March 6, 2017

Survey: retailers drive demand for Internet of Things

Zebra study shows retailers seek technologies to let them fulfill online orders from store shelves.

By Ben Ames

Brick and mortar retailers are planning significant technology investments over the next four years as they look for ways to fulfill e-commerce orders directly off store shelves, according to a survey released today.

Nearly 70 percent of retail decision makers surveyed are ready to make changes to adopt the Internet of Things (IoT), and 65 percent plan to invest in automation technologies for inventory management and planogram compliance by 2021, Zebra Technologies Corp. said.

The results come from Lincolnshire, Ill.-based Zebra's "2017 Retail Vision Study," a survey of nearly 1,700 retail decision makers worldwide that was conducted by the online survey firms Research Now Group Inc. and Qualtrics LLC.

"A lot of retailers are looking to use the store's back room as a warehouse for fulfillment," said Tom Moore, Zebra's industry lead for the retail & hospitality industry, in a phone interview. "Retailers are looking to leverage their footprint and use their real estate in the store to play in the e-commerce world."

Retailers are increasing their investment in technologies to enable e-commerce fulfillment because companies face three main challenges in trying to operate the store as a warehouse, he said. Most retailers track their goods with store inventory software that doesn't share data with their warehouse management system (WMS), their order management system is outdated, and they lack sufficient inventory visibility, Moore said.

Together, those hurdles make it difficult to track the goods on the shelves and to match them with incoming e-commerce orders. Most retailers have 98 to 99 percent inventory accuracy at the time they receive their goods from the warehouse, but that number drops to 50 to 60 percent by the time the goods hit the shelves, Moore said. A store that is willing to pay its employees to perform cycle counts can get the figure up to 70 to 80 percent, but most stores can't afford that expense, he said.

In response to that challenge, 79 percent of North American retailers plan to invest in IoT-enabling technology such as automated inventory verification systems and sensors on shelves by 2021, the Zebra survey found. And 57 percent of all retailers said they think by 2021, automation will help them pack and ship orders, track inventory, check in-store inventory levels, and help customers find items, the survey showed.

To reach that goal, 87 percent of retailers say they are planning to invest in technologies such as mobile point of sale (POS) devices that let shoppers pay for purchases anywhere in the store, the survey said. Another key technology is the array of sensors and beacons that let stores use location-based applications that communicate with individual shoppers' smartphones, linking their online shopping accounts with their in-store activity, according to Moore.

Finally, a third technology set for rising demand is radio frequency identification (RFID), the decades-old automatic identification (auto ID) method that has long been criticized for being too expensive for everyday goods. However, falling prices for RFID tags and scanners now make it worthwhile for retailers to tag items worth as little as $25, Moore said.

About the Author

Ben Ames
Senior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

More articles by Ben Ames

Resources Mentioned In This Article

Technology Videos

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.

Subscribe to DC Velocity

Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : Survey: retailers drive demand for Internet of Things">contact Chief Editor David Maloney. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.