IoT in Retail – Prospects & Possibilities for Business

IoT in Retail – Prospects & Possibilities for Business

05 Sep. 19
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The Internet of Things (IoT) in its basic premise, is a network of objects, most commonly physical devices or IoT-enabled physical assets, that are connected to the internet. They can communicate, analyze, and share data about the physical world to one another via cloud-based software platforms. These physical assets or “things” can be range from consumer devices to industrial machines, to livestock and facilities. In the retail industry specifically, these devices can be RFID inventory tracking chips, infrared foot-traffic counters, digital signage, and mobile devices. While most items can be connected to an IoT network, they must have sensors and actuators, connectivity electronics, and communication software in order to filter and exchange their data.

What Is IoT’s Impact on the Retail Industry?

When we look at the retail industry specifically, IoT is an emerging technology that will have major implications for both consumers and businesses. Imagine being able to walk into one of your favorite stores and have no need to interact with another human being, just simply pull up an app on your phone and find the exact location of the product you want to buy. Perhaps a notification from the store gives you a coupon for an item you already buy regularly, or you simply scan your purchase and the price is deducted from your mobile balance. Better yet, for those who are introverts and would rather shop from home, imagine turning your bedroom into your favorite store’s changing rooms, where you can browse inventory and try on clothes to see how they look. It doesn’t stop there though, here are 7 IoT applications that will completely impact the retail industry.

  • There Will Be an Automated Checkout System

    To be brutally honest, customers hate waiting in line to purchase products. Long lines will always deter customers as it creates irritation, annoyance, and frustration when the long line turns into twenty minutes of waiting to purchase a few items. This can impact how profitable a business is as multiple employees may need to work during busier shopping times, cutting down the profit margins. An IoT network can eliminate lines altogether by simply having a system that reads the tags on each item as a customer leaves the store. This data would then be shared with the checkout system, which would tally up the prices of the items, and automatically deduce the cost from the customer’s mobile balance app. Not only will this make your customers happier as they can easily walk in and walk out without waiting, but it saves businesses money as less cashier staff are required.

  • You will receive personalized Discounts or Coupons

    Many companies in the retail space will reward customers for their loyalty. In is most often in the form of promotional pricing, discounts, and coupons. With an IoT network, sensors can be set up around the store that send loyalty discounts to customers that stand near products which are a part of the discounted loyalty program. The only catch is that customers may need to sign up with the loyalty program in advance. In addition to this, IoT could be used to track items that a customer has been looking at online, and then provide them with a coupon when they come into the store. This allows further personalization and tailored products, hiking up conversation rates and lowering advertising expenditures.

  • Beacons will be widely used

    Beacons are a notification-like system that alerts individuals to discounts, special events, and coupons when they are in the proximity of a specific store. Beacons are Bluetooth devices that require a smartphone and the customer to have previously downloaded the store’s mobile application. Generally, when a customer opens the store’s mobile app, that’s when they will receive the alerts on discounts and promotions. However, beacons can also alert customers passing by to effectively advertise in-store events or promotions as well. This can get those passing by into the store and increases the likelihood of a purchase.

  • Retail Stores Will Have Smart Shelves

    One of the tasks that employees focus their energy on is product tracking. This is required to ensure that the store isn’t out of stock and that items are not misplaced on the store’s shelves. With IoT, smart shelves can be used to detect misplaced products, determine inventory, and even detect theft. Smart shelves work by being fitted with weight sensors and RFID tags that readers can scan. The shelves will inform you when items are running low and when items are incorrectly placed. This frees up employees to complete other tasks, making the store more cost-effective.

  • Your Store Layout Gives You Access to Behavior Knowledge

    It can be very difficult to know whether your retail space is optimized or not, with the only way to tell being, to watch your customer’s behavior. By using aisle-analytics software with infrared sensors, an IoT network can improve your retail layout by telling you which spaces the most popular and which ones are the least popular. Customers may enjoy spending time near the televisions but there’s little room to enjoy the space, or maybe some of your most well-loved items are at the front of the store, causing customers to miss good deals further in.

  • IoT will be Used in Conjunction with Robot Employees

    While it may be a bit hard to get used to, interacting with a robot that is, robots can provide specific information on promotions and inventory, help customers find products, and respond to people in multiple languages. Robots can also make a note of misplaced items, low stock, and complete small inventory tasks.

  • IoT Will Optimize the Supply Chain

    While most retail stores have some form of tracking, IoT can expand this and provide precise data about temperature, time in transit, and product quality. This is invaluable for businesses that need specific environment requirements for products, as they can act in real-time while a product is in transit.

All of these concepts are possible with IoT networks and if it catches on, it is safe to say that it will completely revolutionize the industry.

How is IoT in Retail Relevant to Your Business?

When a business uses IoT in a retail environment, it allows the business to understand the context between the place of the customer and what factors facilitate a purchase or no purchase within a very specific time duration. For instance, a business that has IoT enabled can understand when a customer needs help with a purchase or when they need more incentive with a purchase and respond appropriately within that moment of time. Beyond this, there are five other key applications of IoT that are relevant to businesses.

  • Businesses Can Benefit from Predictive Equipment Maintenance

    Businesses use a lot of equipment and if you cannot predict when that equipment is going to fail or have issues, you end up losing product, customers, and profits because you lose competitive advantage while that piece of equipment is down. When you place IoT sensors on equipment, you can predict maintenance issues that might affect things like part integrity, temperature fluctuations, and power consumption.

  • Smart Transportation Provide Accuracy

    As a business, you always want to move your merchandise as efficiently as possible, which is the goal of smart transportation. The Internet of Things can optimize the transportation route, optimize tracking capabilities, and even provide updates on the quality of the items while in transport. Essentially, IoT gives you a high degree of accuracy on key pieces of merchandise information; how close it is to the store, and what condition it is in.

  • Businesses Can Have Better Warehouse Management

    If a business is using demand-aware warehouse fulfillment techniques, where automation and robots are driven by the online and in-store shopping demand, then IoT has a major impact. It can monitor sales in real-time, track down missed in-store sales, and can optimize the distribution center. In the future, warehouses may be non-static, sporting an open space where self-organizing pallets of products are automated based on real-time demand.

  • Businesses Can Optimize Merchandising to fit Consumers

    If a customer is always going to be connected, then they can check local inventory levels and in-store pricing from their mobile phones, which can have a major impact on brick and mortar locations. If a retailer could create customized best-price offers, provide location-based services in-store, or even provide concierge services to loyal customers, businesses have a better chance of responding appropriately to customer demands or wants.

  • The Shopping Journey Can be Better Understood and Analyzed

    In an IoT enabled business, the store’s traffic can be analyzed to better understand the entire shopping journey that a customer goes through. Surveys could be a thing of the past, as smart stores can use video and Wi-Fi enabled foot-traffic monitoring to see customer behavior. By analyzing behavior in real-time, store associates can customize the in-store shopping experience by adjusting to customer demand.

To put it simply, businesses can benefit from IoT networks because they bring uniformity to the service delivery process, they provide numerous options for adding in personalization, and they offer a way to eliminate customer waiting times. Beyond this, there is a substantial reduction in operating expenditures.

What Are Some Problems That the Retail Industry Suffers From?

  • In-Store Retailers Are Dominated by Online Retail Behemoths

    This is because online retailers have a better overall shopping experience. With an online retailer, you simply head over to the website, find your product, and purchase it. It’s easy and convenient.

  • The In-Store Buying Process is Physically Straining

    Heading into a retail store can be physically straining if you must wait in line to checkout or can’t find a product quickly enough because the inventory is a mess.

  • The In-Store Process Lacks a Personalized Experience

    The in-store buying experience is boring, it isn’t tailored to what you are looking for, and it doesn’t make customers feel unique.

  • Retailers Have Manpower Expenses

    From those who are managing inventory stock, to cashiers, and greeters. Employees are expensive if you need a lot of them.

  • Retailers Have Infrastructure Requirements for Ongoing Customer Support

    Customers expect a certain amount of customer support, and retail stores don’t always provide that if there are too many people in the store or not enough employees on hand.

High Level Solutions for Organization Departments

In order to help alleviate the above listed problems, organization departments can use the following high-level solutions.

  • Sales & Marketing

    A common problem in sales and marketing is not knowing what to display but knowing when to display a product to a customer. By incorporating the smartphone, retail stores can harness it, by paying attention to micro moments. These are moments where an individual will turn to their mobile device for assistance, most commonly to search for something like a specific product, price, or location. While marketers can track personal preferences, routines, and historical activity, they haven’t pinpointed when a consumer picks up their phone to seek something out. Stores can harness this by delivering tailored marketing to consumers that targets what they are seeking. This can be done through mobile apps, beacons, or smart labels.

    Another solution that departments can use is location-based advertising. With this solution, stores can push personalized ads to customers, increasing engagement by delivering relevant messages based on where the customer is in real-time. Location-based advertising provides companies with the opportunity to target individuals at the right time, potentially pulling in sales and reducing the need for generalized advertising.

  • Production

    One of the most productive and effective tools that businesses can use as a solution to production queue problems, is predictive machinery maintenance driven by an IoT network. Businesses that have a lot of equipment, whether it be in the warehouse or on the business floor, will find that unplanned downtimes can destroy their competitive advantage. The most common reason for unplanned downtime is because the equipment has failed in some way, whether it be because a part broke, has been worn down completely, or the mechanisms that make it run are too hot.

    The traditional method of fixing unplanned downtimes is to either replace machinery parts before they break, determine downtimes from previous downtime patterns, or simply increase maintenance costs for parts. None of these solutions are foolproof and come with tradeoffs. For instance, replacing parts before they break is not cost-effective, increasing machine maintenance is expensive, and calculating downtimes based on patterns is not accurate. Now, attach an IoT-enabled device with sensors onto your machinery and it will generate data you need to make sound insights into what physical actions need to be taken to preserve operation uptimes.

  • Logistics

    While RFID tracking has been in use for quite some time now, it has some major disadvantages that impact overall logistics. For instance, despite being a reliable option, it is very expensive to implement, and RFID systems can have scanning issues when trying to scan through metal or water. You can scan multiple items at once but if it malfunctions, tag collision can occur if a reader picks up signals from multiple tags. RFID also as security and privacy concerns, as unauthorized devices can read tags without the knowledge of the individual who owns the object. One way to get around these disadvantages is to use IoT Bluetooth technologies and GPS mobile tracking.
    While Bluetooth predates the use of the Internet of Things, it has expanded to be incorporated with IoT networks, benefiting the shipping and logistics industry two-fold. Bluetooth-enabled IoT devices eliminate the need to use internet data to communicate information about shipments, they require less energy to operate, and they can be combined with IoT networks for the rapid dissemination and analysis of data. How do these benefits translate to logistics specifically though?

    • Manual scanning is a thing of the past. In conjunction with IoT networks, Bluetooth technologies could automatically detect products within a warehouse, shipment, or holding container and trigger an automatic update of information to the transportation management system. This also reduces errors in scanning, therefore reducing physical workload on employees and eliminating packages being left behind.
    • They do not use a lot of energy, meaning that they will reduce a business’ carbon footprint. This can reduce operating costs for data, materials, and electricity. This can be spun up as a green initiative by businesses who want to appeal to that audience.
    • They can be aligned with mobile-based management systems. This will allow a business to access their entire inventory stock via a mobile device within selected area, permitting that the inventory has Bluetooth enabled. This speeds up inventory management, increases product visibility, and creates a more efficient supply chain.
  • Finance – The Reconciliation of Billing with Inventory

    An inherent problem that businesses run into revolves around managing inventory with billing expectations. A business must keep enough stock in the warehouse to ensure that the business keeps moving forward and profiting while simultaneously not overloading on stock, as that would drain the cash reserves. A solution for this problem is an artificial intelligence and machine learning based inventory management system that utilizes real-time data optimize the warehouse, deal with supplier backorders, and keep up with user demand. How?

    • It Can Estimate Demand Predictions

      If implemented correctly, artificial intelligence can be used to create a time series prediction model that will estimate a businesses’ demand over a certain period, say across a week. This is done by incorporating in sales data, user demand, and current inventory stock.

    • Utilize Machine Learning for Full-Inventory Management

      With more advanced artificial intelligence, you can use machine learning or reinforcement learning systems to get robotic models to take control of all inventory operations. This works be combining artificial intelligence with big data analytics, and the use of robots. Predictive analytics are used to gather information about certain retailers, returns, product launches, reviews, and sales figures, and prepares the business for slumps or surges in demand.

  • Store & Online Operations

    One way to make store operations more unique, personalized, and smoother in experience is to integrate in new options for shopping. For instance, retail stores can implement in a virtual try-on plugin to create an augmented reality fitting room. Not only does this make the customer feel like the shopping experience is being tailored to them, but it can boost sales and save costs on not having to do as many product returns. Plus, it helps your customers walk away happier and more satisfied with their purchase because they were able to easily decide on their purchase by avoiding decision paralysis.

    Another way to make store operations smoother is by implementing in facial recognition software so that customers can try on facial products like lipsticks, makeup, glasses, and even hats! When customers can try before they buy, they are far more likely to make a purchase and far more likely to be happier with that purchase. This results in higher customer loyalty and more word-of-mouth marketing.

  • Customer Support

    When a customer walks into a retail store or shops online, they expect to be met with a basic level of customer service. This can range from talking to a live agent, submitting a support ticket, to finding loyalty programs that they can be a part of. While these expectations are being met on a basic level, IoT-enabled devices can enhance the customer support that businesses offer. An example of this would be Levi Strauss & Co’s new artificial intelligence-based chatbot tool called Virtual Stylist, which helps users determine which pair of jeans is the best fit for them. It is a chatbot that was built by mode.ai and is a personalized sizing recommendation tool that poses and processes questions regarding a shopper’s preferences. It is available on Levi & Strauss’ website as well as on their Facebook page and is a smart way to encourage customers to embrace chatbots while still having their customer service needs met.

  • Another method that retail companies can use to support their customers is through proactively identifying opportunities to reward loyal customers with IoT-enabled loyalty programs. This could easily be done through smart beacons that have been programed to communicate directly with existing or repeat customers by offering incentives for their engagement. Since smart beacons can be programmed to reach out to existing customers via a store’s mobile app as well as those who are passing by, stores could theoretically observe customer behavior and reward those who are loyal with personalized and tailor-made options.

If you really like to know more about how your business can benefit from an IoT-enabled network, please get in touch with the dedicated team of Iot developers of Let’s Nurture for a free consultation. We will help you explore how your business can benefit from our diverse portfolio of IoT solutions.

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Lets Nurture
Posted by Lets Nurture

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