Internet of Things – The Implications for Retailers
Internet of Things
Internet of Things (IoT) is a network of connected physical objects that have sensors embedded in them. These devices communicate through the Internet, sharing data about the physical world via networks and cloud-based software. It is experiencing rapid growth at the moment, with 70% of retailers planning investments into the technology by 2021(1).
IoT can be used by retailers for a variety of things, such as efficient inventory management. Currently, retailers are currently losing $800 Billion a year due to inventory distortion(2); which is overstocked or out of stock goods.
The inventory distortion problem can be solved by tracking assets by using Radio Frequency Identification (RFID) and IoT, which are small chips that can be attached to any item. A smart shelf can be created that keeps track of inventory as it leaves the shelf, in real time, automatically notifying the warehouse to dispatch more stock before the retailer even knows levels are low. It is expected that this technology can increase inventory accuracy up to 99% and maintain it at 95-99% (3).
Smart Shopping Trolleys
IoT enables many devices to connect with each other seamlessly, this is data is collected together and analysed to see the bigger picture. An example of this is Amazon’s grocery shop in Seattle, which uses cameras, weight sensors and other sensors connected using IoT for checkout purposes.
Amazon Go has replaced cashiers with IoT technology; customers simply enter the shop, pick up the items they need and leave. This improves customer experience as customers don’t need to wait in line or deal with the checkout process.
IoT-Based Payment Systems
IoT solutions can extend payment functions from till locations to anywhere within the shop through the usage of NFC, where a phone is placed near a reader. This reduces friction at the final stage of purchasing such as queueing in lines which leads to abandoned purchases. This could be in the form of a hand-held reader that shop assistants carry, or integrated into a self-service kiosk; as Zara have done (4).
Internet of Things is changing how retailers operate, it is not clear yet which technologies will gain widespread adoption. However, in a time when the high street is struggling, it is sensible in investing in the industry which may just save it.