5 IoT applications retailers are using today

From RFID to the smart store, retailers are taking advantage of the IoT

By Dan Mitchell, Business Director, Retail and CPG Industry Practice, SAS

At its most basic, the Internet of Things (IoT) is a network of connected physical objects embedded with sensors. IoT allows these devices to communicate, analyze and share data about the physical world around us via networks and cloud-based software platforms.

In the case of retail, the “things” can include RFID inventory tracking chips, traditional in-store infrared foot-traffic counters, cellular and Wi-Fi tracking systems, digital signage, a kiosk, or even a customer’s mobile device.

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Retail IoT applications

Key applications of IoT for retailers include supply chain, connected consumer and smart-store applications. In particular, let’s look at five areas where retailers are taking advantage of IoT:  

1. Predictive equipment maintenance is used for managing energy, predicting equipment failure or detecting other issues. For example, every grocery store has a lot of complex equipment – most people recognize refrigeration units. When these units are instrumented with sensors, we can predict maintenance issues that might affect power consumption for savings or monitor temperature fluctuations to ensure food safety.
2. Moving merchandise more efficiently is one of the goals of smart transportation applications in retail, and IoT can come into play with the maintenance of transport, tracking and route optimization. We know many retailers have been using GPS to track and route trucks in the last couple of years. With IoT, we are able to understand to a much higher degree of accuracy how close a pallet of merchandise is to a given store.
3. When it comes to demand-aware warehouse fulfillment, we’re talking about warehouse automation and robotics driven by online and in-store shopping demand. IoT allows us to monitor sales opportunities in real time and track missed in-store sales, taking demand planning to the next level. It's important to remember that RFID is a well-tested part of IoT that can be used for inventory management and more accurate service-level optimization. Currently, a typical distribution center or warehouse is organized by aisles and shelves based on a fixed schematic. The warehouse of the future will be open space where automated pallets self-organize based on real-time demand.
4. Increasingly, the connected consumer is having an impact on brick-and-mortar locations. Retailers understand that customers are able to check in-store pricing and local inventory levels from their mobile devices. Imagine how much better our merchandise planning and price optimization would be if we could make a customized best-price offer in real time or provide location-based services right in the store. What if we could target our high-value, loyal customers with concierge services? In the past, it was accepted as the norm that we would send mass promotions to customers with the expectation that some acceptable percentage might be interested in that promotion. With IoT, we can now understand the context (the time and the place of the customer) to identify when we are certain the customer needs help or an incentive to purchase, and we can respond proactively.
5. In a smart store, mall traffic can be analyzed across several retailers so we understand the entire shopping journey. In the past, we had to run expensive survey projects to understand if store associates were being responsive to customer service needs and then enact elaborate staff training programs. Now, within smart stores, we will be able to use video or Wi-Fi foot-traffic monitoring to see if customers dwell over a product area. Then, in real time, direct an associate to help that customer or analyze that information later to adjust store layouts for more efficient customer visits. In addition, by monitoring store traffic and customer demand in real time, we can customize the current in-store shopping experience. That gives us the opportunity to implement rich digital marketing inside the store or announce events to customers via their mobile devices.

With the rapid growth of online shopping, retailers are very keen to bring the frictionless customer experience of online shopping into the store wherever they can. They want access to the same type of rich data and high-performance analytics that retailers use to drive websites and mobile shopping trips. Their goal is to have that same limitless control to craft a customer experience and collect detailed data to help them predict how customers will shop.

The differentiation with IoT will come from a retailer’s ability to sense, understand and act on IoT data with analytics. It won’t be in the technology, the devices or the IoT plumbing. To take advantage of this new promising area, retailers should focus on IoT applications that better serve customers and create value.