Industry Insights

IoT Applications in Retail

Digitizing a store can have immense return on investment from improved efficiency in the supply chain and heightened marketing conversions.

April 12, 2018

Our world is becoming increasingly connected and customer expectations are changing along with it.

Shopping online is an almost frictionless experience, and to keep up, retailers seek to mimic this experience in their brick and mortar stores whenever they can. However, it can be a struggle to create a similar, hyper-customized experience in stores without the large amounts of data and analytics that online retailers usually have access to.

Nonetheless, consumers have come to expect technology to anticipate their needs and provide them with a seamless shopping experience, whether that is online or in person. To meet these expectations, many in the retail industry have turned to the Internet of Things (IoT).

If you’re not familiar with IoT, you can read a thorough but simple explanation here. In summary, the Internet of Things is a network of physical objects that are connected digitally via sensors. Connecting physical objects allows the devices to communicate with each other and, most importantly, collect and analyze data that gives us insight into our processes and business.

So how are retailers taking advantage of IoT to improve their supply chain and customer experiences? Internet of Things applications in retail involve connecting and tracking inventory, improving the customer experience, and using real-time data to improve marketing campaigns and increase conversions. Read more about these common applications below.

Inventory & Better Integration with Supply Chain

Research has showed 70% of retail and manufacturing businesses have already begun to transform their supply chain processes. In-store inventory tracking with IoT-enabled technology improves integration with other stages of the supply chain such as distribution, leading to much more efficient operations. Inside the stores, we’ve seen smart shelves that track inventory using Radio-Frequency Identification (RFID) chips. RFID uses radio waves to read and capture information stored on a tag attached to an object. This technology enables retailers to track inventory levels and locate items in the store, which greatly helps with missing stock. It also makes automated re-ordering possible when inventory gets low.

Outside of the store, asset tracking solutions are utilized to keep track of inventory on it’s way from the supplier. By attaching internet-connected trackers to the trucks that carry inventory, or individual items themselves, retailers can know the location of their assets in real time and transfer inventory between different stores without jeopardizing maintenance history or losing track of stock.

Smart Dressing Rooms: Better Customer Experience

RFID technology has also been used in smart mirrors and dressing rooms. Rebecca Minkoff opened a store in in 2016 that has a number of connected features enabled by IoT, and we’ve only seen these trends take off since then.

In the store, customers can walk up to a wall of digital screens to browse the current collection, call an associate for help, ask for certain items to be sent to their dressing room, and even order a drink to sip while they shop. Via smart mirrors in the dressing rooms, customers can browse different styles, ask for other items to be brought to their dressing room, or request that their selected items be sent to checkout for purchase.

Amazon Go, along with many other retailers, uses a combination of data from multiple sensors along with computer vision (read: deep learning) technology, allowing customers to simply walk out of the store without formally ringing up all their items to pay. Through these connected technologies, the items in a shoppers basket are identified electronically and their account charged accordingly.

Amazon Go Retail Technology
Image from GeekWire

Convenience is one of the most powerful aspects of a consumer’s buying decision. All of these extra features help eliminate pain points for shoppers like waiting in long lines, searching for different sizes and colors, or looking for help from an associate. Making a shopping experience as convenient as possible increases the likelihood of conversions and sales.

On top of improving and tailoring the customer experience, these technologies collect data that help retailers improve their operations and save money.

Marketing & Product Placement

Online retailers can see where their shoppers come into their website, what pages or products they linger on, and what pages they have trouble navigating around. Brick and mortar stores are now using IoT technology to gain similar insights in person.

Retailers can use video or Wi-Fi connected sensors to map the foot-traffic in their stores and use the data to help increase conversions. For example, if customers are dwelling over a product area, you can see them in real-time and send an associate over to assist them in finding what they need. Knowing which areas customers have trouble navigating also helps retailers adjust the store layout to be more efficient. Additionally, insights gleaned from foot-traffic monitoring can help retailers better place products to increase conversions. Let’s say the data shows that a certain area of the store gets a lot of foot traffic. Store owners can then place marketing campaigns or certain products in those popular areas to increase sales.

Digitizing a brick-and-mortar store can have immense return on investment from improved efficiency in the supply chain, heightened marketing conversions, and more. On top of that, new IoT-enabled technologies can greatly improve the customer experience and increase brand loyalty.

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