How IoT is changing Retail & Hospitality
Hello, I am back after a week of vacation in sunny Hawaii, where I stayed at a large resort. The sheer size and operation of the resort impressed me. They were operating on Oracle’s hospitality suite, which culminated many of the topics I’ve discussed in a previous blog – 2-way SMS capabilities, QR codes/mobile ordering, and customer loyalty (a clean record of all purchases made at the resort). They were even able to respond directly to the survey I left. My mind kept thinking that the resort could have improved with IoT devices’ help (Internet of Things).
What is the internet of things (IoT)? These devices connect to the internet or a network of other devices that can communicate and transmit data to cloud storage (i.e., edge computing). Common examples in your house: google chrome, amazon dash button, smart TVs, wifi refrigerators, and washers & dryers. You may interact with IoT devices on your mobile device – HomeKit for iOS, SmarterThings for Samsung phones.
According to IHS Markit, there are over 30 billion IoT devices in use in the year 2020. These devices range from sensors, GPS trackers, mobile POS terminals, smart shelves, and more recently, beacons. McKinsey Consulting estimates that the impact of automated checkouts will reduce cashier staff up to 75% by the year 2025, resulting in an expense reduction of $150 to $380 billion per year.
Amazon has rolled out AmazonGO in select cities such as Seattle and NYC. The retail experience is cashless. Before entering the store, you select the preferred payment option on your amazon app. A series of cameras and RFID tags work seamlessly, so an accurate list of purchases bill against your payment option.
I believe AmazonGO is not entirely practical as cashless payments are not accessible by low-income or low-middle income consumers. Also, consumers yearn for positive interactions with retail associates (i.e., the Chik-fil-A customer service model). While this might be a desired operating model in the future, it is not practical for most businesses today.
In a recent blog by Cisco Retail’s Mark Scanlan, he mentions a few complementary offerings and the benefits of modernizing IT infrastructure and, more broadly, digital transformation.
The inextricable move to the cloud has accelerated recently for multiple reasons – a need to
- reduce the physical IT footprint in the store
- stand up and configure new or pop-up stores quickly
- capitalize on the elastic capacity that cloud processing provides for busy periods
- leverage Software as a Service offerings for business systems such as supply chain and customer relationship management.
Going back to my earlier position, how is IoT changing Retail & Hospitality today? There are endless use cases, but I’ll go through examples with potential monetization. The 20th century introduced the “just in time” model for supply chains with the advent of drop shipping. The next iteration is real-time inventory management with minimal human involvement.
For both Retail and Hospitality, consumers demand the ability to receive goods or services with minimal emotional investment. Why do so many resorts require you to call the front desk when you need extra towels? Why haven’t they adopted something comparable to the amazon dash button? Consumers crave human interaction during purchases, but they do not like picking up the phone for each request. That’s why 2-way SMS works so well!
The arrival of smart shelves combined with weight sensors and next-gen visual AI enables smart product replenishment. Yet, many businesses often don’t have the proper demand planning practices because of reliance on top-down planning approaches. Waiting untill the minimal threshold of your inventory count puts your business at the mercy of your suppliers. Even a few days without desired inventory leads to your business losing credibility with loyal customers. Investing in digital infrastructure ensures the appropriate quantity of products is available, and a systematic reorder mechanism can replenish stock when necessary.
The earlier Cisco Blog excerpt indicated potential outcomes. Through economic surveys, our previous blog about retail indicated the BOPIS model. Sophisticated mobile POS devices are supporting payment processing mobility and inventory management. Enabling an omnichannel network ensures integration and enables effective reporting. The business will have the ability to collect, sort, and aggregate several data points. There’s also the metric of time saved. Earlier, we discussed the financial figure that might be economically recognized if the cashier position doesn’t exist due to self-checkout replacing them. What about the time component? For example, in hospitality – eliminating the trip, servers will save an enormous amount of time walking back and forth, processing the bill on the POS system. Reducing the time spent processing payments will ensure they are better able to focus on guests.
We are seeing more retailers shun the traditional fixed point of sale and adopt mobile devices. In some cases the POS may still be at a lane or cash wrap, but it may also be used for line busting, curbside pickup, home delivery, and for omni-channel returns. These additional use cases shift the emphasis from dedicated payment terminals that communicate directly with a payment processor, to multifunction devices sitting on the wireless network.
Courtesy of Preeti Wadhwani
There is an endless number of business cases regarding IoT. GPS sensors help track orders more effectively; product arrival becomes more predictable. The emergence of beacons adds a big win for growth marketers seeking to add a personal touch to the retail experience. By leveraging Bluetooth, you can send push messages to phones and change promotions based on an endless number of combinations. Global Market Insights estimates revenue from beacon technology will surpass the $25 billion mark by 2024.
There are several IoT technology providers offering an OS (operating system) and technical architecture. AWS IoT vs. Azure IoT comparison. My favorites are:
- Amazon AWS IoT focuses on Commercial, Home, Industrial use cases. Amazon is one of the first companies to bring IoT to the home with Alexa, and they’ve invested lots of resources into being a preeminent force in the IoT space.
- Azure IoT focuses on Commercial, Healthcare, and Industrial use cases. Azure provides examples to create a fully integrated IoT ecosystem. They’ve also created an IoT Hub to learn more about their services.
- Cisco IoT focuses on Industrial and Transportation use cases. They are a leader in edge computing, making them a leader for transportation and supply chain firms seeking to implement modern tracking technology. They are currently a challenger brand against AWS and Azure but I expect the competition to heat up in the coming years.
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