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IoT Has a Place in the Retail Space

Added to IoTplaybook or last updated on: 06/17/2018
IoT Has a Place in the Retail Space

IoT technology just may be the biggest thing to hit retail shop floors since shelf tags and wire hangers. Big names like Marks & Spencer, Macy’s, and Target, for example, are using item-level RFID tags and readers to improve inventory accuracy by efficiently performing multiple counts year-round. This has a positive impact on product availability, replenishment, and sales.

IoT system integration and consulting services will grow past $35 billion in 2022.

They’re tapping into exciting ways to improve the customer experience too. Take the newly opened Amazon Go store in Seattle that uses computer vision to identify product location, along with sensors and deep learning algorithms. Customers who have the Amazon Go app on their phone can simply pick the items they want and leave the store without the hassle of checkout lines. The products they choose are tracked in a virtual cart and charged to their Amazon account automatically.

IoT Has a Place in the Retail Space
Justin Patton, RFID Lab
Auburn Universisty

There’s much more to come. “The next generation of these IoT store solutions will be using multiple types of sensors, [and] layering them on top of technologies like RFID and computer vision,” says Justin Patton, director of the RFID Lab at Auburn University in Alabama.

Bluetooth Low Energy beacons, for example, can track consumer proximity to products, allowing retailers to influence their purchase behavior with customized coupons, analyze response rates, and measure traffic flow. Shelf weight sensors can collect data about consumer interactions with products, like whether anyone picked them up and put them back. Thermal and chemical sensors can help detect food ripeness and shelf life, while stereoscopic or 3-D imaging systems can contribute added information about products, such as their distance and size.

The retail IoT future also includes smart, RFID-enabled packaging and interactive Digimarc barcodes that provide consumers with more information about the products they buy, as well as information-dense 2-D barcodes for managing customer inventory, enhancing supply chain visibility, and authenticating products.  

It all adds up to what Patton calls the age of sensor fusion. “It will be more about how we use multiple IoT technologies in conjunction with each other,” he says. “You can get to correct answers faster with multiple solutions providing data to analyze.”

Right now, according to Patton, a lot of IoT deployments are siloed, but system integrators can help break those barriers down. “SIs are becoming essential partners in many IoT partner program ecosystems due to their expertise in integrating IoT solutions across specific vertical markets and regions,” ABI Research notes in a recent report. In addition, ABI forecasts that IoT system integration and consulting services will grow past $35 billion in 2022.

In the retail space, system integrators can also help businesses move beyond “bolted-on” solutions, which collect entirely new forms of data and then simply dump it into the same fields their store systems were using before.

“It’s not actually adding any new actionable metrics; it’s just making the old ones more accurate,” Patton explains. He provides as an example RFID cycle counts offering serialized metrics about all the items in a store. Save that data in a simple inventory quantity field and you miss out on useful information. A product that's being picked up often but not purchased, for example, could be damaged and in need of replacement.

System integrators and resellers should get ready for the age of sensor fusion.

“Bolt-ons can generate actionable data that is very valuable and can have a positive ROI, but they’re always in danger of being removed, since the stores don’t become reliant on new data fields they’re generating, but simply operate more efficiently using their old metrics,” Patton says. System integrators can play a key role in helping retailers rebuild their environments to retain and gain value from data that currently gets stripped away.

Patton also recommends that system integrators be open to overtures from emerging retail IoT vendors. Retailers who appreciate a startup’s sensor-equipped inventory management robots, for instance, need on-site support that most startups aren’t big enough to provide. An experienced system integrator can help growing vendors quickly scale and provide necessary support for a win-win relationship.

Still, while most retailers want to exploit IoT opportunities, many of them remain skittish prospects just the same, Patton cautions. “There’s some hesitancy among many traditional brick-and-mortar retailers to heavily invest in infrastructure-intensive IoT solutions,” he says. They’ve seen big retailers like JCPenney fail in their efforts to reinvent store concepts, including using RFID technologies, and nearly every day comes word of big retail brands shutting down stores or facing bankruptcy.

The good news is that “most retailers know they have to evolve,” Patton says. “There’s a lot of risk but also opportunity.”


JENNIFER ZAINO is a New York-based freelance writer specializing in technology, business, education, and healthcare issues.