Domain of Research

Internet of Things in Retail Industry:

Internet availability and connectivity to electronic devices and sensors can make many things happen with least human intervention. Modern retail has seen something of a tech revolution in the past few years, with new innovations becoming available on a regular basis.

The pace of change is so great that today’s bright spark is next year’s standard requirement.

For example, the smart shelves launched by Mondelez International, in 2013 were marketed as state-of-art technology, but are now considered a simple modular solution (Dell, Panasonic – Smart Shelves). Such is the rapid evolution of technology. similarly, recent hot topics, such as cloud and big data, will soon no longer be considered cutting-edge technology. Indeed, the technology frontier and competitive edge will move towards the Internet of Things (IoT), and the shift has already started.

So, what is IoT? Gartner describes it as “the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment”. A recent Gartner survey has marked IoT as the fastest growing trend in technology and estimates that by 2020, the number of Internet-connected objects will increase by 30 times.

There are few more applications of IoT in the Retail industry that caught my attention:

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. 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 if we could make a customized best price offer 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 act and understand 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.