The Internet of Food Retail Things:

How Game-changing Transformations Are Opening New Opportunities for Savvy Food Retailers

Just when you thought you’d figured out the game of food retailing, all the rules have drastically changed!

Does that statement apply to you? If so, you’re not alone. Retail executives industry-wide are reeling from the dramatic changes reshaping the marketplace at almost lightning speed, trying to understand what those changes mean for their businesses today and in the years ahead.

Driving the transformation: The Internet of Things (IoT), the term used to describe a world where physical “things” such as devices and sensors are both smart and connected, with the ability to collect and share data.

“The Internet of Things is a game changer for the retail industry and gives retailers the tools and insights to trans-form their businesses,” the Microsoft white paper Trans-form the Retail Store with the Internet of Things says.1

And what a large, potentially lucrative game changer it is and will continue to be! By 2020, there could be as many as 30 billion devices hooked up to the IoT!2, with the

economic value-add across sectors from the IoT projected to reach $1.9 trillion by 2020.3

The Unique Nature of Food Retailing

So what does the IoT have to do with your business? Un-derstanding the unique environment in which food retailers operate is an important step in answering that question.

First, consider the fact that your industry presents chal-lenges other retail categories simply do not.

“Food retail is unique in that it has a substantial mechani-cal equipment component most other retail environments don’t have,” explains Michael J. Higgins, senior vice president, marketing, strategic planning & business de-velopment, Hussmann, a leader in manufacturing, selling, installing, and servicing display equipment and refrigera-tion systems for customers in the retail food industry.

“In food retailing, product needs to be available, cases need to be up and running, temperatures and out-of-

stocks need to be managed, and this involves a significant amount of infrastructure,” notes Michael Seals, director of marketing strategy and business development for Huss-mann. “And food retailers still have shopper relationships they have to keep their thumbs on. A lot of that is data driven, and all of it has to be done in an economically viable way within the confines of a traditionally low-mar-gin business.”

Add to that the fast-growing implications of omni-channel marketing, and the important role technology can—indeed must—play in moving your business forward becomes clear.

“Retailing, food retailing in particular, is at the intersec-tion of two transformational changes — mobile com-merce and The Internet of Things—we call it The Internet of Food Retail Things—with the Smartphone as the great enabler,” Seals says. “The mechanical aspect—the importance of food freshness relative to the mechanical equipment, for example—is one of the many aspects that The Internet of Food Retail Things can help manage.”

In fact, Microsoft also strongly believes that the IoT offers

tools and insights that can transform your food retail business. “Through implementing an effective Internet of Things strategy, retailers can significantly improve, automate and refine business processes, reduce operational costs, integrate channels, and most importantly, better understand and engage with customers.”1

Today’s Changing Consumer

Have you visited one of your stores recently to observe how your customers shop? If so, you’ve likely seen cell-phone wielding shoppers checking their phones or com-municating via text as they traverse the aisles. (And if you haven’t walked those aisles recently, you certainly should!)

Mobile commerce has dramatically shifted the way con-sumers navigate the path to purchase. “Via Smartphones, shoppers can engage in mobile commerce from anywhere, any time, while both shoppers and retailers can connect with the Internet of Food Retail Things, each for their own purposes,” Higgins says. “They have the opportunity to get real time information on everything from prices to menus to out-of-stocks to food freshness.”

Indeed, shoppers are growing accustomed to digital’s ben-efits in other retail settings and are beginning to expect them in grocery as well.4

The fact remains, however, that 94 percent of total retail spending still happens in stores, and in-store conversion rates are four times higher than online-only conversion rates.5 Most significant for food retailers is data that shows most shoppers make the ever-important purchase decision in front of the shelf.

“The shelf is perhaps the most important link in the value chain from manufacturer to retailer to consumer,” information from Nielsen says. “It is where brands and innovations are made available to consumers. It is where pricing and promotions take place. It is where supply meets demand, in the most tangible way.” 6

And that, says Seals, begs the question: ‘If shoppers are making decisions in front of the shelves in your Hussmann equipment, how can we help impact those decisions?’

The answer: Tie the IoT into mobile commerce to influ-ence those decisions in personalized ways at shelf in real time.

Change + Challenge = Opportunity

Are you convinced yet that these big, game-changing situations the IoT has wrought will impact every aspect of your business? More important, are you convinced that embracing these changes and taking the necessary steps to incorporate new technology is the only route to a successful future?

If not, it is easy to understand why. “Retailers are looking at The Internet of Things with a cautious eye,” Higgins says. “It is all so new—people are going to be reluctant.”

But as a food retailing executive, it is important that you recognize that these changes and challenges create signif-icant opportunities you can capitalize on.

“There are new digital opportunities that can affect point-of-purchase decisions being made—things that impact that decision even before a customer leaves the house,” Higgins says. “Retailers need to start those interactions when the purchase process begins…for example, when customers are making shopping lists. That has become a new moment of truth with the shopper.”

As challenging—and yes, at times as confusing—as this evolving landscape can be, the good news is the IoT can make a difference for you right now, no matter where your business may be. You can begin with the things that mat-ter most—Point of Sale (POS), digital signage, mobile

devices, shelf-edge labels and store equipment. It’s really the Internet of Your Things, and it starts by building on the infrastructure you already have in place, using familiar devices and services in new ways, and incorporating the right technology to ultimately help you use data to create insights and make more informed business decisions.1

As Hussmann (armed with expertise in all areas of food retailing, not just their merchandising and refrigera-tion foundation) is continuously exploring, testing, and understanding new, state-of-the-art digital solutions, they are poised to help retailers make sense of the changing landscape and define and implement the transforma-tional changes that will enable retailing excellence in our dynamic world.

“In today’s competitive environments, retailers are invest-ing in technology to drive efficiencies in creative mer-chandising and in ways to make the shopping experience more engaging,” Seals says. “Hussmann’s involvement in new solutions can help retailers take advantage of the latest trends through great merchandising, lighting in-novation and new interactive technologies. By effectively connecting with today’s consumers, retailers can enhance the shopping experience and improve the lives of custom-ers and their families.”

Embracing these emerging IoT technologies also can help you, as a food retailing executive, learn how to play by the new rules and ultimately win at the food retailing game.

For more information, please visit Hussmann at 2015 FMI Connect, booth #1204,or visit www.hussmann.com.

1Microsoft, “Transform the Retail Store with the Internet of Things,” 20142ForbesBrandVoice; “The Internet of Things Will Transform Retail As We Know It” by Keith Mercier, Global Retail Leader for IBM Watson, 1/12/2015, www.forbes.com3Gartner, “Forecast: The Internet of Things, Worldwide, 2013,” November 2013.4Nielsen, “Bricks and Clicks: Global Grocery Shoppers Want a Blended Experience,” 4-29-155Chain Store Age, “Online Shoppers To Brick-and-Mortar Stores: Time for a Facelift,” Dec. 10, 20146Nielsen: “Winning at the Shelf: Driving New Value Through Optimal Assortment”