Over the past two decades, the customer’s experience in retail stores remained relatively unchanged. Obviously, retail environments have undergone significant change due to the introduction of information technologies, including the rise of online shopping. Yet, the in-store experience provided by traditional retailers is pretty much the same, but maybe not for long. We expect the Internet of Things (IoT) to cause great disruption in that space.
An interesting example comes from a concept store for AlpStories, a Slovenian cosmetics brand that is combining the traditional therapeutic usage of essential oils form the Austrian Alps with modern preparation technology. As the brand itself, the store had to mirror the link between nature and technology. The main feature that illustrates this positioning is a technically advanced robot that is used in production of the products. This is the first store in the world with all natural cosmetics that offers clients a chance to create their own product. Customers select ingredients, which are then mixed by the robot inside the store in real time. Because of this fully automatized method, there is no possibility of human error while mixing the product.
We believe IoT will provide traditional retailers with the tools to coexist with the online retail world as “omni-channel” shopping erases the distinction between online and offline shops. A recent study from the McKinsey Global Institute shows that the potential economic impact of IoT in retail environments ranges from $410 billion to $1.2 trillion per year in 2025, with opportunities to reduce the need for labor on the selling floor and at checkout, while increasing the “shopping basket” through customization and cross-channel selling.