Reshaping retailing business models with IoT and AI

From rural shopping malls to Manhattan’s avenue, retailers face an uphill battle against eCommerce companies in trying to grab the attention of customers. An apparent shift from brick-and-mortar stores to click-and-collect channels has led many industry observers to predict that in the next five years, retail will change more than it has over the past century. We also believe that big changes are inevitable and retailers must act to remain profitable in the long term.

Nowadays, the Internet of Things (IoT) and Artificial Intelligence (AI) show remarkable promise in helping retailers to engage better with customers and improve customer satisfaction. It was just yesterday that a retailer used to interact with the customers only at the point of sale. Now, with the connected world, that point of sale is just the inauguration of a business’s relationship with the customer. With the use of IoT and AI, smart retail solutions can consider transaction history, customer inquiries, customer service communication, spending habits, profile details with the particular focus on hobbies, feedbacks, and much more to develop machine learning-based more relevant and personalized campaigns. That’s how even a window shopper can be converted into a customer.

Till now, sales used to be the core focus for most retailers, never inventory management. However, with AI-powered IoT-enabled smart retail solutions, retailers can now manage the stock of fast-moving goods and keep customers happy. Machine learning algorithms based predictions about popular items not only help retailers to handle busy seasons and replace the error-prone human-generated excel sheets but also help to keep the storage costs minimum by avoiding unnecessary purchasing of inventory. In fact, with a smart retail solution, retail executives now not only think about sales, but also consider about gaining new efficiencies, cost savings, inventory accuracy, and how to provide better customer experiences.

Today, tomorrow, and in the coming years, retail competition will keep getting tougher. It’s mainly because, until now, retailers didn’t have to worry much about global competition nor did they have an opportunity to access global consumers. Nevertheless, that scenario is changing as technology helps break down barriers and generates new retail business models. That’s why almost every retailer out there says that businesses need to be more innovative, particularly with customer engagement. Consumers are not expecting now retailers to be just limited to connecting them to goods. That change of mindset pushes retailers to shift from a product-centric way of thinking to consumer-centric. Hence, technology such as AI and IoT is the real disruptor for retailers.

In a sentence, to increase revenues, remain profitable, and manage capital investment effectively over the next decade, retailers have no other option but to make closer moves to technology aggressively.