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Does the Retail Industry Leverage the Internet of Things Best?

August 16, 2017

Does the Retail Industry Leverage the Internet of Things Best?

The Internet of Things (IoT) is creating the latest buzz in the world of data centers. Solution providers and IT managers are trying to determine what to expect from the IoT, how to accommodate the anticipated increase in data traffic and how to deal with IoT security. They also are trying to understand how to get the most from the IoT. The potential is enormous; the ability to embed software, sensors and actuators into physical devices and connect them for monitoring and control via the Internet opens up new potential across all markets. The retail market in particular is finding new and innovative ways to leverage the power of the IoT.

When you think about it, retail is a logical application for IoT technology, because it’s all about moving goods from the retailer to the consumer. Retailers also are dependent on consumer attitudes and behavior, so they are starting to use IoT technology to track customers’ in-store activities. The IoT also is revolutionizing the supply chain and inventory tracking.

According to Gartner, Inc., there will be 6.4 billion connected things in use this year, up 30 percent from 2015. And there are expected to be more than 25 billion connected things by 2020. The analysts estimate that 5.5 million new things are being connected daily, many of them for retailers.

There are various ways that retailers are applying IoT technology, including areas where solution providers can offer invaluable expertise. Here are just a few examples:

Inventory Tracking Using RFID


Radio frequency identification (RFID) is one way to provide unique identifiers for goods. With RFID, retailers can track inventory through the supply chain, onto store shelves and ultimately out the door as sales.

Using the IoT and RFID promotes real-time inventory tracking. According to the RFID Laboratory at Auburn University, using item-level RFID can raise inventory-tracking accuracy from 63 percent to as high as 95 percent.

For example, in San Francisco, Levi Strauss & Co. and Intel are working together to create a real-time shopping lab. Using RFID tags on every item in the Levi’s Plaza Store, data is tracked and relayed to the cloud for immediate analysis. Not only can merchants track inventory status, purchase patterns and product popularity, but they also get real-time analysis of in-store patterns, including “dwell time” on a product, shopper movement, and time between product selection and purchase.

Improving the Customer Experience


Having all this IoT data at your fingertips provides insight that can be directly applied to improving in-store sales and the customer experience. For example, Hugo Boss is using heat sensors throughout the store to create heat maps that reveal customer traffic patterns in order to improve customer flow and strategically place merchandise.

Other technologies such as 802.11ac Wi-Fi and Bluetooth also are helping customize the shopping experience. Using an IoT infrastructure with location-based tracking, retailers can track customers through the store, and when they reach a certain aisle and select an item, a sales coupon or special offer can be immediately generated and transmitted to their smartphones via Wi-Fi.

Advertising, digital signage, energy usage, smart shelves and other technologies are becoming more commonplace in stores, all driven by the IoT.

In-Store and E-Commerce Convergence

Omnichannel retailing is proving a boon to retailers in a world where shoppers are seeking more selection and convenience online.

Using electronic product codes and RFID, retailers are adopting GS1 standardized electronic product code information service (EPCIS) as a means to extend data visibility across all retail channels, including brick-and-mortar and online. EPCIS allows retailers to track goods throughout the supply chain quickly and accurately. Grocers and pharmacies in particular are interested in adopting EPCIS to prevent counterfeit goods from entering the system.

EPCIS systems also enable new shopping capabilities. For example, consumers can browse an online store catalog, identify a product and determine instantly if the product is available at a local retail outlet or if it needs to be purchased online. It also makes it easier to track goods in transit so that you know where your order is at all times.

Automating Retail Processes


Retailers are realizing the value of the intelligent store powered by the IoT. Many shoppers don’t want to deal with sales associates, and serving shoppers with little or no human intervention cuts overhead and can increase sales.

Cisco research shows that 48 percent of the retail industry’s processes could be automated with the help of the IoT. Mobile payments, smart fitting rooms and self-help applications are streamlining transactions and increasing profits as well as sales.

Of course, retail is a ripe market for big data analytics. With all the IoT data being gathered in the store and online, analytics can reveal shopping patterns, style preferences, stocking strategies, store flow, pricing trends and much more. In a market that has to survive on small margins, any advantage helps.

In many ways, retailers are pioneering new territory in the IoT, and they need solution providers to guide them. In-store sensors, wireless technology, cloud data storage and processing, analytics and more have to be in place for retailers to make the most of the IoT. The more goods that retailers need to track using IoT technology, the more they will need solution providers to help them manage the infrastructure and data capacity to make the most of the potential of the IoT.