
  • Customer intimacy based on customer information.
  • A frictionless shopping journey with ease of search and navigation.

Physical storefronts have their advantages, but they must also deliver the rich and consistent customer experiences that shoppers value so much in ecommerce. Doing this requires the merge of the physical and digital—combining the best of online and in-store shopping.

Let’s look at a simplified comparison in fashion retailing to illustrate an approach.

Customer Need

eCommerce Advantage

Physical Commerce Advantage

Find things for me/ inspire me

  • Vast catalog
  • Digital connections to social networks
  • Search engines
  • Product touch and feel

Help choose what’s right for me

  • Personalization engines
  • Crowd-sourced recommendations
  • Try it on for fit
  • Associate advisor

Buy

  • One-click pay and ship
  • Take it with you now

While retailers understand the need to transform their customer experience, their challenge is in executing this vision because of three critical barriers:

  • The physical store is a dark site – the lack of both historical analysis of how customers navigate and shop, and real-time sensing of when customers are in the store, is a major handicap.
  • Experiences that blend the physical and digital and traverse the complexity of self-service and assisted service is a design challenge.
  • One thing ecommerce stores do very well is declutter. Physical stores attempt to display their full assortment of sizes and colors. This makes the shopping experience messy and distracts from the objectives outlined earlier.

Each one of these challenges require exploration and solutions. For the purpose of this blog, let’s concentrate on the first—lighting up the physical store for insights into shoppers’ preferences, wants and needs.

Shopper analytics in a physical store are focused on understanding the buying process:

  • The ease with which shoppers navigate the store and the degree to which they are exposed to available merchandise.
  • The decision process – depth of examining the product, comparing like items, and abandonment behavior.
  • The impact of in-store displays, advertising and promotions.

Historically these analytics have been based on shopper surveys, panels and observation studies, and the insights have therefore been limited and contaminated.

How can Retail IoT and Cloud solutions help?

IoT is essentially about tapping new sources of data to drive insights and actions. The new insights either remove assumptions in existing decision-making or move us to more real-time sense and respond. Use of IoT is now mainstream given the advances in both sensor platforms and the intelligent analytics capabilities available from the cloud.

IoT in retail platforms have improved their capabilities and reduced cost in three ways to enable shopper analytics:

  • Integrated sensor platforms. Many of the sensor devices have been integrated substantially reducing the cost of deployment and maintenance.
  • Data fusion. Intelligent analytics enable data from various sensor streams to be merged to form an integrated view of a shopper journey.
  • People and product interaction analytics. Monitoring shopper behavior to understand what products they are exposed to, show interest in, and purchase.

Microsoft in Retail

Microsoft’s vision for retail is to enable our retail customers to rapidly test and scale advanced technologies from the cloud, that will enable their digital transformation.

Our offerings are delivered on a common platform that can span both digital and physical environments, which means that retailers can benefit from seamless connectivity between solutions across all aspects of their business. With Microsoft cloud innovations, in-store engagements are personal, contextual and relevant based on purchase history, demographic information, location, time of day, and other data sources. To learn more, here are some additional resources.

LinkedIn: Bharat Popat

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