26 September 2019

It seems like the world has been talking about the Internet of Things (IoT) forever. The idea of extending internet connectivity from IT and communications devices to all manner of electronic equipment and gadgets was supposed to usher in the ‘smart’ revolution, creating a joined-up digital world where data was king and powered the dynamic, streamlined, super-efficient management of our day to day lives.

It isn’t that the IoT hasn’t come about. It’s just been more of a gradual evolution than the rapid revolution some expected. By 2020, it is forecast that there will be anything between 30 billion and 200 billion connected IoT devices in existence, covering things like smart home appliances, self-reading and self-adjusting utilities meters, industrial and medical system sensors, IP-based security systems, connected cars and, of course, consumer devices. That’s a pretty big network by anyone’s standards.

Compared to sectors of the economy like manufacturing and utilities, retail has been relatively slow on the uptake with IoT solutions. Perhaps the most high-profile application to date is behind the scenes, with many big firms now routinely using RFID sensors and geolocation tracking when moving goods to make inventory management more agile.

But with technologies maturing all the time, IoT is likely to have a much bigger impact in stores themselves over the coming years. Here are just five of the many ways iOT technology is already changing the in-store experience.

Smart shelves and dynamic pricing

RFID sensors are already used in-store for security purposes, triggering door alarms if someone attempts to leave without paying for an item with an RFID tag attached. Another use of these sensors are for trackers on shelves, so that every time an item is removed and purchased, the shelf would log that it needed replacing. With this kind of system deployed across the store, stock control would be based on real-time intelligence, ultimately making it more efficient and responsive – no more shelves left empty for hours at a time.

Another potential use of smart shelves and RFID is the concept of dynamic pricing. One of the issues retailers have always faced in adjusting and micromanaging prices is the time it takes to change pricing on shelf displays. Using smart shelves fitted with electronic displays, price changes could be made in the POS/inventory management system and then applied and displayed across the store instantly.

Personalized customer offers

When people shop online, they leave a trail of user data that retailers can harness to personalize purchasing journeys, target marketing and customize offers. With the impact this can have on loyalty and repeat patronage, most retailers would love to be able to access this data to use in store. One option is to combine the use of branded apps with in-store beacon technology. Beacons are a type of Bluetooth device which can connect to a user’s smartphone. Retail chains like Macy’s  re already using beacons to send push notifications for offers to shoppers who have their app installed on their smartphone. When a customer passes a beacon on a particular display or shelf, it triggers a notification to be sent to their app.

An extension of this could one day involve a more sophisticated data exchange, where a beacon on a particular shelf or display ‘reads’ the customer history data on a shopper’s phone, and uses that to make targeted recommendations or offers. Alternatively, similar devices installed in POS terminals and mPOS tablets could give staff relevant customer information, helping them tailor the service they provide and personalize upselling and cross-selling recommendations.

Intelligence-based merchandising

While current beacon technology is yet to evolve to the point where it can communicate the kind of data outlined above, one thing it is commonly used for is indoor location tracking – like GPS, but on a smaller scale. Individual beacons deployed across an area will log the location of anyone carrying the appropriate app on their phone as they come into proximity with them. By joining the dots, you can build an accurate map of a person’s movements.

This is very useful in retail merchandising, especially in supermarkets and department stores. Retailers have long been interested in how location of goods and displays affects customer interest and conversion, whether consumers ‘see’ items better in some places than others and how product location can be used to maximize visibility across an entire range of inventory.

Using beacon technology, retailers could quickly build  ‘heat maps’ to show which areas of a store get most foot traffic, and then start to investigate why. This leads to questions of whether it makes sense to focus the highest-value items in these busiest, most visible areas, or whether the heat map changes if certain goods are moved to other places. If so, could the most popular, high-volume goods be distributed to achieve a better distribution of traffic around the store, so more products get browsed? There’s also the potential for a customer’s individual movement map to be available to staff via POS displays, so they could shape conversations around items the customer has browsed, or make suggestions regarding those they have not.

Digitally enhanced experiences

IoT is not a single type of technology. It is a concept for connecting different types of technology, bringing all sorts of exciting technologies online in many different scenarios. One such technology that is already proving popular in retail is Augmented Reality, or AR. So-called ‘magic mirrors’ are being used by beauty and fashion vendors, for example, to allow customers to virtually try on a product by digitally projecting it onto their image when they look in the mirror.

AR and its cousin VR require a variety of different connected hardware in order to work, including screens, headsets, sensors to trigger ‘automatic’ digital experiences as, say, a customer passes a display, and more. According to Gartner, 46% of retailers plan to use AR and/or VR solutions by 2020 in order to enhance customer experiences. But a lot of that focus remains around creating AR-enabled apps for use away from stores. Long term, however, as retailers look to protect brick-and-mortar assets and create unique in-store experiences, the most value to be gained from investing in AR and VR technologies will definitely be seen in the store.

Automated checkout

Finally, another example of IoT use in stores that we are already seeing is automated “checkout-less” checkout. Amazon Go grocery concept stores make use of sensor technology and a special app to track the items a customer picks up off the shelf as they shop, tally up the costs and then automatically bill them via their phone – and they are free to walk straight out of the store without stopping.

While this represents IoT being applied to radically re-imagine the very concept of point-of-sale, we can imagine that ‘lighter’ versions will eventually gain mainstream traction. The combination of RFID tags and beacon technology, for example, may be used to automatically ‘scan’ items as consumers shop, sending a digital receipt and final total to their smartphone so all they have to do at the end is pay. Scanning technology at checkout may evolve so it can detect signals from multiple RFID tags at once, instantly presenting a total and deactivating the security tags the moment the customer sets the items down.