Put yourself into the shoes of your customer for a minute. You’re walking past a store selling books in the mall. Suddenly your phone pings you with a notification for a personal discount for the book you’ve been looking at on the shop’s website. Along with the discount, they even send you a map showing you where that specific book is on display in-store.

You go into the store and pick up the book. When you’re done shopping, there’s no waiting in line — you just leave the store. That’s because sensors at the exit scan your items, with the total deducted from your account via the store’s app.

Meanwhile, the shelf where you picked up that book takes note of the event and sends the information to the back-end inventory system. The trend for that item will determine the volume to be restocked.

It does sound like a futuristic scenario, but it is happening now — thanks to the Internet of Things (IoT).

What is the Internet of Things?

The Internet of things (IoT) is the networking capability that allows information to be sent to and received from objects and devices using the Internet.

In broader terms, this means that all items we use on a daily basis — from kitchen appliances to fixtures to retail shelves —  will be interconnected, able to exchange data, and optimized to fit a specific set of preferences. This presents a wide range of opportunities in many different areas — including, or even especially, in retail.

It’s estimated that by this year alone, there will be over 30 billion IoT devices, and the Internet of Things-enabled retail market could be worth $94 billion by 2025 as more retailers start to implement this technology — from smart shelves and beacons to supply chain management — with the goal to improve the customer’s shopping experience. 

According to Walmart CEO Doug McMillon:

“With the growth of the internet of things, customers will enjoy an increasingly connected or ‘smart’ shopping experience through a network of connections linking the physical and digital worlds into an ecosystem of devices, including vehicles, stores and software. The internet of things, drones, delivery robots, 3D-printing and self-driving cars will allow retailers to further automate and optimize supply chains too. Both sides of the equation – demand and supply – will change dramatically.”

Trends in retail IoT

There are numerous IoT-related benefits to the retail industry, but here are five of the top trends to look for. 

On-site sensors for maintenance and compliance

Retailers can use IoT technology to ensure that their stores are running smoothly and are staying compliant even when they’re not around. 

You could install commercial sensors for food safety, warehouse and storage facilities, and even parking site monitors. There are a variety of sensors in the market that can track things like temperature, light meter, humidity, and CO. 

These sensors can then “talk” to your smartphone and indicate how your stores are doing. And if anything is amiss — for instance, if there is a rise in temperature levels — you’ll get an alert instantly. 

Depending on your solution provider, you may even have the ability to generate reports, so you can view historical data and track any fluctuations and trends overtime.

Another bonus of store sensors? Store sensors allow retailers to automate tedious and repetitive safety checks resulting in labor savings. 

Automated checkout

Every retailer knows that long lines deter your customers from purchasing products and, often, from returning back to your store. But on the other hand, it’s hard for retailers to justify paying multiple employees to work during busier shopping times. That’s where IoT comes in. A system can be set up that reads tags on each item when a customer leaves the store. 

Instead of checking out at the counter with an employee, that checkout system takes note of the items and then deducts that cost from the customers’ mobile payment app. This results in quicker purchases, happier customers, and reduced costs for retailers to the tune of $150 billion to $380 billion a year by 2025.

One of the first companies to jump on board was retail giant Amazon with their Amazon Go stores, brick-and-mortar locations that allow customers to purchase merchandise using smartphones, without cashiers or checkout lanes. Shoppers need to have the Amazon Go app so they can be sent a receipt of their purchases after leaving the store.

In November 2018, Sam’s Club opened a Sam’s Club Now store in Dallas that operates with no cashiers. Instead they use 700 cameras, an app, and electronic price tags that can be updated in real time. Several other locations implement the Scan and Go app, where shoppers download the app, scan the barcode of each item, and locate items in the store using voice-activated search. Customers then pay for their purchases in the app and simply show their digital receipt to an associate on the way out.

Improved supply chain management 

A critical part of any retail business is replenishing the stock on time, accurately keeping track of how your product is handled, where it’s located in the supply chain, and knowing the exact SKUs and minimal losses. While many retailers are already using IoT infrastructures to track products, that’s going to be taken up a notch sooner rather than later thanks to RFID tags, which will help with supply chain management.

RFID have many uses in retail. Their main reason for implementation is that you can use this form of IoT to obtain precise data points — everything from how long an item was in transit to the temperature it was stored at. Customers can even use their smartphones to scan a tag to learn more information about a particular item.

Avery Dennison was an early adopter of this technology. They have more than 1,000 patents and applications, and started by turning clothes labels into RFID tags. Because of these tags, shoppers could use them to access bonuses in stores. Whenever an Avery Dennison client was near the store that offered promotions, their smart phone immediately received an alert.

Customer use aside, having this additional data helps retailers improve the quality of transportation moving forward, and ensures your process is running as efficiently as possible — helping you get your merchandise into the customer’s hands even faster. 

Smart shelves

Speaking of RFID tags, they can also be used when implementing Smart Shelves — wireless inventory control systems that are fitted with weight sensors. Instead of having your employees’ time and energy spent on keeping track of items to ensure they’re never out-of-stock or misplaced on various shelves, Smart Shelves automate both of those tasks and also detect potential theft.

How do they work? Smart Shelves are equipped with weight sensors and use RFID tags and readers to scan the products on both display and stock shelves. Thanks to the weight sensors and RFID tags, retailers are informed when items are running low or when items are incorrectly placed on a shelf. This helps keep the inventory process both more precise and cost-effective, all while detecting in-store theft thanks to the RFID tag connected to a reader.  

One store using digital shelving technology is grocer Kroger, who has implemented it in more than 92 of their stores nationwide. The shelves are built atop a network of sensors that keep track of products and keep in-store inventory counts accurate and up-to-date in real time.

The shelves can also reportedly show ads, offer digital coupons that consumers can easily add to their mobile devices, and interact with the Kroger’s mobile app to lead them through the store to the items they’ve selected.

At the end of the day, all the data collected by Smart Shelves can be shared with a store manager to provide customer-related insights.

Personalized customer experience

If you have frequently returning customers, it’s safe to say that rewarding them for their loyalty is good for your bottom line given that 43 percent of customers spend more money at brands they’re loyal to. And part of that loyalty comes from having a personalized experience, with 80 percent of customers saying they are more likely to purchase a product or service from a brand who provides personalized experiences.

Thanks to the use of beacons and other IoT, retailers are able to offer their customers a more personalized shopping experience. For example, if customers sign up for a loyalty program in advance, IoT can be used to set up sensors around the store. Those sensors can then send loyalty discounts to those particular customers when they stand near products with their smartphones. 

Or take for example, a woman who was looking at your product online, and then when she came into the store, she received a discount on that same product. Thanks to the IoT, you can track items a customer was browsing online and send personalized discounts when they come in store. Because you can tailor each discount using IoT, you can greatly improve your conversion rates.

The bottom line 

The future really is now when it comes to the changing landscape of retail and the intersection with technology. By implementing IoT, retailers can connect online and in-store experiences, improve employee efficiency, optimize inventory and supply chain management and overall, improve the customer experience.  

Are you ready to step into the future?

About the author:

Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.