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Internet of Things (IoT) in Retail Stores


Internet of Things (IoT) in retail is considered to be one of the game-changing elements for the way in which business is done today. The idea of “connectivity” is going way beyond laptops and smartphones as we see, it takes us towards an age of smart homes, smart cities, smart stores, smart farming, connected devices, and connected cars. In short a “connected life”.

IoT, a catch-all term in today’s hottest technologies, has been pushed all across the retail stores for years and is steadily becoming more visible as business solutions via digital transformation and not as IoT. According to a recent report by BusinessWire, the global IoT in retail market size is expected to reach USD 94.44 billion by 2025, showing a 21.5% CAGR during the period. A report by Aruba says 79% of retail organizations are expected to have begun using IoT by end of 2019, up from 49% in 2017.

As per the reports by markets and markets in April 2020 “The global impact of COVID-19 on Internet Of Things (IoT) market size is expected to grow from USD 150 billion in 2019 to USD 243 billion by 2021, at a Compound Annual Growth Rate (CAGR) of 13.7% during the forecast period. “

The report also states that the growing adoption of smart payment technologies to minimize human contact involved in cash payments, and rising demand for wearable devices are the major factors driving the market growth.

Further findings from the report

  • IoT software in retail is expected to witness a growth of revenue share of over 40% by 2025.
  • The Latin America region is anticipated to account for a revenue share of over 10% by 2025 owing to increasing investment in retail infrastructure.

Further, the revenue ($ m) from IoT retail platform in 2023, is estimated to reach $4.3 billion and the connected assets(m) to 25 billion.

Revenue from retail platform

According to a survey conducted by Microsoft

  • 44% of retail IoT decision-makers indicated that AI is a core component of their IoT solutions
  • 87% of those surveyed consider IoT as critical to their business success
  • Survey participants believe the biggest benefits they will see from IoT adoption include increased efficiency (69%), cost savings (64%), increased competitive advantage (62%) and new revenue streams (56%)
  • In the US, IoT it is often utilized for security and store analytics (65% each), while store analytics (49%) and supply chain/store optimization (43%) are more popular uses in Europe

One of the major concerns of retail stores is how they can become more profitable and efficient by handling internal processes “quickly”.

And here is how IoT helped retail stores to achieve this.

1. The Reinvention of dressing rooms with smart mirrors

Virtual fitting, brings the convenience and speed of the online experience into the in-house store, allowing shoppers to quickly ‘try-on’ tons of outfits in different combinations within seconds. After which they could call for store assistants to get them the actual products. RFID tags on each cloth help to recognize the items and allows shoppers to swipe up the product screens that show the item styled with different looks, colors, and sizes on different lightings and then, store items for later reference.

Neiman Marcus, an American based luxury department store, has a Memory Mirror that shows you a 360-degree view of yourself along with your outfit and allows you to compare outfits simultaneously. You can also snap photos of yourself to share with your friends on social media by asking for their opinion before you make your purchase.

While shoppers experience a personalized fitting room session, retailers behind the screen receive volumes of data about the shoppers, what they “try on” versus “buy” and also “don’t buy”, how customers are pairing items and more. Also, it allows you to superpose clothing on your own, making fitting rooms a thing of the past.

Memory mirror in Neiman Marcus, Luxury Department Store

2. Smart Shelves

Today, the shelves in a retail store have paper labels proudly announcing the prices and discounts sticking at the edge. The invention of electronic labels eliminates all the papers and will make it easier to change the prices in the entire store on the fly, thereby reducing human work. These shelves were built with a network of sensors that keep track of products and keep in-store inventory counts accurate and up-to-date in real-time.

Kroger, an American Retail giant has already started to use EDGE, which stands for Enhanced Display for Grocery Environment. It is a cloud-based display solution for traditional shelves which relies on Microsoft’s Azure to store and process volumes of data generated by customer actions around the shelves. Kroger EDGE displays advertisements, prices, nutritional data, coupons, and videos with lower voltage LED lights. Imagine, you are standing in front of a milk display and it instantly allows you to compare nutritional information between other brands while getting a QR code coupon that can be scanned with your phone. Kroger’s smart shelves simply ditched the papers and delighted the shoppers with lights. The system made its first in-store appearance last fall, and can now be found in 92 Kroger locations. According to its sustainability report, Kroger aims to cut its electricity consumption by 40% across 2,800 stores operating in 35 states in two years.

Kroger’s smart(EDGE) shelves

3. Beacons

Beacons are small Bluetooth devices, that is programmed to advertise a product. It uses geolocation to send alerts to smartphones/tablets based on proximity. Customers can receive discounts, special events like “sale going on Tissot” or “Hamleys is having 60% off on valentine’s day” and other reminders when they are near a shop provided they have previously downloaded the store’s app.

Macy’s, an American Department Store has been using beacons since 2014. After opening the Macy’s app in-store, shoppers are alerted to promotions and discounts. The app identifies which area of the store you are roaming. The app will also remind you of the lipstick brand you liked online if you’ve entered the makeup sections. Moreover, beacons also send alerts to passersby. This can be used to effectively advertise promotions and live events. According to Swirl Network's research, 70% of shoppers say beacon-triggered offers increased their likelihood to purchase in-store. Besides Macy’s, stores including Urban Outfitters, Lord & Taylor, and Timberland already use beacon technology. Beacon alerts have allowed the gigantic stores to reach their audience without uttering a word.

Beacon’s Alerts

4. Robot Employees

Robot employees have the potential to significantly revamp the retail sectors around the globe. According to BI Intelligence prediction, about 2.8 million enterprise robots to ship between 2016 and 2021. While it is hard to trust a robot to be your customer service representative, it is also a fantastic opportunity to cut down complex tasks burdening your workforce. Wishing to become tech pioneers, many companies have already integrated robots into their work.

Lowe’s, an American based home improvement retailer introduced OSHbot, a robot employee, at its stores in San Francisco, which helped customers find specific products. The robot walks to the customers, welcomes them and asks if it can help to find products in the store. If the shopper has brought an example of what they are looking for, such as a spare part, they can hold it in front of a camera built into the robot, it leads the shoppers to the appropriate shelf to find it. The information gathered aids in identifying the shopping patterns to get more understanding of which stock moves quickly, and during which days of the week or seasons.

Target, a well- known American based retail giant, tested a robot called Tally, in one of its stores in SF to help stock shelves and take an inventory by taking over simple tasks, Target’s robot frees up their human employees to focus on providing top-notch customer assistance ensuring the shelves stay stocked.

OSHbot in Lowe’s, an American based retail company

5. People Counting

Businesses have always wanted to know the counts of the number of people entering their premises to understand the entrances vs. purchases, customer experience, and marketing success, etc., to improve their business further. This is usually done at an entry or exit, with the data collected automatically by an electronic device called a people counter.

IoT can scan for micro-vibrations to detect human occupancy and movement within the coverage zone. It estimates the number of still and moving people, and the data is sent to a cloud platform through the IoT network. The sensors can detect traffic patterns and customer behavior to determine the optimum placement of the products.

Especially during this COVID -19 pandemic, retailers and supermarkets have adopted “one-in-one-out” rules to limit the spread of coronavirus by following social distancing. IoT helps to automate the process of one-in-one-out, resulting in improved safety and cost reduction.

6. Supply chain and logistics

IoT aims to keep tabs on the shipping process, conditions, and hereabouts, thanks to its enabled sensors.

As millions of people are staying indoors in this pandemic, home deliveries have increased exponentially.

Retailers can utilize IoT-enabled smart sensors in shipping containers to track the whereabouts of the shipment, give insight into the temperature, humidity, shock, and tilt of the packages during the journey, ensuring that it makes its way to the customer. This ensures reliability from the retailer’s perspective and also ensures safety.

IoT can also help retailers bolster warehouse issues, track stock, and improve efficiency. IoT devices can collect data to optimize shipment

Theft-prevention

IoT helps you track your supply chain and inventory in real-time, therefore letting you know when something was taken, and the person who took it. This goes a long mile in protecting your business from unseen losses through sensors, strengthening the CCTV surveillance and Electronic Article Surveillance. IoT is an ultimate security measure to implement in your retail store.

Personalized discounts

IoT sensors help retailers to trigger loyalty discounts codes to specific loyal customers’ smartphones when they are viewing the product in the stores

7. Auto check-outs

Spending hours at the check-out counters have always been disliked by the customers. During busy hours, it is unprofitable to place multiple employees at the check-out counter. When the check-out queue is too long, customers are more likely to leave the store without purchasing anything. To overcome this issue, retailers use IoT solutions to automate PoS systems. An automated point of sale (PoS) can read tags on each item when the customer leaves the store and automatically deduct the cost from their mobile payment app. It makes customers happy by reducing their valuable time and they would be more willing to visit the store again. Also, it will help retailers save money from being paid to cashiers.

McKinsey, a leading management consultancy estimated, automated checkouts can reduce cashier staff requirements by up to 75%, resulting in savings of $150 billion to $380 billion a year in 2025.

Amazon opened its first cashier-less Go store in New York City. Amazon Go, largely sells basic groceries, ready-made lunches, drinks, snacks, and frozen dinners. The store uses hundreds of cameras and sensors to account for what people are buying. People need to simply use their Amazon Go mobile app to enter the store, pick up what they need, and leave. The product gets charged to their Amazon account automatically as they’re exiting. Amazon calls it “Just walk out shopping”.

Amazon Go’s “Just walk out shopping”

The impact that IoT created on retailers...

Revamping customer experience

A typical mobile user who is connected to a network has more expectations from a retail store when it comes to customer experience. Customers want good service, accurate information, and quicker delivery. The advent of IoT solutions has helped retailers to achieve this. IoT solutions such as robot employees and self-checkout provide users with a better experience.

Providing coupons and promotions on-time

One of the areas where the traditional brick and mortar stores are falling behind from online retailers is to deliver the demands quickly and recognizing the customer's need. As discussed earlier IoT solutions like beacons and sensors are used to overcome these issues.

Improvising in-store flow management

Retailers have always been trying to improve the way customers navigate through their stores. IoT solutions along with advanced digital tools help improve it drastically. Monitoring traffic patterns and then trying to find a connection with trends is hard without accurate data, beacons and smart cameras can simply blow your mind with more accurate and detailed data to show how customers behave and where their interests are more.

Inventory tracking

IoT offers better control over Inventory. The inventory management system powered by beacons, sensors and RFID chips helps to synchronize physical assets with database servers. IoT solutions, such as smart displays, digital price-tags, and high-resolution cameras with image analytics abilities enable improvised control over the goods placed in the stockroom and front shelves.

Optimizing supply chain management

The optimum use of IoT in retail stores is seen in the face of the supply chain. Today, supply chains of retail stores are more complex than ever, that they need better management. Retailers need to track their inventory from the moment it left the manufacturing plant until it is delivered. IoT sensors track their product and ensure they are kept in desired temperatures, altitudes, and humidity levels during transportation. The utilization of IoT devices in the supply chain helps to cut-down financing costs and reduce reliance on human labor.

Parting Thoughts

  • The time to unleash IoT is now. It is the first step to transform your store for the 21st century retail. IoT solutions, provide a personal, seamless, and differentiated experience for shoppers. Retailers are digitizing brick-and-mortar stores, which can have an immense ROI and drive differentiated brand experience.
  • Embracing IoT technology, can improve the in-store experience instantly, increase brand loyalty and can become more convenient and interesting for both retailers and customers which is the need of the hour.

IoT, the rising star of the 21st century’s retail!

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