Envisage the use of IoT in Retail Industry to Maximize your Returns

9 min readOct 2, 2018

Let’s experience the in-store visit of the tomorrow!

You enter the retail store to buy new jeans, then reach the jeans rack and point the smartphone and in a split of seconds, you can view the product details and the other colors and sizes of jeans available. After selecting the pair of jeans, the app suggests you try the dress virtually in the fitting room along with the directions to locate the fitting room. After walking up to a wall of the digital screen, you can check how the items selected would look like and then move out of the store without standing in the long checkout queues.

Doesn’t it sound miraculous? Geared up to sense the same retail experience the next time you visit the store? If so, it’s a matter of time when you can see and experience the digital innovations as an integral part of the brick-and-mortar stores altogether. The leading retail players like- Amazon, Starbucks, Walmart, and Intel have already realized the need of customers and offering services to customers in a hyper-personalized and smart way.

How is it possible? The retail stores don’t have touch points in-built in the store to gather the data and tap the value out of mammoths of user-generated data just like online stores. The Internet of Things technology has a solution to this dilemma. At the core, it works using connected devices and there exists no chance that the customer entering the store doesn’t have the mobile device in the pocket. That’s where you win.

With IoT development, the retail industry is experiencing dramatic changes from new customer acquisition to enhancing the in-store experience to the growing loyalty. The technology has set the benchmark. To keep up with the frictionless online shopping, physical stores are embracing the technology to mimic the same experience, market the offerings efficiently, keep the shelves full of stock, maintain equilibrium in supply-demand, and boost ROI. This is interesting!

Let’s look at the key areas where IoT retail applications are bringing easily spotted customer benefits and operational benefits to the retail landscape. They are:

Smart warehouses

The demand-aware warehouses automatically keep the products in the stock based on the in-store and online shopping demand. For instance, a few months back Amazon has taken an initiative of automatically ordering the product on the customer’s behalf before they make an order by tracking their regular product purchase. In this scenario, the product is kept in the stock in the nearby warehouse to complete the delivery within a day as the customer orders the product. The warehouse automation for self-organization based on the demand speed up the delivery that delighted the customers and improved the sales.

Taking a step further, during traffic congestion, there is no point in sending the orders out because the delivery vehicle just sat in the traffic that’s a waste of both time and fuel. The warehouse delivery system is connected to the traffic congestion system where the distribution plan is rescheduled during off-peak traffic periods, so the product can be reached in the minimum time and at the least expense.

Smart manufacturer operations

For the giant retailers, the product manufacturing with the machines is as equally important as selling the products in the retail store because it ultimately impacts their bottom line. In the factory, the sensors are attached to the machines that detect the variations in the pressure, vibration, and temperature over a period of time and can predict the conditions where the chances of failure are the most.

The predictive equipment maintenance reduces the likelihood of unplanned machine downtime that potentially saves the millions of dollars in production. Also, the advanced sensors can be embedded that helps in identifying how much raw material gets wasted which can be reduced to improve the productivity.

Smart transportation

The retailers can keep track of the assets out of the warehouse by embedding the sensors or GPS devices with the truck, which enables them to track the asset condition and the route that truck is following.

Under smart packaging from the warehouse with NFC chip or RFID tag that’s connected to the packaged items, enables the retailer in monitoring freshness of the product and send other information about it. Also, the route can be rerouted by the retailer to ensure the assets reach the retail store in the least time, distance and money.

For instance, Trillium Farms and Centrum Valley Farms, the US-based egg producers for shipping the eggs to their customer using smart pallets where RFID tags are embedded that broadcast the signals which enable them to track the location, distance and time it will take to reach. Additionally, the temperature, shock, and vibrations can also be analyzed with the sensors attached to the pallets ensuring the eggs reach the customers in the right condition. Thereby, the quality and transparency can be maintained in the supply chain.

Smart shelves

Due to the less visibility into inventory, the ‘out-of-stock’ nightmare drive away the potential customer and overstocking bring losses. Plus, tracking the item missing on the shelves is another issue that hurts the business profits. The efficient inventory management is imperative to reduce the inventory cost and make the most out of the sales opportunity.

According to a McKinsey report, “Reducing the overstocking and stock outs lower the inventory carrying cost by 10%.”

The modern retailers are using electronic, connected smart shelves that tracks the inventory level with RFID tags and broadcast the signal to the retailer for the items low in the inventory or about to expire. The visibility into the inventory keep the inventory levels fine-tuned with the demand and auto-replenish the shelves with no risks of unsold items and avoid theft in the stores. Besides, the inventory space can also be optimized based on the product dimensions, and trigger the auto-reordering of the product.

For instance, Levi Strauss adopted IOT application for the inventory management that lets Levi’s team have 100% visibility into what’s on the shelf or what needs to be ordered. It has empowered the staff to deliver the profound customer service because when the customer enters into the store looking for a pair of jeans with specific color and size, the staff is not required to check the inventory room, instead, every detail is available at the fingertips.

In addition, the staff has improved understanding of the customer behavior that helps in optimizing the store layouts, get insights into how the stock moves and used through edge sensors, and product misplacing or low stock will never happen which leads to no loss of the sales opportunities.

Smart dressing rooms

During peak hours on the weekends, standing in the long queues for the trial room and then trying the several dresses makes the shopping tiresome. Plus, they lack interactivity as which top would look good with a pair of jeans. Here, IoT-powered virtual interactive fitting room works as a panacea for the retailers.

In the stores, the customers just need to stand before the digital mirror where the smart screens read the RFID tags attached to the items and the mirror gets converted into a screen where the customer can view how the item would look like, new size can be requested, get suggestion for the complimentary items to go with the style, call an associate for help and even take a sip of your drink while trying the dresses. Once, the item is selected by the customers, it’s sent to check out for the purchase.

Rebecca Minkoff, the fashion store in New York has used IoT for the classic smart fitting rooms where the customers will get a sense of how the dress would look, ask for the additional items from the dressing room through smart mirrors and get the list of all the items the customers have tried to either order them through E-commerce store or sending the selected items for checkout right from the dressing room. The technology implementation has increased the apparel sales by three folds at their three connected stores.

Smart checkout

Have you ever imagined a store where you walk in, grab what you want and walk-out without any checkout process? The sci-fi is turned into a reality by Amazon Go where the myriad of the surveillance camera on the store’s ceiling started tracking the customers when the customer scans the personalized QR code at the store’s gate during walk-in, and then the cameras add the items to the virtual cart which are picked by the customers. Later, as the customers walked out, Amazon deducts the amount from the credit card linked to the Amazon account.

The amazing experience with self-checkout makes people feel like no shopping, but shoplifting. The combination of deep learning, sensors and other technologies has differentiated Amazon stores, and compelling other retailers go cash-free for catching the more eyeballs and increasing the revenue the same way.

The masterstroke of Amazon in the form of Amazon Go has paid off to the retail giant in terms of grabbing the high share of the market, increased customer spending over the grocery, gaining a substantial competitive edge and scaling the revenue by a huge amount.

Smart marketing

Gaining the shopper insights when they step inside the store, the products they linger on, the trouble they have in searching for the products or the things they don’t like, is nearly impossible even using the web cameras or numerous sales assistants. The unavailability of the information won’t let the retailer market the offerings efficiently. Using IoT technology, the retailers can map the foot traffic in the store and the data can be used to increase the conversion.

The Bluetooth low-energy beacons are used in the stores for the navigation, collecting customer’s data and sending push notifications. The beacons are embedded at various places in the store like- walls, counters or shelves, and when the customers visiting the store come in proximity of beacon, the relevant notification of coupons, new arrivals or discount is triggered in the real-time. When the beacons are coupled with the mobile app, the customers can easily navigate inside the store and locate the items in no time.

Starbucks has implemented beacon technology in its home tome of Seattle, where the beacons are installed to send the notifications for the new brews and the personalized offers to the customers to make them buy the premium coffees. The iBeacon local marketing strategy supporting the premium coffee play improved in-store engagement and increased sales of premium brews.

The digital signage is also getting space in the retail space that is impressive and intuitive. Plus, they are cost-savvy for the marketers as opposed to traditional print media marketing to display the contextual messages that can be changed dynamically effortlessly. Leveraging IoT technology, the digital signage is turned into smart signage where the sensors or smart devices collect the customer data and display the tailored messages to them as they stand before or pass by the signage.

Offer Moments has designed the dynamic billboards for the retail outlets where the screen changes as the customers walk by. The mannequin in the window display quickly connects to the smartphone to gain the customer information as they walk past, and then sends the relevant offers or discount related messages on their phone. Moving ahead, the facial recognition technology is also used to identify the customer and change the display with an advertisement customized to the customers’ data. The IoT has made the marketing more interactive and transformed the way customers shop.

Wrap up

IoT app development is a breakout trend in the offline retail that’s putting the retailers years ahead of the competition in addition to immense return on the investment through amplified supply chain efficiency, improved marketing conversion and augmented customer experience.

The rapid-fire rise of mobile and accelerating IoT deployments mirrors the rapid adoption curves of IoT as compared to other digital technology disruptions. The early adopters gain an important advantage in the competitive environment with reduced costs, differentiated brand experience, and increased revenue.

Waiting for the IoT disruptive force in the retail operations is no more an alternative for the retailers, who want to lead in the space and secure future growth. It puts a question at the forefront: Where do you want to stand, on the verge of disruption or extinction?

The decision is yours- are you ready for the change? The data-centric retailers are the king and the retailers of tomorrow, but the laggards are likely to disappear altogether.