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The Internet of Things' Role in Retail POS Systems

September 27, 2017

The Internet of Things' Role in Retail POS Systems

The latest enterprise technology buzz is around the Internet of Things (IoT): those everyday devices that have IP addresses so that they can be wirelessly monitored and managed over the Internet. Tracking goods electronically is a concept that has been with us for some time, especially in retail point of sale (POS). What’s different is that IoT technology is becoming more prevalent and sophisticated, and the benefits of applying IoT for POS applications and analytics are becoming more advanced.

Retail is extremely competitive, and retailers operate on narrow profit margins, especially with the boom in online shopping. Stores now have to compete with every other retailer on the globe, and sometimes the brick-and-mortar storefront even has to compete with its own online brand. Retailers are anxious to try anything that will give them a competitive edge, and as a result, POS is increasing sales profits with the help of IoT.

According to Juniper Research, retail spending on IoT technology is expected to reach $2.5 billion by 2020 as IoT becomes an integral part of retail operations. As Juniper notes:

“…[L]eading retailers using the IoT to generate an ‘ecosystem’ are poised to gain market advantage and truly [capitalize] on the opportunity. Linking the hardware elements of RFID tags, beacons and connected consumer electronics, such as wearables, with software analytics promises in-depth business insight and an enhanced customer experience.

So how is IoT changing the retail infrastructure, and how can solution providers capitalize on these changes? Here are some innovations:


Radio-frequency identification (RFID) may be the first retail application for IoT. RFID allows retailers to take end-to-end control of inventory, tracking goods at each step through purchase. RFID also eliminates the need for barcode scanners at the register, and can even enable the customer to charge a product to his or her credit card via smartphone before leaving the store. While RFID is expensive, it is already proving valuable and points the way to other ways that retailers can apply IoT for POS.

Inventory management

IoT-enabled retailers no longer have to walk the aisles with clipboards and scanner guns taking inventory. U.S. retailers lose an estimated $224 billion from excess inventory and $45 billion for not having inventory in stock. While stores still need to take a complete inventory on an annual basis, automated IoT inventory management enables real-time tracking at the point of sale to provide an ongoing snapshot of goods in stock, and also generates data for analytics to predict inventory requirements.

Mobile POS systems

Retailers are finding they can actually increase sales by bringing the POS system to the customer on the sales floor. More stores are equipping sales staff with wireless tablets that can handle credit card transactions as well as scan goods. This makes it easier to assist customers on the spot, checking inventory for size, color and other variables and making the sale without going to the register. The IoT technology tracks pricing and inventory, including discounts and sales, and items are logged as sold as soon as the transaction is complete.

Impulse marketing

More retailers are experimenting with in-store smartphone marketing, also referred to as beacon advertising. Low-power wireless devices transmit signals to shoppers as they walk down the aisles, beaming coupons and specials to their smartphones as they pass by goods on the shelves. Using IoT and POS technology, these instant bargains can be tailored to consumer buying habits, browsing habits and other criteria to increase the impulse to buy.

Tracking deliveries

As the lines between brick-and-mortar and ecommerce shopping continue to blur, tracking delivery of goods to customers’ doorsteps becomes more important. More retailers are integrating their in-store and online sales so that customers can shop online and pick up in the store or shop in the store and order for delivery. Retailers realized that consumers are increasingly using stores as real-world catalogs, checking out goods on the shelves before looking online for a better deal. Integrating online and in-store sales means fewer lost sales, but it also means more inventory tracking is needed. With IoT technology, goods are scanned at delivery, the delivery logged, inventory updated and the consumer notified by email, all by reading the goods with a handheld device. Consumers can even use their RFID apps to pay for purchases such as pizza delivery.

All these new retail strategies are being driven by both IoT and POS technology, which means the solution-provider opportunities abound. Consider that retailers are now upgrading their POS hardware to accommodate the new EMV credit card security requirements. As retailers adopt new POS strategies, they need POS tablets and transaction hardware, secure in-store wireless systems, new scanners, inventory control software, data management strategies and more. In addition, there are big opportunities in big data, because the additional data generated by IoT/POS transactions can yield new insights about customers, pricing, product sales trends and more. Smart solution providers will be on hand to help resellers harness new technologies for new profits.