Just imagine: you are walking past a music store in the mall as your phone pings you with a notification on a personal discount for the ukulele you’ve been eyeing for some time on the shop’s online web site.
Tempted, you enter the store and receive another notification on the location of the item in question. As you start walking in this direction, a robot assistant approaches you, asking whether you need a case for your instrument and then accompanying you to the needed section.
When you’re done shopping, you just leave the store. Your items are scanned by sensors at the exit, and the amount (with the promised discount) is deducted from your account via the store’s app.
Sounds like the future? Then the future is already here. Things around us are able to connect to the web and talk to each other. According to the IDC report, by 2025 each connected person will have at least one data interaction each 18 seconds, or 4,900 times per day, via all those connected devices that represent what we know as the Internet of Things (IoT).
Many industries hopped on this train, and retail is no exception. With fierce competition in the online space, companies are often shifting their optimization efforts to the offline part of their business, mixing and matching all sorts of business practices with abundant IoT data. Let’s take a closer look at how IoT in retail has become a hot trend that shapes today’s retail landscape and determines its growth.
IoT And Machine Learning
Machine learning as a software discipline plays a huge role in how the IoT ecosystem (a.k.a. the actual machines) responds to the outside world, and what insights these devices can generate to feed business units.
In fact, most of the biggest U.S. retailers (like Walmart, for example) use a combination of IoT devices and machine learning. Therefore, when we talk about an IoT project, it mostly implies that the collected data will be processed with the help of machine learning. There’s no other way around it.
IoT And Supply Chain Management
Replenishing the stock on time, with the exact SKUs and minimal losses, is crucial for a successful retail business. At the same time, if you can’t deliver goods on time and in the right shape, your stellar marketing team won’t make a difference. That’s why retail businesses are investing heavily in the development of their IoT infrastructures supporting their logistics.
This growth drives the IoT hardware market. It’s not just about connected devices. It’s also about devices created to connect with a particular purpose in mind, like RFID chips. Have you heard about any new smartphone models from Motorola lately? Nobody has. But Motorola is doing just fine. And a lot of their recent growth can be attributed to the fact that they’re one of the largest RFID chip manufacturers in the world.
Retailers have started tagging apparel with RFID chips. Each chip contains a unique ID, which customers can scan with their smartphones and verify the item’s authenticity as well as learn more information about the product.
IoT And Inventory Tracking
This domain has embraced IoT applications in all their variety. For example, mobile self-checkout is a growing trend among retailers. It comes in various forms, including RFID chips that automatically disconnect after a customer makes a purchase via a specialized app.
Of course, when talking about IoT and inventory management, we can’t but mention robots. Sure, at this point most of them look like robot vacuum cleaners (instead of amazing human-like creatures), but that doesn’t prevent robotics from making its way into retail.
Robots are almost error-free when tracking inventory, and they can work 24/7. With their help, it will become possible to prevent understocking or overstocking, which can boost the efficiency of any given supply chain.
IoT And Beacon Technology
Retailers are actively adopting beacon technologies. In fact, it’s one of the fastest-developing retail technology trends, which has grown more than tenfold over the past several years.
The concept is pretty simple — beacons are small devices placed in stores to communicate with smartphones and other devices in the vicinity via Bluetooth or other wireless technologies. It has an extensive variety of applications, which has contributed to a whole niche of products and services that have sprawled out of it.
Beacons are used for a variety of tasks, from controlling the number of floor employees and merchandising in real time to sending push notifications to passing-by customers with tailored promotions based on previous visits and purchases.
Major retail players are also no newbies to the technology. For example, Walmart has been experimenting with beacons for a while now. They even embedded beacons into the lighting in their stores as an experiment in cooperation with General Electric.
IoT And Blockchain
While all of the above-mentioned technologies are based on previous and current IoT advancements, many existing tech standards are not suitable for the growing IoT niche. Yet new solutions and products are steadily filling this technological vacuum.
Blockchain is one of those technologies with a growing number of applications within retail supply chain management. For example, IBM offers blockchain-based solutions that cover the entire supply chain cycle, with a specific focus on logistics. One of their solutions, TradeLens, is a platform where business users have access to a shared ledger that’s updated and validated in real time.
Apps like Warranteer provide cloud-based warranty services that transfer paper warranties onto the cloud using blockchain, which can save retailers a tremendous amount of money on warranty management.
Retail is undergoing fundamental changes, pressured by the omnipresence of online competitors like Amazon. The past decade saw a wide variety of retailers going out of business because of their inability to adapt to the rapidly changing retail landscape. To name a few victims, Gap, JCPenney and Victoria’s Secret are closing hundreds of their retail stores.
IoT proves to be a technological Band-Aid for retail brands against the aggressive market pressure. Almost any part of the business pipeline is affected by this transformation. From storefront to supply chain management, every retail executive is looking for a new way of applying IoT in this technological diversity. This way, businesses can compete with online retail giants as well as provide stellar customer experiences.
Kate Prohorchik is a Technology Observer at Iflexion. She combines business development, marketing and sales backgrounds in the retail IT industry. For the last eight years she’s been helping brick-and-mortar as well as digital retailers embrace disruptive technologies and adapt to the new customer-centric reality. Now her expert voice finds its way into her articles on transformative effects of digital innovations in the retail industry.