The Internet of Things (IoT) has been a hot topic in retail circles in recent years — but what, exactly is it and what is its place in retail?
In essence, the concept of internet of things in retail calls for everything to have an IP (internet protocol) address, which means that all objects can communicate and share data about themselves. One great example: you may have seen the TV commercial for Samsung smart refrigerators, in which a child can add, say, “apples” to the “smart” shopping list on the fridge, which immediately notifies the parent at the grocery store.
It’s this instant, always-on communication potential for internet of things in retail that really excites industry professionals — and holds great potential for transforming operations.
While RFID has done great things for improving inventory operations, internet of things in retail could really change the game. With tags on products and sensors right on the shelves, inventory counts — once a time-intensive procedure dreaded by store workers — could be done in a matter of minutes or less. With products continuously reporting their status, retailers can act quickly on any potential issues and make over- or understocking a thing of the past.
With more than 8.4 billion IoT devices in use, retailers must be concerned about the new skillsets required to manage the internet of things in retail, from networks to devices and more. Of course, this is just the tip of the iceberg. Consider just these few impacts:
- IoT network security: IoT in retail calls for more communications protocols, devices packed with more capabilities — complexities that can create greater potential for vulnerabilities.
- IoT encryption: IoT networks mean there’s always data at rest and in transit, and retailers will need to secure and encrypt both, preserve data integrity and fight against “data sniffing” by black-hat hackers.
- IoT security analytics: Artificial intelligence, machine learning and big data will play a significant role in monitoring data and reporting actionable insights on retail IoT devices.
Smart Sensors for Tracking Customer Footfall
Retailers are particularly intrigued by IoT’s potential to improve customer traffic counting. From WiFi tracking to intelligent floor to traditional people-counting systems sensors, IoT in retail can deliver much greater insights into what shoppers are really doing in stores and how better to serve their needs. With real-time data, retailers are empowered to make real-time decisions, especially when WiFi systems and people counters are working together. Marketing display not attracting eyeballs? Dispatch store associates to shift it now, instead of waiting until after hours. Making these tweaks and changes in real time can boost conversion rates and capture greater sales.
Beacons and Marketing
Beacons are probably the best-known IoT retail application. Small, stationary Bluetooth-connected devices, beacons communicate with shoppers’ WiFi-enabled devices and push out messages to customers, from store information to discounts and promotions.
Three quarters of marketers say location-based marketing is important to their business.
As an internet of things in retail application, beacons can take advantage of a shopper’s location to deliver a strategic, custom tailored offer. Hovering near the bathroom cleaning spray? Maybe you’ll get a coupon for a free sponge if you purchase the spray. Smart offers at the precise point of decision can influence shoppers and drive conversion, increase basket size and sales, while simultaneously increasing customer satisfaction.
What IoT Means for Supply Chain
In four years, 70 percent of retail companies intend to invest in IoT technologies, and supply chain is a top-of-mind area. Retailers are always striving to improve supply chain visibility and IoT can provide greater insights to reduce stock-outs and right-size assortment and allocation according to customer demand. Retailers again will lean on machine learning and predictive analytics to reduce supply chain constraints and challenges, and improve the customer experience.
We’re only beginning to scratch the surface of what internet of things in retail can do. Retailers are planning significant investments to reap the benefits of IoT and deliver the next-gen experience that customers demand.