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Connected Retail: The Business Case for IoT in Retail

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IoT (Internet of Things) has a lot of promise for retailers over the next few year. Estimates run into the hundreds of billions of dollars of annual impact by 2025. But building an ROI is difficult. How do you get value now?

Published in: Retail
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Connected Retail: The Business Case for IoT in Retail

  1. 1. CONNECTED RETAIL THE BUSINESS CASE FOR IOT Oliver Guy Retail Industry Director Software AG
  2. 2. 3 | A BUSINESS CASE FOR IOT • The Internet of Things • Experimentation and the Business Case • IoT Maturity • IoT Innovation • Bringing it all Together TODAY
  3. 3. 4 | A BUSINESS CASE FOR IOT • The Internet of Things • Experimentation and the Business Case • IoT Maturity • IoT Innovation • Bringing it all Together TODAY
  4. 4. 5 | INTERNET of THINGS MAY BE BIGGER THAN THE INTERNET ITSELF
  5. 5. 6 | THE INTERNET OF THINGS IN RETAIL POTENTIAL VALUE Source: McKinsey – “Unlocking the potential of the Internet of Things” http://www.mckinsey.com/business-functions/business-technology/our-insights/the-internet-of-things-the-value-of-digitizing-the- physical-world per year by 2025. The application of IoT within retail has a potential impact of $410Bn - $1.2Tn
  6. 6. 7 | RETAILERS AGREE IOT WILL BE HUGE 13% 39% 42% 21% 41% 38% 22% 16% 16% 30% 4% 3% 14% 1% 2% My company has no idea how the Internet of Things will impact our own operations in the next 3 years. The Internet of Things will have a dramatic impact on consumer products in the next 3 years. The Internet of Things will drastically change the way companies do business in the next 3 years. IoT Perceptions In Retail Strongly Agree Agree Neutral Disagree Strongly Disagree 80% Source: The Internet Of Things In Retail:Great Expectations RSR Benchmark Report, August 2015
  7. 7. 8 | CONNECTED RETAIL Connected Retail combines new IoT initiatives with the enterprise to ensure data and actionable insights are fully utilized across the business. Connected Retail will transform retail environments for the digital age. WHAT IS IT?
  8. 8. 9 | A BUSINESS CASE FOR IOT • The Internet of Things • Experimentation and the Business Case • IoT Maturity • IoT Innovation • Bringing it all Together TODAY
  9. 9. 10 | IOT IN RETAIL © 2015 Software AG. All rights reserved. EXPERIMENTATION RFID TagsElectronic Shelf Edge Labels Smart Mirrors Location AnalyticsBeacons Smart Badges
  10. 10. 11 | TOP 3 IOT ORGANISATIONAL INHIBITORS THE NEED TO SHOW VALUE BUSINESS CASE AND ROI APPEARS TO BE AN ISSUE Business leadership doesn’t understand the benefits of Internet of Things Overall Capital Requirements – we never even get to the subject of ROI We have not identified a business case to support specific use-cases for the Internet of Things The technology supporting the Internet of Things is not mature enough for our business to invest Our existing infrastructure is not capable of supporting Internet of Things We don’t have the skills to manage the analytics and predictive modelling required to take advantage of IoT data Our IT team does not have the capacity to take on Internet of Things projects Source: The Internet Of Things In Retail:Great Expectations RSR Benchmark Report, August 2015
  11. 11. 12 | JUSTIFYING A ROLLOUT BUILDING A BUSINESS CASE © 2015 Software AG. All rights reserved. ? Staff Efficiency Gains Error Reduction Reduced Paper & Print Costs Business Case for IoT Electronic Shelf Edge Labels
  12. 12. 13 | DRIVING REAL VALUE © 2015 Software AG. All rights reserved. THE CASE FOR CONNECTED RETAIL Real-Time POS Streaming In-Store Inventory Price and Promotion Optimization Electronic Shelf Edge Labels
  13. 13. 14 | DRIVING REAL VALUE © 2015 Software AG. All rights reserved. THE CASE FOR CONNECTED RETAIL Real-Time POS Streaming In-Store Inventory Price and Promotion Optimization Electronic Shelf Edge Labels Connected Retail Real-Time Offer Alignment 1. Correlate POS data & inventory 2. Model future near-term performance 3. Adjust offer 4. Roll-out adjusted offer to shelves & POS
  14. 14. 15 | JUSTIFYING A ROLLOUT © 2015 Software AG. All rights reserved. BUILDING A BUSINESS CASE Electronic Shelf Edge Labels Real-Time POS Streaming Price and Promotion Optimization In-Store Inventory Real-Time Offer Alignment + + + = = Reduced Paper & Print Costs Error Reduction Staff Efficiency Gains Increased Sales Increase Promotional Uptake / Conversion Reduced Stock-Outs Increased Margin
  15. 15. 16 | DRIVING REAL VALUE © 2015 Software AG. All rights reserved. THE CASE FOR CONNECTED RETAILTHE CASE FOR CONNECTED RETAIL Time IncreasingValue&ROI Disparate Sensors and Initiatives Make Sense of Multitude of Inputs Alert and suggest actions to improve and correct Automatically take ‘Corrective Actions’ Leverage the ‘Retail Moment’Sense Pan-Sensor Visibility Automate ‘Actionability’
  16. 16. 17 | THE INTERNET OF THINGS IN RETAIL THE RETAIL MOMENT Source: Gartner – “Unlocking the potential of the Internet of Things” http://www.gartner.com/newsroom/id/3093819 The impact of digital business and the IoT will require advanced analytics to support real-time decision making to take advantage of momentary business opportunities.
  17. 17. 18 | A BUSINESS CASE FOR IOT • The Internet of Things • Experimentation and the Business Case • IoT Maturity • IoT Innovation • Bringing it all Together TODAY
  18. 18. 19 | IOT INNOVATION IN RETAIL POWERED BY
  19. 19. 20 | Serious About Retail Strategic Partnerships Retail Specific Solutions Retail Insight and Thought Leadership Technology Partner Investment
  20. 20. 21 | SOFTWARE AG INNOVATING WITH IOT Location Analytics Real-Time Inventory Visibility Location Based Marketing Smart Store Monitoring Free 25% SALE 50% Admit one
  21. 21. 22 | LOCATION ANALYTICS HISTORICAL DEVICE LOCATIONS Hotspots of customer crowding • Highlight problems • Understand passage • Understand impact of promotions and respond
  22. 22. 23 | LOCATION BASED MARKETING SPECIAL OFFER Special offer for Mr Clark Free headphones with your new iPad
  23. 23. 24 | REAL-TIME INVENTORY UP-TO-DATE FIGURES Real-Time Inventory Up-to-date inventory figures in spite of delays caused by processing of the ERP systems
  24. 24. 25 | SMART STORE MONITORING IN ACTION STORE OVERVIEW Shading indicates high dwell times Red indicates potential problems Graphical store overview with overlays of dwell time, conversion and flow rates Live, Historic, Predicted
  25. 25. 26 | SMART STORE MONITORING IN ACTION TASK ASSIGNMENT Tasks assigned to staff based on need and availability
  26. 26. 27 | A BUSINESS CASE FOR IOT • The Internet of Things • Experimentation and the Business Case • IoT Maturity • IoT Innovation • Bringing it all Together TODAY
  27. 27. 28 | CONNECTED RETAIL BRINGING IT ALL TOGETHER https://www.youtube.com/watch?v=6OmhBclaOys
  28. 28. 29 | LEVERAGING THE DIGITAL BUSINESS PLATFORM IN RETAIL A SAMPLE OF CUSTOMERS DIGITAL BUSINESS PLATFORM
  29. 29. 30 | SOFTWARE AG WHAT IT MEANS TO YOU 50 Track record used by over retailers globally In Retail Stability for your future investments Global leader in process and data orchestration and real-time analytics Support for industry standards Independent and agnostic Support for your initiatives Extensive partner network 2,200 expert consultants across 70 countries Global and Regional competency centres
  30. 30. 31 | SUMMARY & ADVICE IoT will revolutionize the retail industry 1 Elevate the IoT conversation beyond individual initiatives5 Taken in isolation, IoT initiatives are hard to justify2 Consider how IT platforms and digital transformation support the IoT business case6 Combining IoT with established enterprise IT drives new opportunities3 Think about how IoT initiatives can squeeze even more value out of existing investments7 “Connected Retail” is the name we give to this new paradigm4 When looking at IoT related infrastructure, make sure it can scale8
  31. 31. 32 | www.SoftwareAG.com/ConnectedRetail

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