That decline is larger than the multichannel retailer’s overall 5.8% sales decline.
The so-called “Internet of Things” will be a big deal by 2025, say experts surveyed by Pew. A separate report from IDC quantifies retail spending related to web-linked objects.
A windshield wiper tells the car’s computer it needs to be replaced. A milk carton alerts the refrigerator that it’s time to buy more milk. These are a couple of examples of what’s being called “the Internet of Things”—objects communicating with each other via the Internet.
The Pew Research Center recently surveyed 1,600 Internet experts and found that the vast majority “agree that the expanding networking of everything and everyone—the growth of the Internet of Things and embedded and wearable devices—will have widespread and beneficial effect by 2025,” Pew said in a report released this week. “They say the opportunities and challenges resulting from amplified connectivity will influence nearly everything, nearly everyone, nearly everywhere.”
That includes in retailing, concludes a separate International Data Corp. study out this week. IDC is building its projection on the likely growth of the Internet of Things from the bottom up, by looking at actual use cases where devices might communicate with each other and transfer data, says Scott Tiazkun, a senior research analyst in IDC’s Global Technology and Industry Research Organization and one of the authors of the report, “United States Internet of Things Spending Guide by Vertical Market.” The IDC report released this week looked at 30 uses cases across eight industries, including three in retail.
The most promising of the three is the potential to offer consumers shopping in stores personalized digital offers, such as identifying a customer by her mobile device and sending her an offer customized to her taste. “This is what retailers will focus on next,” says Monika Kumar, program vice president in IDC’s Global Technology and Industry Research Organization. “They’ll have that better view of the customer and be able to provide personalized services and offers they want.”
IDC’s report quantifies how much U.S. organizations will spend on information technology—hardware, software and services—related to each use case. In the case of automating personalized offers via automated communication between devices, IDC projects spending will total $192 million this year, and that compound annual growth rate for the 2013-2018 forecast period will be 11.4%.
Another way retailers might deploy device-to-device systems is in digital signage, for example, using video cameras to identify that the shopper approaching a department is a young woman and changing the offer on a digital sign accordingly. “Retailers are already seeing benefits from this,” Kumar says. IDC projects IT spending of $172 million for digital signage and a five-year growth rate of 10.2%.
The third retail use case is in store operations. This can include shelf sensors that report an item needs to be replenished from a stockroom or reordered. IDC projects $77 million in spending in this area in 2014, and a five-year growth rate of 10.8%.
As for milk cartons carrying sensors that alert a refrigerator when the carton is nearly empty, Kumar says the cost of the sensors would have to be very low and consumers would have to find this valuable. “It will be up to the consumer to decide if this is something want and isn’t intrusive,” she says.