The Internet of Things and the Future of Retail

Imagine yourself walking into the supermarket, grabbing your grocery cart, strolling through the aisles, and filling your cart with all of the products on your shopping list, as usual. You conclude your everyday grocery shopping experience by scanning through your shopping list, making sure everything is checked off. Sounds normal, right?

What if you then took your cart through the checkout and with a sensor, all at once, your entire shopping cart’s contents are scanned, ringing up all of your products instantly, while your specified payment method is directly charged?

Maybe this scenario is a bit of a stretch.

Or maybe not.

The Internet of Things (IoT) is interconnecting technology devices by linking everything to the web to make processes more efficient. Microprocessors, sensors, devices, data centers, analytics software, artificial intelligence programs, networks – all of this technology is currently being used in the retail industry, linking everything to the internet to monitor, track, and manage all of the aspects of retail inventory and distribution. It’s also allowing ecommerce businesses and brick-and-mortar companies to offer promotions exclusively to individual customers, creating more personalized customer experiences.

For instance, based on data that’s collected through search trends, online browsing, and shopping patterns uncovered through loyalty programs, retailers can promote and merchandise with a more targeted customer approach.

And it’s not only online shopping that’s being tracked. Loyalty customers may have a shopping app on their phones that, when connected to Bluetooth low energy beacons, can produce visual heat maps, allowing businesses to track everything from the products each customer buys to the very way they move around the store.

To a consumer, this tracking can feel a bit like “Big Brother.” But don’t panic about privacy just yet! The specificity of this detail can be made anonymous to help maintain individual privacy while still allowing retailers to collect invaluable data about their customers to better customize their offerings to match customer’s wants/needs.

Real-time data is being gathered, analyzed and distributed through the IoT, giving the retail industry more opportunities to optimize their customer service, monitor their supply chain, create a “smarter” experience for their customers, and a more efficient process for their retail staff.

Global Leaders Looking Toward the Future

The IoT is the future, enabling retailers to take advantage of innumerable opportunities to optimize their services.

As reported by eMarketer: “According to an August 2015 study by Retail Systems Research (RSR), the majority (54%) of retailers worldwide with above-average sales growth said they believed the IoT is poised to dramatically change the way companies do business in the next three years…Studies that have assessed the market size and growth potential for the retail IoT agree that retailers are already making substantial investments, especially in the areas of supply chain monitoring, inventory management, asset tracking, and payments processing. While adoption is still in its early stages, it will continue to increase as technology becomes less expensive and more reliable.”

In fact, retailers across the globe are expected to spend billions on IoT hardware by 2020. A 2015 report by Juniper Research has predicted that $2.5 billion will be spent on various sensors, beacons, RFID tags and other hardware and installation costs, which is four times as much as the $670 million spent in 2015.

The retail industry is one sector that is eagerly embracing IoT, as international leaders in this industry are becoming more familiar with its benefits, which includes increasing margins, boosting revenue and winning over consumer loyalty.

How Retailers Are Already Using IoT

Some retailers are ahead of the game when it comes to applying IoT to impact sales, optimize staff and create an engaging customer experience.

Take Disney, for example: Disney’s MagicBand wristbands are RFID-enabled, allowing for hotel room access, theme park access, and food and merchandise payments. This way, you don’t have to carry around tickets, a room key, cash or credit cards to pay for or access anything within Disneyworld, not only making the customer experience easier and more convenient, but allowing the company to better track which services consumers most use and where their money is being spent.

Another great example of IoT in action is the application of big data by the retail conglomerate, Walmart. By staying on top of social media trends, Walmart uses this data to promote products that are trending. They also track weather data locally and compare it to historical grocery sales data to optimize this area of retail. One example of this: historically, Walmart’s data reveals that +80 degree temperatures are in line with higher salad ingredients sales. They can thereby use this information by optimizing store-level merchandising and promoting salad ingredients during the applicable weather conditions regarding past sales.

Store merchants aren’t the only ones who are taking advantage of big data and IoT-enabled devices. Amazon, one of the largest online merchants, is making consumer buying more efficient. With a WiFi-enabled device called the “Dash Button,” Amazon has created a quicker purchasing option. The button is attached to particular consumer goods that often need a refill, like printers and ink/paper, for instance. When the supply of ink or paper is almost out, a consumer no longer needs to login to their Amazon account, find their product and purchase it; instead, they can simply tap a button that’s on the device which instantly creates an order. The transaction is completed using the customer’s online account information and the ink/paper is delivered, hassle-free.

How IoT Will Be Applied in the Future

IoT is already used in all aspects of retail – from the head office to distribution centers to store rooms; from in-store to at-home customer experiences (as with Amazon’s Dash Button). Being as such, retailers now require platforms that are in-tuned to their customer and their services, collecting and aggregating relevant data which will enable them to produce and target communication over their particular distribution networks. Having the right platform will allow retailers to use the data they collect to create, organize, schedule and deliver content efficiently. These processes will be primarily automated, saving the business and the customer time and money.

Sensors and PoS systems will have built-in smart devices recording and reporting data on nearly everything happening in-store. The real-time information collected by these devices will be interconnected in a way that the analysis of the in-store experience will become more insightful and true-to-life, allowing companies to make changes in the way they operate so that the customer experience is richer.

For example, motion sensors linked to the entryway of a store’s dressing room might notify sales associates or cashiers via portable devices (like a smart bracelet that vibrates or flashes a message), alerting staff to the fact that a customer has been waiting to enter the dressing room for a certain period of time. When a sales associate is across the store, stocking product, and they receive this notification, they can then hightail it over to the dressing room so that the customer doesn’t wait too long, providing them a better in-store experience, while also enabling the retailer to utilize their staff efficiently.

Moreover, real-time in-store data systems and devices can produce an “aware” store – or one that is smart-screen enabled, allowing stores to deliver communication to customers all over the store, instantly.

While product labels, promotions and print media provide consumers relevant information over a predetermined period of time (until the sign is changed when the promotion is over), smart screens can provide more instant information about the product – including up-sells – allowing for more flexible, in-depth and influential communication of product information. This creates a more informed customer experience, while also delivering detailed data more efficiently to the company. For example, smart systems will notify a business when a product is overstocked or understocked, at what time of day it’s most often purchased and the environmental conditions in which it best sells. Smart systems will also take into account products that are trending online, allowing for companies to more effectively promote certain products according to their popularity at any given time.

Leave a Comment