How IoT is Changing the Retail Paradigm
The technological revolution arguably began with the proliferation of the personal computer. From there global industries began to change incorporating technology into their everyday operations. Entirely new industries like telecommunications sprung up almost overnight and the world became interconnected in a way that had never before been seen in human history.
A new emerging trend in technology known as IoT (Internet of Things) is proving to be just as disruptive. IoT is “smart” technology that interacts with other technology, allowing for things like energy grids to be able to self-repair or vehicles that can identify maintenance issues before they happen. But it’s the retail industry that’s undergoing a paradigm shift with the changes IoT is creating right now.
A Closer Look at the State of Retail
Consumer tastes are changing and the retail industry is struggling to keep up. The traditional brick-and-mortar model of customers walking into shops and making purchases is starting to lose its appeal. Now, people all over the globe are shopping online.
Companies like Amazon are thriving because they’re taking advantage of how consumers want to shop. Reducing overhead costs by eliminating physical locations has allowed Amazon to gain an edge over other retailers and maximize efficiency. Meanwhile, traditional retailers have not fared so well.
Big brand names like J.C. Penny’s and Kohl’s haven’t been able to make the transition easily. Earnings are down and their stocks are being downgraded, while store closures rise in an attempt to curb losses. But not all retailers are in trouble. Nordstrom has done well with its ecommerce system and has successfully kept customers faithful by providing online ordering options.
IoT is taking the internet to a new level though. Interactive technology is a game changer and other companies are already making preparations. Korean-based Samsung launched a refrigerator model last year that comes equipped with a camera to let you see what’s inside your fridge without even opening it. But the company isn’t stopping there. Samsung recently partnered with Grubhub – a company that let’s customers order delivery from thousands of restaurants – to create a model that allows you to place orders directly from your refrigerator.
Grocery stores are changing too. Aside from the shift away from cheap options to organic food, grocery stores will soon be able to interact with your refrigerator. IoT is developing ways for you to grocery shop right from home and even have it delivered without ever stepping outside.
These radical changes in technology come with numerous risks and pitfalls. Experienced investors might remember the dot-com crash back in 2000 after rapid commercial growth of the internet industry. Anything ending in a .com attracted investment, (regardless of real world application,) creating an unstable environment. IoT seems to be following similar tracks and investors should be careful to maintain discipline and focus on fundamentals in order to navigate through these changes.