Retail IoT brings fresh revenue opportunities
Advanced analytic capabilities are crucial for retailers to compete in the digitalised marketplace according to new research from Gartner. And that’s providing opportunities for resellers and providers dealing in advanced analytics.
The analyst firm says retailers without advanced analytic capabilities will struggle to capitalise on internet of things-driven revenue opportunities.
Robert Hetu, Gartner research director, says as the internet of things continues to expand over the next five 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.
He cites the example of a customer’s refrigerator that can sense the need to replace its water filter.
“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,” Hetu says.
“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.”
Gartner defines advanced analytics as the analysis of ‘all kinds of data’ using sophisticated quantitative methods to produce insights that traditional approaches to business intelligence, such as query and reporting, are unlikely to discover.
Gartner says advanced analytics tools enable deeper insights and put information in the hands of business analysts and business users, offering significant potential to create business value and competitive advantage.
It says retailers need to acquire self-service and big data discovery capabilities.
“With big data discovery, the entry bar to explore big data sources will be lower,” Gartner says. “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.”
Hetu says since the analsyts and users are less skilled than traditional BI roles, they will handle less complicated problems, taking them less time to fail or succeed.
“They are also closer to the business complexities, making it easier to establish interactive analytic processes that will speed up results,” he says.
“This will allow big data sources to be explored more often, feeding valuable information into the business and yielding faster results.”
Gartner says the impact of digital business and 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.
“Retailers without advanced analytic capabilities may be toppled by their inability to capitalise on IoT-driven revenue opportunities,” Gartner says.
“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.
“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 favour 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 adds.
“Retailers without advanced analytic capabilities may be toppled by their inability to capitalise on IoT-driven revenue opportunities,” the industry analysts say.
“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.”
For retailers it’s a world of change and opportunities, and for resellers too, the change signals opportunity in the form of a new potential market.