How IoT Will Impact the Future of Global Consumer Goods Industry
Technology was one of the highlighted industries that fared well in the past few years. The rising attention to technological solutions were especially prominent against the turbulence and limitations brought by the global pandemic to everyday life. With the shift to remote work, the obligation to stay at home and suspended travel activities people relied on technology no longer only for social connection, but core business activities and even leisure. This sharp new trajectory away from the physical world into digital and virtual environments is now definitively set to continue sharply in the post-pandemic world.
Whilst many fast-growing technological solutions, such as VR, AR and even Blockchain-based systems are attracting mainstream attention, solutions offered by IoT systems are little talked about directly in relation to the global consumer goods and brands, despite its ability to dramatically increase brand value in a short period of time.
What is IoT?
IoT or the “Internet of Things” is a system of interconnected mechanical and digital machines, computing devices, objects, or people that are provided with unique identifiers (UIDs) and the capability to transfer data over a network without needing human to human or human to computer interaction.
“The IoT can seem futuristic but it is just a progression of the internet, which is enhancing its reach further and further. This time, it is extending into a physical object” says Bruce Sinclair, President of IoT-inc and author of IoT Inc: How your company can use the internet of things to Win the Outcome Economy.
IoT integration can range from simple sensors to new technologies connected any physical objects such as on-the-shelf consumer products, clothes and other wearables linked to the web. Any object with a biochip transporter or any other natural or man-made object is assigned an internet protocol or IP address can transfer data over the web. Some major brands such as Hexoskin, Sunnto, Garmin, and Polar are using IoT to understand and communicate to clients in a better way, to bring new functionality to their products and services, improve decision-making and increase the value of the brand and the business. These are, however, somewhat advanced examples. The interesting thing about IoT is that a lot of brands, not involved in high-tech, can create value already now, by simply picking all the ‘low-hanging fruit’ first. By paying closer attention to both, software as well as hardware systems and technologies that already exist today, consumer brands’ owners can considerably enhance their product functionality and brand value. However, due to the lack of attention to effective and creative integration, most are missing out on these vast opportunities.
How does IoT work?
An IoT contains network-enabled smart devices that consume embedded systems, such as sensor and communication hardware, processors to gather, deliver, and act on data they acquire from their operational environment. There is a wide range of such hardware solutions already in existence. IoT devices deliver the sensor data they gather by connecting to an IoT lodge device or gateway where data is delivered to the cloud to be analysed. Often, these devices connect with inter-related devices and act on the information they receive from one another. The equipment and the integrated systems would perform most of the functions without human intervention, although people work on devices, for instance, to manage, configure them or give access to the instructions or data.
Why should brands pay attention to IoT solutions?
Only a few years ago, high value traditional consumer goods brands (outside of “smart” or “tech” segments) didn’t even consider combining high-end consumer brands with real technology. There simply didn’t seem to be an apparent enough reason for pro-active integration in this area. The common preconception has been, and perhaps still is, that the high-end brand status (e.g. fashion, luxury food & drink brands) is built on artisanship, tradition, style, and quality. Relying predominantly on the habit of creating time-tested quality items was the norm and perhaps, indeed, this was enough.
The world in recent years has changed drastically, demanding major shifts towards full re-imagination of high-end (especially in case of heritage) brand and product value creation. Technological implementation and digitalisation, are now driving the need for high-end consumer goods brands to show the understanding of the new cultural reality adopted by the socially and culturally evolving opinion leaders and influencers. The new reality, without any access barriers to information and ever developing functionality, outside of the traditional product specialty. Indeed, few brand owners, only a couple of years ago, would have believed that the vast majority of value acquisition for their branded products will be controlled by and gathered around technological solutions. As a matter of fact, some market players and even market leaders are yet to accept and understand this fully.
However, it is now definitively clear that the biggest value opportunity for brands set to take full advantage of the brand value landscape changes in the next years is going to be presented in building, controlling, and managing a direct brand-to-consumer relationship. The vast majority of this effort, in pursuit of a strong customer relationship is going to be underwritten by new technologies.
The need behind the IoT systems becomes particularly relevant as most leading industries and brands actively look towards growth opportunities in integration with Web 3.0. Indeed, virtual reality coupled with virtual products, as well as blockchain-based NFT solutions is now considered to be the gateway into the future of digital products and completely new market places. Further to this, it has recently become evident that the growth in large NFT transactions is predominantly driven at the retail level. For this reason, the market for NFTs via Metaverse and no doubt ‘non-blockchain’ based digital product sales via any other virtual marketplace, for consumer goods brands, is not only promising, but can turn out to be definitive in the survival of high value brands in the next years.
How IoT will reshape high-end brands?
There is a fast-growing expectation by the new generation of consumers for transparency and traceability of processes behind the product, production and origination. Therefore, as it comes to improving the value of the digital products, one of the key problems to resolve is to dramatically improve the connection between the physical and the digital product. This is especially relevant as it comes to high-end products and brands, that will derive most value from solving this problem.
The nature of IoT systems gives the ability to evolve the link between technology and the process behind the product, creating a deeper connection between high-end consumers and the brands they value.
IoT is already quietly introducing itself in every sector of life. From product origination to product consumption and everything in between is connecting with everything else: raw materials, supply chains, manufacturing facilities, logistics, production, personal items, fashion accessories, household objects. Here are just some of the practical things that IoT will reshape in high-end brands.
Automation and Authenticity of Production. The IoT can control, record and automate almost any sourcing, pre-production, production or post-production processes, preceding the creation of the final branded product, regardless of the industry. Transparent reporting of such data will give rise to previously unimaginable level of traceability and authenticity. This is exactly what the next generation of consumers desire from the products and brands they consume. Such transparency will inevitably be followed by the new type of rating systems of products vs. brands’ marketing claims to product quality, efficiency or nowadays trendy — environmental impact.
Improved Functionalities and Product Transparency. The benefits of the IoT, are not only limited to accessories and apparel, but all consumer products, including those connected to health. Smart sensors located in clothing (see Hexoskin), for example, will track your temperature or heart rate. Whereas, fully traceable so called “field to glass” production journey of a rare bottle of whiskey or wine, will not only measure your calories consumed, but also allow to verify the real provenance and quality of the product, again marking it against brand claims and promises. This will lead to the ultimate value of the brand, linking each product to its provenance.
Metaverse, Virtual Worlds and “Digital Twins”. With the sharp rise of Metaverse and virtual worlds, one of the ongoing focuses is on creating a stronger connection and a real relationship between the physical item and its digital replica. The IoT systems will provide one of the key solutions allowing to authenticate and transfer value from the physical to create a legitimate “digital twin” — a fully interconnected representation of a physical process or a product in the digital world. This solution, indeed, will offer major benefits, as companies and brands continue to look for effective and visible offline to online integration.
EndNote
Consumers are looking ahead; there is no doubt that the IoT solutions will improve brands and businesses in ways beyond imagination, all for the benefits of both consumers as well as brand owners. IoT systems will become particularly powerful when combined with AI capabilities, which will lead to limitless automation and intelligence to any well-integrated operation. The ability to create fully traceable products, as well as to improve interconnection between the physical and the virtual worlds, thereby creating legitimate and fully automated “digital twins”, will bring IoT solutions to the forefront of value generation for consumer goods and brands. Interestingly, a lot of the technology and solution are already available and at relatively cost-effective disposal of those who know how to integrate them.
Given the availability of countless IoT solutions already present on the market, the question on how far the IoT will go in reshaping consumer brands, has a direct link with how creative and bold the brand owners will be in finding ways to use and integrate all that the IoT systems have to offer. Like with everything else, new technology means going down blind alleys of trial and error. The next few years will identify the early winners and many will be left behind. Indeed, the result gap between traditional and innovative leaders continues to increase.
About the author:
Zak Oganian is a FoodBev industry entrepreneur, with over 12 years of extensive experience in brand ownership and international development. He is director at Kinahan’s Whiskey Co. (one of the world’s oldest and most innovative whiskey brands he helped rebuild) and the CEO of Geneva-based G7G group, focusing on transforming the world’s heritage brands with leading technologies, ready for next generations of consumers.
