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Connected Commerce: An IoT-driven Revolution in Retail is happening now

By Alexander Hahn

Connected Commerce, the next big step in brick-and-mortar retail, is right around the corner. Learn more about the solutions it brings for stores, the great customer experience it enables and the high-tech that enables it.

Rightfully, experts and branch insiders see IoT-driven Connected Stores as currently one of the top issues of retail industry worldwide. This is not surprising as the first connected stores are already operating and running successfully. So it is not an exaggeration to say that 2018 could present the break-through for this new era of stationary shopping.

Note: This article is part of our #DigitalRetail series – click here for an overview

Retail strategists know: The sooner merchants adopt the Connected Store concept, the sooner they will benefit from it. And many of them are ready to get started:

“70% of all retail decision makers globally are ready to adopt the Internet of Things to improve customer experiences”

This is one of the most important findings Forbes cited from the Zebra Study “Seven in Ten Retailers to Invest in IoT Technologies to Revolutionize Customer Experience”.

Craft beers and vegetables - this is what our Connected Store prototype which we developed with T-Systems looks like

Craft beers and vegetables - this is what our Connected Store prototype which we developed with T-Systems looks like

Connected Stores avoid customer’s frustrations with stationary retail – and make use of its strengths

It is certainly not new that the classical, stationary retail is facing a lot of challenges since the upcoming and the seemingly unstoppable success of e-commerce. And this is also due to frustrations of in-store shopping.

So what bothers in-store shoppers most?

  • Queuing:

This is the number 1 reason and it sure is frustrating: Your customers found the right product, hold it in their hands – and have to stand the line for what feels like an eternity. This is why purchase cancellation is not only a phenomenon of the online world.

  • Unavailable items:

the desired product is out of stock or simply not listed in the store

  • Poor customer service:

not receiving advice because all shop clerks are busy

  • Personal wrong decisions:

Forgetting to buy the milk when buying your muesli – or buying the wrong kind of milk, not taking lactose intolerance into consideration.

Connected Commerce: for customers it means no more queuing at checkout, amongst many other advantages. For the retail industry it means an IoT-driven revolution

However, 92% of total retail sales still happen in offline stores, according to findings by IBM Watson. And why?

These are the three major strengths of brick-and-mortar-shops:

  • Immediate purchase:

When shopping in-store, customers get their hands on the products right away – there is no need to wait for delivery

  • Direct, personal service is an asset:

No online description of a product, can compete with the personal advice of a well-informed shop assistant – if available, of course

  • Experience is key:

Shopping can be much more than just buying. Make sure your customers have fun and encourage them to build communities. For example, the barbeque manufacturer Weber invites their clients to join the Weber Grill Academy in order to learn about their new acquisition, to meet alike-minded people and – simply to have fun.

Now the key benefit of the Connected Store is to use these above-named strengths while avoiding their most important off-turners – and adding even more functions to make the customer experience even greater.

Register and identify once with your smartphone and your personal data, and then you’re ready to go for the Connected Store

Register and identify once with your smartphone and your personal data, and then you’re ready to go for the Connected Store

What is the Connected Store experience like in practice?

Since a video says more than words, just follow Kate and her shopping experience:

Connected Store: How cutting-edge technology opens up entirely new opportunities

In order to realize the shop of the future, we made use of a variety of latest technologies. In short, we used various sensors, smart scales, infrared cameras that track shoppers’ movements in the store – mainly Internet of Things (IoT) technology, connected to smart data analytics tools and Artificial Intelligence, for example for a chatbot.

We realized it together with our partner T-Systems – Wirecard provided the app and its interaction with the hardware, the “invisible” payment at check-out, the integration of various payment methods, the biometrics (fingerprints and face recognition) and the data analytics technology, e.g., enabling dynamic shopping lists.

And what does all this technology enable?

In a nutshell, it offers a quick, cart-free and contextual shopping experience.

Wirecard Infographic: IoT Store - The User Journey

As you see in the film above and in this infographic, after your customers have registered and identified themselves with their smartphone, they enter the shop, every item they take from a shelf is automatically registered.

So they need no cart, but they can put the chosen products in their handback or rucksack and simply walk out of the store. This means: no queuing, the payment happens automatically in the background.

Just take the things you need – and walk out of the Connected Store: This is one of the most important benefits for customers

Just take the things you need – and walk out of the Connected Store: This is one of the most important benefits for customers

But the Connected Store offers much more than that for your customers!

Let me give you some concrete examples:

  • Personal buying incentives: Your Connected Store notices that your customer Ben takes a packet of strawberries – but then puts them back, probably because they are too pricey. So your system offers him an individual discount of 15% off the price which is displayed on his or her smartphone
  • Smart shopping lists and cross-sell recommendation: When your regular customer Liz shops in your store, 80% of her shopping list is always the same. So for example, if this time she forgets to buy milk when he buys her muesli, your system automatically reminds her; and when she chooses sugar and flour with the muesli, why not show her a great recipe for delicious Christmas cookies which she can make with these ingredients?
  • Grasp user behavior: Steve chooses lactose-free products – plus normal milk. Your Connected Store asks him on his smartphone display if he is sure – and if he decides to go for almond milk instead, your system can lead him to the right shelf if that is what he wants.
  • Lift and learn: Maria picks a new beer brand she doesn’t know yet. While she holds the bottle in her hands, the display on her phone appears with information about how the beer tastes, where and how it was brewed and some more background information.
Lift and learn, one of the features a connected store offers

Has the Connected Store already passed its field test?

It looks pretty much so, as comparable IoT-based stores are already up and running. One of the first movers on the marketplace was Amazon Go, and even though it may still face some hiccups which are typical for pioneering companies, it is considered to be a success in learning how a Connected Store works in practice.

Furthermore, there is Moby Store, a mobile 24-hours store run entirely by technology, with no check-out and no staff at all, Technology Review reports.

Finally, Alibaba’s IoT supermarkets Hema are already further down the track, as their news portal Alizila reports:

“The first two years of store operations have yielded some promising results. Customers each make 4.5 purchases a month on average and 50 times a year. Among users who open the Hema app, the conversion rate for making a purchase is as high as 35%.”

We at Wirecard are ready to go – and now we’re looking for a merchant with whom we can put our concept into practice. I am convinced that in 5 to 10 years, there will be no more tills, but people will just walk out with their purchases.

So go ahead, forward-thinking retailers: The revolution in retail is happening right now, be part of it!

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