Wearable Technology Is Breaking The Retail Distribution Model

Smart technology is becoming mainstream very quickly. Not a day goes by without hearing about some new piece of smart technology that can help you get fitter or smarter or improve your life in some other way. In the past week alone, I’ve heard about devices that can improve your tennis swing, improve your posture, sense your presence, and generate energy from walking — not to mention the new smart watches, handheld 3D printers that can draw bones, smart breathalyzers, and, of course (!) smart wigs!

These devices are starting to find their way into the hands of consumers, but much of the retail channel has yet to catch up. Smart locks, smart wearables, and smart fitness devices are all generally being sold through the traditional online and offline channels for electronics and devices; sports stores, clothing retailers, and home hardware stores have been slow on the uptake. In the US, we have already seen some electronics retailers (such as Best Buy) significantly expand their “smart wearables” section from a small pod to an entire aisle or even a dedicated corner or section of the store. At the same time, many sports stores have not even started carrying the latest fitness tracking devices — something that should be in their sweet spot.

In fact, many traditional clothing retailers’ merchandising models have put them well behind the eight ball. Where do companies like Fitbit, SolePower, or others fit into the traditional clothing retailer’s model? Quite simply, they don’t — and that will hamper these retailers, because far more innovation is happening at crowd-funded startups than in the clothing manufacturing space (Nike being the obvious exception).

So what is the future for traditional retailers around smarter wearables? My guess is that they will continue to be pushed to the sidelines over the next two to three years; electronics retailers will prosper at their expense and innovation in wearables will continue to happen elsewhere. But eventually the traditional clothing retailers will begin to consolidate and innovate. Some large brands will buy the smaller device startups; others will launch their own lines of smart wearable clothing or devices. A large proportion of today’s standalone wearables will be integrated into traditional products.

One thing is certain: As with the shift toward online selling, traditional retailers that fail to embrace the shift to smart wearables will continue to see their value and market share erode.

So how does this relate to CIOs? For a start, I know a number of CIOs in clothing and sporting retailers in Asia who are challenging their company Buyers to get on top of these trends – and in some cases are even educating the Buyers as to the coming trends. CIOs, along with Enterprise Architects are typically responsible for scanning the tech horizon – and through this approach could help the business better understand the current and future buying behaviors and technology trends.

CIOs in retail should also look to leverage the data ecosystem of wearable technologies – how can the data collected at the device or wearable level perhaps be integrated into the loyalty systems, or help to guide the customer experience strategy? What other internal or external data sources which might, if integrated with your own data, actually create a better outcome for the customer – is there a way you can make the wearable technology experience better if purchased from your store?

With technology disrupting the retail landscape, the CIO has a great opportunity to help their business remain relevant in the Age of the Customer.

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