What’s Next in the Connected Retail World? Greg Kahn / GK Digital Media / August 2015

The Internet Of Things Has Arrived

“The Internet of Things Will Transform Retail As We Know It.” Keith Mercier Global Retail Leader for IBM Watson

“[The Internet of Things] will be bigger than anything that’s ever been done in high tech.” John Chambers, Executive Chairman of Cisco

IoT has piqued the interest of mainstream consumers

Worldwide Google search activity for “Internet of Things,” January 2008 – June 2015

Source: Google Trends

Why Now?

Source: Goldman Sachs, Cisco, IoT Analytics, GK Digital Media

Adoption of Mobile Devices

Cost of Sensors

Cost of Bandwidth Cost of

Processing

Shrinking form factors

Big Data tools + Infrastructure

Emergence of IoT

So, what does the term actually mean?

The Internet of Things (IoT) (n.) “Sensors and actuators embedded in physical objects are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet” IoT enables multi-way communications between objects and brands, objects and consumers, objects and objects. The result is a virtuous cycle of value improvement.

Source: McKinsey, HBR

Sensors

People & Processes Connectivity

IoT

IoT: The Who’s Who

 600+ companies in IoT as of Dec 2014

The Internet of Things Consortium (IoTC) is comprised of more than 60

leading hardware, software and analytics companies – in areas including

home automation, wearables, connected cars, smart cities, 3D printing, and

virtual/augmented reality.

The IoTC is dedicated to the growth of the internet of things marketplace and the development of sustainable business models.

The Internet of Things Consortium

60+ and growing

Members

The impact of IoT  The internet of things is revolutionizing our daily lives.

•  Safety in our homes

•  Commute to work

•  Delivery of goods and services

•  Health monitoring

•  Improving the efficiency of industrial machinery

•  City infrastructures

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Enhancing customer experience

Improving operational efficiency

Enabling creation of new channels + revenue streams

How IoT will play into Retail

Today’s Complex Retail Journey

Source: Cisco IOE Retail Journey

IoT will…

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2

3

Enhance customer experience

Improve operational efficiency

Enable creation of new channels + revenue streams

IoT Impact on In-Store Experience

Personalized Shopping Experience Beacons

Wearables

Contactless Checkout Smart vending machines

Retailers are already setting up tech open houses

Target’s Open House provides a hands-on demonstration so consumers can truly experience how technology will improve their lives on a day-to-day basis

Baby’s cry is detected by onesie, alerting a

mother’s phone

Coffee maker is activated, and sound is piped in to

confirm the brew

Temperature adjusts and lights dim when

consumers lie on beds

Retailers are offering more connected touchpoints to simplify consumer shopping

The on-the-go shopper expects no hassle “in-and-out” experience

Push Notification Sent Upon Entering Store

for Latest Offers

Digital Signage for Additional Information

Contactless Payment During Checkout

What’s to Come: Home-to-car-to-store

At Home Seeking Information In Transit Entering the Store

What’s to Come (Part 2): Virtual and Augmented Reality

Neiman Marcus’s smart mirrors allow shoppers to compare several outfits side-by-side and share photos with friends

American Apparel’s shopping app transforms a physical product in-store to an informative, custom digital experience

Virtual Dressing Room Augmented Shopping

What’s to Come (Part 3): Connected Packaging and Buttons

SMART PACKAGING

Placing RFID chips on the package to learn more about the product or send special offers when the item is running out

Johnny Walker Smart Bottle

EXTENDING CONNECTED EXPERIENCES

Create added value experiences through augmented reality that provide either inform, entertain, or delight the user

Heinz Trivial Pursuit

HOME REPLENISHMENT

Provide consumers a personalized home inventory management device that replenish consumer goods automatically and on-demand.

Amazon Dash

IoT will…

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Enhance customer experience

Improve operational efficiency

Enable creation of new channels + revenue streams

IoT and Retail Supply Chain

Smart Thermostats/Lighting

Smart Tagging Products

Smart Shelves

IoT will…

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Enhance customer experience

Improve operational efficiency

Enable creation of new channels + revenue streams

Monetization of IoT Data

OPPORTUNITY

INDUSTRY EXAMPLE

IoT – through data sales – becomes its own profit center

Tesco works with Dunhumby to sell its purchase shopping data and analytics platform to CPG

suppliers for them to better understand behaviors and segmentation

OPPORTUNITY INDUSTRY EXAMPLE

Service Based Business Models

Industrial Printer 3D Printing Service

Shift focus from expenditures to pay-by-use model In order to drive sales of consumer 3D printers, Staples invests in a 3D printing service to get users comfortable

with the technology and software before purchasing

New Pricing Models

360pi IBM Real Time Pricing Intelligence Dashboard

OPPORTUNITY

INDUSTRY EXAMPLE

Dynamic pricing models based on customer preference supported through micro-segmentation

Ace Hardware catalogs inventory into IBM 360pi’s real time pricing intelligence tool to power dynamic pricing based off zone rather than setting a national price

Beacon Networks

OPPORTUNITY INDUSTRY EXAMPLE

Creation of a cloud-based beacon network Swirl’s cloud-based software allows retailers and marketers to plan and assemble on-premise ad campaigns. The ad format

appears as a full-screen takeover that auto-launches on a user’s phone when they are in the range of a beacon — which can be

as close a proximity as a certain aisle or even an area of a shelf.

Where do we go from here?

•  Tweak behaviors, don’t reinvent them

•  Consider the platform

•  Start small, but keep an eye out for expansion

•  Integrate technology and standards

•  Partnership is key

•  Think beyond the smartphone

•  Consider new revenue streams

•  Focus on data integrity

Help define future consumer experiences

Build an infrastructure for IoT

Call to action: 4 ways to get started now

1

Upgrade Your Registers to Enable

Digital Payments

Deploy Smart Vending

Machines

2

Make Your Shelves Smarter

with Sensors

Offer Personalized Messages at Home, in the Car, at the Store and On

the Mobile Device

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THANK YOU Greg Kahn greg@gkdigitalmedia.com @GKmediaBUZZ

Sources Google Trends “Internet of Things,” January 2008 – June 2015 McKinsey Quarterly Insights and Publications, “The Internet of Things” HBR: Hui, Gordon, “How the Internet of Things Changes Business Models,” Harvard Business Review, July 29, 2014 Center Electric 2015 Goldman Sachs Global Investment Research Cisco Consulting Services, 2015 Higginbotham, Stacey, “Target opens up a new store in San Francisco to try out smart devices”, Forbes, July 9, 2015. Eliot, Lance, “Retail's new reality: Invisible shopping centers and virtual assistants,” CNBC, April 24, 2015. Quirk, Mary Beth, “Neiman Marcus, Nordstrom, & Other Retailers Trying on Smart Fitting Mirrors,” Consumerist, May 11, 2015. Takahashi, Dean, “Thinfilm’s smart bottle tells you if your Johnnie Walker scotch has been opened before,” Venture Beat, February 25, 2015.

“QR Code Review Heinz Trivial Pursuit,” Scan This Guide, July 22, 2014 Perez, Sarah,” What’s It’s Like to Use Amazon’s Dash Buttons,” TechCrunch, August 3, 2015 Karlin, Sarah, “Staples 3D Printing Service Has Arrived,” Fast Co Create, May 5, 2014 “360pi And IBM Collaborate To Help Retailers Price Competitively In Real-Time,” Innovation Retail Technologies, September 30, 2014 O’Reilly, Lara, “Beacons can finally become massive deal, thanks to Twitter,” Business Insider, April 23, 2015 Desarnauts, Bernard, “Wristley Apple Insider’s Report #16,” Medium, August 18, 2015 Smith, Cooper, “How beacons – small, low cost gadgets – will influence billions in US Retail Stores,” Business Insider, February 9, 2015 Bacheldor, Beth, “NeWave Sensors Solutions Unveils Smart Shelf To Track High Volume, Fast Moving Consumer Goods,” RFID Journal, March 6, 2014 Kasznik, Efrat, “5 ways the ‘Internet of Things’ transformed the vending machine,” The Business Journals, April 10, 2015