“Why innovate now?”

It’s a common question these days. Everyone in business has myriad challenges vying for attention, and an ingrained aversion to the risks of being a “first mover.” What’s more, because technology evolves so quickly, there’s often a mentality of “Why not wait?”

The retail industry has been challenged by technology pressures from direct-to-consumer breakthroughs. The pandemic heightened it, but the reality existed before COVID-19 and continues now. Many are also overwhelmed by challenges only government can help address. Still, brick-and-mortar retailers often resist innovation, even though their current precarious state is caused by the speed with which their channel competitors have adopted it.  

In fact, as retail companies become technology, they must fundamentally reevaluate their relationship with innovation. And they must recognize that data can be a superpower.

Certainly, margins in retail are tight, so a “Why innovate now?” approach to new technology might seem the safest way to protect them. But as more and more studies show, early adopters usually gain a competitive advantage and tech-savvy companies tend to absorb Luddites. Often, the answer to “Why innovate now?” is “Because your competitors are already ahead of you.”

When McKinsey & Co. looked out at the grocery retail market in 2023, it saw a need for action that would propel companies to embrace innovation with speed and scale.

“To unlock the full potential of analytics,” its experts wrote, “grocers need to shift gears from exploring and testing use cases to building the required capabilities for implementing them at scale and embedding them into their daily processes.”

Some get it. Kroger employs hundreds of data scientists and software engineers tasked with applying digital innovation and analytics to the decidedly analog business of selling groceries. Amazon.com, a technology-first retailer, is seen as the great disrupter of many industries and a master of data. And Walmart, with its Walmart Global Tech division, has moved quickly and smartly in the face of technology disruption, and would be the first to call itself “absolutely a tech company.”

These remain exceptions, however. As the Harvard Business Review put it last year, “For years now, executives have been told that advanced analytics can provide better answers to almost every business question. Yet in retail, at least, surprisingly few companies have taken full advantage of the opportunity.”

While many recalcitrant retail executives find supply chain visibility tools beyond their comfort zone, that’s only because most are unaware that technology exists today that is easy and cost-effective to deploy at the scale. Ultimately, it’s this kind of visibility and data acquisition that turns retailers into tech companies, and allows them to succeed in the future — and improve those historically razor-thin margins.

According to HBR, “Even as Walmart, Amazon, and a few other leading retailers operate at the leading edge of the analytics frontier, making many important decisions based on an ever-growing supply of real-time and historical data, most of their competitors still use very basic tools that are far better able at tracking where they’ve been than where they should be going.”

The Need for Ambient IoT

Some engineers and technologists have developed a visibility platform that uses ambient internet of things (IoT) technology to allow retailers to trace finished goods, food and produce, pharmaceuticals, packaging and shipping containers. This is enabled by a cloud-based platform that turns ambient IoT data into business intelligence. The system is a technological leap ahead of current radio frequency identification (RFID) technology.

Once, RFID was the leading edge of the bleeding edge. But it’s being distanced by ambient IoT because the latter requires neither scanning nor expensive infrastructure. In one digital swoop, it solves two reservations that retailers have with technical innovation: fear of new processes, and excess cost.

Here’s how it works: IoT pixels — self-powered, stamp-sized computing devices — are affixed to everything retailers need to trace. They communicate wirelessly over standard Bluetooth connections with existing and off-the-shelf routers, sharing information about the thing itself, including location, temperature and humidity. The data is collected securely in the cloud, where retailers can monitor their supply chains, analyze data and program actions, like alerting suppliers when food has been stored improperly.

By adding intelligence to everything in a supply chain, ambient IoT enables real-time omnichannel inventory management, food-safety monitoring and compliance, and carbon footprint tracking. And it becomes an integral part of a retailer’s operations, not a bolt-on solution. 

First-Mover Advantage

For many companies, aversion to innovation stems from being inherently conservative. They’re so busy running their businesses that they’re slow to reinvent them. They’re either unaware of the innovation happening around them, or unsure whether it’s ready for prime time. And the fear of making a mistake takes precedence over the legitimate fear of being left in the technological dust.

Questions like, “Is it mature? Can it scale? How soon will we see ROI?” are common. But while many executives puzzle over the answers, the industry moves ahead. As McKinsey put it, “The executives of even the slowest-moving company must be aware at some level that they are missing out.”

In retail, the risk of being left behind is real. Several leading retail companies are already taking advantage of ambient IoT to enable real-time visibility and advanced analytics. A major pharmacy chain is piloting ambient the technology to track the shipping and handling of products to its many stores — seeing in real time, for example, when medicines aren’t being kept at required temperatures. An apparel retailer is using ambient IoT to reimagine stores, tracing the movement of clothes at retail locations to identify what’s popular or not, precisely manage inventory so customers are never disappointed, and free up sales associates to connect with shoppers rather than stock shelves. These are real-world retail applications of an innovative tool delivering true competitive advantage.

The distance from “Why now?” to FOMO — fear of missing out — is very short. And with the advent of ambient IoT, it’s retail’s first movers that are driving the industry’s evolution. 

Experts worry that despite understanding the advantages that technology and data have given their competitors, most laggards may never catch up. But it doesn’t have to be that way. As McKinsey put it, “Investments in technology used to feel optional. Today, a wide range of affordable, field-tested technologies can help retailers reduce [their] cost structure…while delivering a better experience for both consumers and employees. Audacious investments should be the next step for the industry.”

Ohad Perry is vice president of sales with Wiliot.