By Kevin Meagher, ROC-Connect
When the Internet first arrived, retailers were slow to see the threat it posed to their business. Most failed to recognize the opportunity it offered to reinvent their channel strategies and were slow to react. This opened the door to new companies that have become global retail giants in just 20 years.
It was almost with disbelief that retailers watched as consumer behavior changed and they realized that, despite instincts that told them otherwise, consumers would in fact ‘click and buy.’ Retailers spent years and billions of dollars trying to catch up, but it was too late — in the interim, they had allowed new entrants like Amazon to get a foothold and begin to steal the market lead.
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The IoT is in the next phase of growth for the Internet and once again, it will be a game changer. Retailers really need to avoid repeating the same mistake of underestimating the impact the IoT will have on their business, as analysts are estimating the market in trillions of dollars. The IoT has opened the floodgates to innovation with every manufacturer racing to exploit Internet connectivity to reinvent their products and business models. In the home, everything from the faucet to the toothbrush is being connected and generating data.
Data from appliances and devices in the home will redefine how consumers interact with their environment and it will have a fundamental impact on the way they make their buying decisions. Instead of focusing on the physical attributes of a product, purchasing decisions will be driven by apps and services enabled by data from the IoT. In this new world of connected devices, the focus will shift from products to services, and retailers need to worry about securing access and control of the data from the devices they sell.
There have been some early movers in retail. Lowe’s and Amazon have used the IoT to launch smart home solutions, and even though they have adopted different approaches to market entry, they have many things in common. In particular, they have been quietly working to secure access to the data that will be the future life-blood of their consumer relationships.
Through Iris and Alexa, they each offer a central hub that acts as a key node in the home. The hubs could be considered a Trojan Horse. They discreetly collect data from the devices in the home and pass it to the cloud, where it is used to support new services delivered through branded UXs. The hubs are like a bridge into the home, supporting the ability to cross-sell and upsell new products and services. The quality of the data from consumers allows improved targeting and engagement, with many smart home users interacting with their systems and suppliers on a daily basis by choice.
Retailers need to think strategically and look at how they could exploit the IoT to update their business model and defend their position in the market. Harnessing the power of the IoT requires broader strategic thinking and organizational change to deliver success — it calls for a complete change in mindset.
If retailers simply stick to the traditional role of merchant and focus on pushing volume for margin, they will leave a huge gap in the market. This gap will give others the opportunity to exploit data from devices, allowing them to deliver services that will attract and engage consumers. A gap that Amazon, Google and Apple are already working to position themselves to fill.
Kevin Meagher is the SVP Business Development for ROC-Connect, a technology company offering an enterprise grade cloud platform to support the IoT and the deployment of smart home products and services. Meagher has been recognized as a global pioneer and thought leader in the smart home and IoT. He is the former VP and General Manager of Lowe’s Smart Home initiative where he led Lowe’s IoT program. Meagher also founded Intamac Systems, a UK company offering a Cloud platform delivering smart home solutions to the mass consumer market through telecommunications companies and utilities.
