Frost & Sullivan: M2M and Big Data to Overcome Challenges in the Retail Sector

LONDON, Oct. 10, 2013 /PRNewswire/ -- High competition within the retail sector compels market participants to seek ways to sustain a well-organised, well-connected supply chain and develop production plans in tune with the customer's desires. Implementation of machine-to-machine (M2M) technologies and data analytics would be a solution to overcome these challenges.  M2M can facilitate communication between supply chain actors and promote easier management of inventory. This technology can also provide a complete shopping experience for the customer and develop innovative methods of communicating with clients.

According to Frost & Sullivan's ICT research, the retail sector spent €59.0 billion on ICT products and services across Europe in 2012. By 2017, ICT spend is forecast to increase to €75.0 billion at a compound average growth rate (CAGR) of 5.0 percent (2012-2017). At this CAGR, the retail sector is expected to enjoy the second highest growth rate of all vertical markets in Europe, just behind the wholesale and distribution sector.

"Technological advancement in any industry helps to streamline operations.  Implementation of M2M technologies, on wireless or wired networks, specifically, promotes remote management of workloads thereby reducing time spent on regular operational work," said Frost & Sullivan Research Analyst, ICT, Shuba Ramkumar. "Furthermore, M2M connectivity allows data collection on various parameters which can be analysed to provide better insight into the market, and in particular customer behaviour."

In the retail sector there is a constant need to ensure operational efficiency that can help retailers to stay ahead of the competition. Moreover, this sector is heavily dependent on a well-managed and coordinated production and distribution channels. Being a customer facing industry, it is also important to build and maintain customer interest. All these challenges can be addressed by M2M technologies.

"One of the biggest areas for growth in M2M for retail is the associated use of data analytics to understand shopping habits of customers," added Shuba Ramkumar. "Consumer data analytics may be done using data sets from different sources, to help retailers either increase sales or optimise operating expenses."

Retailers stand to benefit from collaboration with service providers such as Mobile Network Operators (MNOs) who possess raw data about subscribers using their network services. Although very useful, the use of big data always raises a number of questions about privacy and security. However, the biggest obstacle, preventing the integration of data sets is the lack of common standards in data formats.

MNOs have several features that make them relevant service providers in the retail space. Their technical strength in providing connectivity, ownership of vast reservoirs of customer data via communications networks, experience with personalised marketing and advertising make them strong contenders to be IT vendors for smart shops in the future.

"The retail industry currently uses M2M connectivity in several vital areas to overcome operational challenges such as inventory management, in-store management and remote monitoring of mobile stores. With advancements in technology, development of common standards and cost reductions, retail shops will grow from using M2M connectivity for basic requirements to deriving value-added benefits from its use (for example, data analytics, personalised marketing and in-shop services facilitating customer shopping experience). Shops will therefore become smarter, reflecting the objectives of a smart community," summarised Shuba Ramkumar.

If you would like to learn more about Frost & Sullivan recent Market Insight entitled Using M2M Technologies to Overcome Challenges in the Retail Sector, please contact Joanna Lewandowska, Corporate Communications, at [email protected]. Please include your full contact details in the query.

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SOURCE Frost & Sullivan