Will connected devices be a dream or nightmare for retailers?

Carphone Warehouse and Dixons Retail are selling their recently announced merger plans to City investors as a way to tap into the connected devices story. They reckon the link-up will ensure the combined entity is in prime position to benefit from the expected enormous growth of the ‘internet-of-things’ whereby household items and wearable technologies are linked to the internet.


Although the logic has been questioned by the City, the future does look likely to involve a lot of these connected devices. So maybe it is a sound strategic move by the two retailers. Certainly the predictions look good – there is expected to be nine billion newly connected devices by 2018 of which one billion will be TVs.

However, the big question centres on the people who are investing in the creation of these devices. They clearly want a return on their investment and this predominantly revolves around them using the data from the devices.

The likes of Google, which bought internet-connected thermostat maker Nest, are only in the game because of the value they will gain from the user’s data that the devices generate. The question is what will they do with it? It’s obvious how it works on Google’s search site – users see relevant advertising based on their search requirements and part behaviour.

It’s the same with connected TVs. The advertising that is served up to individual viewers depends on their previous viewing habits. Sky sells advertising space to brand owners who can then show them to specific relevant groups of viewers.

In these cases it is clear that the consumer is gaining some value from their data being used. This trade-off has also worked when it comes to retailer’s loyalty cards; it is easy for shoppers to see whether the discounts and offers they receive are relevant and justify them sharing their data with the merchant.

But with a myriad of new connected devices hitting the market the value that consumers gain from allowing their data to be leveraged by third-parties will absolutely come into question.

Consider that Google has disclosed that advertising will inevitably start to appear in some odd places as connected devices become more prevalent: “A few years cheapest klonopin lorazepam from now, we and other companies could be serving ads and other content on refrigerators, thermostats, glasses, and watches, to name just a few possibilities.”


Nest thermostat: internet-of-things is hotting up

Nest thermostats could be the vehicle through which energy companies bombard customers with ads and the wristbands from the likes of Nike could provide the data for health-related brands to push advertising to the health-conscious. It is not a big step for such devices to be linked to insurance companies so they can use the data to help them determine premiums.

The way data is used is certainly climbing up the agenda. Only this week Facebook announced its plan to give its 1.3 billion users more control over their personal information. Its founder Mark Zuckerberg stated that the company was trying to find a balance between hoarding the data that advertisers crave and ensuring users are still comfortable enough to share online.

Such moves are a reflection of the EU and governments around the world pushing for the introduction of regulations. Cookies and data protection (with positive opt-in) are just a part of this broad conversation.

There is no doubt that the connectivity of the new devices, and the opportunity to link them through technologies like Beacons (and who knows maybe drones in areas where it is not possible to locate Beacon-type transmitters), is a marketers dream. But is it conversely a potential consumer’s nightmare?

Maybe the solution will be similar to that adopted by the likes of music streaming company Spotify, which uses the ‘freemium’ model whereby the basic free service comes with advertising whereas the paid-for version has extra bells-and-whistles and no ads are served to the user.

A combined Carphone Warehouse and Dixons certainly looks like it is hitching its wagon to a transformational part of the retail landscape but it does have potential risks because if the consumer feels their data is not being used to their benefit by these connected devices then it will be the retailer who sold them the item that invariably gets it in the neck.

Guy (online only)Sponsored colummn by Guy Chiswick, Managing Director, Webloyalty Northern Europe (@Webloyalty_Guy)