What Retail Can Teach us about IoT

Why designers should be paying attention to major retailers when designing new IoT components.

Retailers are frothing at the mouth to get consumers excited about the IoT, and for good reason: after all, Gartner estimates that IoT products and services are going to reach a value of over $300 billion by 2020. To help attain their piece of the IoT pie, big box stores like Target and Best Buy are investing serious floor space to demonstating IoT feasibility in the daily lives of customers. Both stores, for instance, plan on featuring whole-house IoT solutions ranging from automatic lights to smart thermostats.
Retailers know that hooking customers on one particularly cool IoT component means their greater willingness to plunk down money for other connected gadgets, but designers should take care to consider what this means when designing and marketing IoT components.

It had better work. Sporadic failures in the EE world are normal. Occasionally--for reasons both known and unknown--devices simply don't perform as expected. Designers have infinite patience with inevitable failures, but customers do not. A 99% success rate in the lab may be phenomenal, but if that expensive smart thermostat fails only a single time, there's a good chance it's going to be returned to the store from whence it came.

Customers don't know what IoT is. Talk to any customer walking into Target about their experience with IoT and you'll likely be met with a blank stare. There's a good reason retailers use terms like "connected home" and "smart" when dealing with technical components-- they make more sense to the average person. While IoT talk has been kicked around the industry for years, the concept is still new to the consumer. That means makers need to focus just as much on educating customers as they do on selling to them. While early adopters may be savvy, it's not yet time to assume that the average family has an understanding of IoT and its value. Customers won't understand the term "Internet of Things," but they definitely will understand that their phone can control their refrigerator.

Sticker shock is real. The Hue line is very cool, but customers have a difficult time understanding why they should pay $200 for a starter pack of light bulbs when they could run to Home Depot and get the same thing for $15. This is another reason why close connection to retailers is vital: customers simply will not invest in technology unless they understand how it works and how it will make their lives better, and they are most likely to trust the big box store with which they already have a relationship. Utilizing this relationship can make tremendous sense for makers.

Connect everything. It's logical to those in the industry that only iOS-compatible devices will work with iPhones, but that concept is foreign to consumers. All they understand is that their smartwatch should be able to communicate with every other device. That means designers have an obligation to ensure that an IoT device doesn't just work with other products in the same product family, but with other "smart" devices, even those made by other manufacturers. That may mean even ensuring compatibility with competitors. Customers don't care about the details--they care about functionality.

This holiday season will mark the first that retailers have truly devoted real energy and floorspace to IoT. This is the time to pay attention to how customers respond and adjust accordingly.