SAN JOSE: Increased connectivity, of both people and devices, will transform how consumers shop, how businesses handle data and how individuals deal with privacy issues, according to industry experts.

Raymond Velez, global CTO at digital agency Razorfish, described the "internet of things" as the biggest innovation in the digital world.

"We've just started to tap the surface for what a new world will mean when every physical touchpoint has some sort of representation or capability to talk to each other, to talk to consumers, to talk to brands," he told Digiday.

Padmasree Warrior, Cisco Systems' chief technology and strategy officer, told McKinsey that just 1% of what can be connected is actually connected and the next decade would see "significant progress" in connecting the remaining 99%.

"That will be a lot more information on the network," she observed and that needs to be usefully analysed in order to "drive better processes, better decision making for businesses, and better lifestyles for users and consumers."

Every single vertical – manufacturing, retail and transport – would be very different as a result.

She pointed to how the retail environment had already changed with the advent of ecommerce and mobile platforms and gave an example of how it might continue to change with the introduction of sensors for indoor location.

This would, she said, enable the retailer to know which aisles consumers visited and whether or not they bought anything there.

"And so if we can analyse that data and tell you when there's a sale going on, that benefits you as a user as well as the retailer," she stated.

"It's really a combination of a recommendation engine, or a preference engine, of a coupon or a discount engine, and a loyalty program, combined with indoor location," she suggested, currently discreet applications that would make retail a very different experience in the future.

On the issue of personal data, Warrior noted that the argument was focused around simply opting in or out, but she argued that in future this would be a more nuanced debate with consumers having greater choice.

"And I may want to change my mind," she added. "I may opt in at the beginning but as I find what that data is being used for, I may opt out."

All of this would require sophisticated analytics and a different way to present data. "Up until now, it has not been the problem most creative people have been handling," she observed.

Data sourced from McKinsey, Digiday; additional content by Warc staff