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Retail IoT: An Industry-Wide Transformation

Learn how retailers are fighting increased competition with enterprise-wide IoT applications that usher in better productivity and profitability.

Come to think of it, it seems like we do live in a ‘matrix’ of sorts. Most of us are always connected to the Internet, in one form or another. We look for public wi-fi spots in a new city or bite our nails when we exceed the data cap on our plan.

The same trend can be traced throughout the plethora of gadgets that we interact with on a daily basis. ATMs, vending machines, fridges, and even our watches are often capable of connecting to the web. All of these connected devices represent what we know as the Internet of Things (IoT). Not a very snazzy name, but pretty descriptive and all-encompassing, nevertheless.

The skyrocketing Internet of Thinks (IoT) industrySource: 1, 2

These devices continually collect and relay information to operate properly. This data holds enormous value, from a variety of perspectives. Product teams, marketers, engineers, and decision makers - every department can use this information to drive measurable results.

The retail industry is not an exception. With fierce competition in the online space, companies are often shifting their optimization efforts towards the offline part of their business, mixing and matching all sorts of business practices with the abundance of IoT data. Let’s take a closer look at how IoT is shaping today’s retail landscape and its growth.

IoT and Machine Learning

In this context, the phrase could be used figuratively and literally. But it’s worth noting that machine learning as a software discipline plays a huge role in how the IoT ecosystem (a.k.a the actual machines) responds to the outside world, and what insights could be generated with these devices to feed other business units within a company. IoT primarily supplies machine learning implementations with the gigabytes of data generated every second.

That’s why Fortune 500's #1 company, Wal-Mart, invests heavily into IoT and machine learning. These technological concepts were practically created for each other. In fact, most of the biggest US retailers use a conjunction of IoT devices and machine learning. Therefore, when we talk about an IoT project, it mostly implies that the data collected through it will be processed with the help of machine learning. There’s no other way around it.

IoT and Supply Chain Management

This part of operations doesn’t get enough credit for being the driving force behind business growth. Getting the goods on time, with minimal losses and of the right variety is crucial for a successful retail business. It doesn’t matter if you have a stellar marketing team if you can’t deliver goods on time and in the right shape.

That’s why retail businesses are investing heavily in the development of IoT infrastructure that supports their logistics chain.

Estimated spending On connected Logistics Solutions

This growth drives the hardware market that supports the IoT. It’s not just about connected devices. It’s also about devices that are created to connect with a particular purpose in mind, like RFID chips. Have you heard about any breakthrough smartphones from Motorola lately? Neither have we. But Motorola is doing just fine. And a lot of their recent growth can be attributed to the fact that they’re one of the largest RFID chip manufacturers in the world.

Motorola Solutions - Google Finance - Screenshot at Sep 26 22-41-58Source: Google Finance

Retailers are not trailing behind, as 96% of them have plans to start tagging apparel with RFID, and as IoT data processing capabilities are getting more and more affordable and commonplace.

IoT and Inventory Tracking

This domain of supply chain management has embraced IoT applications and all of their robust variety. For example, mobile self-checkout is a growing trend among a wide range of retailers. It comes in various forms, including RFID chips that automatically disconnect after you’ve purchased via a specialized app. Some notable startups in this niche include Queue Hop, Scandit, and FutureProof. Some of them even offer self-install kits, so smaller retailers can easily get on board with few mobile development services needed, as these products offer a ready-to-go implementation, hardware and software included.

Of course, when talking about IoT and inventory management, we can't miss the opportunity to mention robots. Sure, at this point most of these products look like glorified Roombas, but this doesn’t diminish the fact that robotics is slowly making its way into retail. Robots don’t need sleep and are practically mistake frees when tracking inventory. They free up resources and prevent under-stocking or overstocking, which positively affects the economics of any given supply chain. Scout by Cosy Robo is a good example of a successful product in this niche. Keonn’s creation also deserves a mention, but there are plenty of other solutions in the field.

IoT and Beacon Technology

This technology is relatively new and seems to be overshadowed by other innovations in the IoT and retail data management space. Nevertheless, retailers are taking beacons very seriously, with adoption rates skyrocketing across the board. In fact, it’s one of the fastest growing retail technology trends, which has grown to more than tenfold over the past several years.

The concept is pretty simple - beacons are small devices placed in stores to communicate with smartphones and other devices in the vicinity via Bluetooth and other wireless tech. It has an extensive variety of applications, and the forecasted number of beacons that will be placed in stores across the US by 2018 is over 4.5 million. That’s why there’s a whole niche of products and services that have sprawled out of it.

Beacon technology market trendsSource: 1, 2, 3

Beacon-based analytics companies provide a variety of products, both hardware and software, that will enable real-time visitor tracking. These solutions are often used for operational management, like controlling the number of floor employees and merchandising at any given moment.

Beacon-based marketing focuses on customer interactions and mostly interfaces with store visitors. There are various applications, like sending push messages to people that approach the store and offering tailored promotions based on their previous visits and / or purchases.

Of course, this craze didn’t leave major retail players behind. Wal-Mart has been experimenting with beacons for a while now. They even went as far as to embed beacons into the lighting in their stores as a joint experiment that involved General Electric. A couple of years ago, Nordstrom launched a beacon-based marketing campaign with a single goal of improving customer experience in their stores. They even earned a pretty high Personalization Index score from SailThru for their application of beacons in mobile marketing.

In case you missed it, Facebook has also developed their beacon technology seeing the growing popularity and potential of this technology. Yes, now you can’t even hide from Facebook in the physical world.

Technological Overhaul

While all of the abovementioned technologies are based on previous and current IoT advancements, it’s evident that many modern-day tech standards are not suitable for the growing IoT niche. This technological vacuum is steadily filling with new solutions and products.

Blockchain is one of those technologies, as it sees a growing number of applications specifically within the retail supply chain management. For example, Block Verify offers blockchain-based product signatures that are meant to fight the onslaught of counterfeit goods - from electronics to luxury items. Services like Waranteer provide cloud-based warranty services that transfer paper warranties onto the cloud using blockchain. Integration with a service like that could save a tremendous amount of money on warranty management for retailers.

The rise of RFID chips also brought new requirements for data transfer capabilities. Technologies like LPWAN and 3GPP improve the quality of data management, speed and longevity of IoT devices with extended range, battery life, and digital security. These technologies see a wider adoption with POS and asset management ecosystems. In fact, it is projected that over 4 billion IoT devices will rely on technologies like LPWAN by 2025.

Communications Technologies Used by IoT Services


Retail is undergoing some fundamental changes, pressured by the increasing omnipresence of online competitors like Amazon. The past decade saw a wide variety of retailers going out of business because of their inability to adapt to the rapidly changing retail landscape. Even this year saw some big name brands going under or declaring bankruptcy, like in the recent case of Toys R’ Us - one of the most iconic and recognizable retail brands in the United States.

IoT proves to be a technological safe haven for brands that are still surviving the market pressure, as various retail applications of IoT can significantly increase financial and operational flexibility for a wide variety of retailers. Practically any part of the business pipeline is affected by this transformation. From storefront to supply chain management - every retail executive is looking for a new way of applying IoT in this technological diversity. This allows them to compete with online retail giants and, as a result, diversify options for consumers, which is always a good thing in a market economy.

Do you think there are other great applications of IoT that are on the rise in retail but we might have missed them? Share your thoughts and ideas in the comments below!

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