Impact of Internet of Things on the Retail Industry

IoT has caught the imagination of technology enthusiasts and there are many predictions of how it might revolutionize industries and practices as we know them today. The retail industry has already undergone a wave of disruption with the onset of e-commerce and online retail. There is every chance that IoT heralds the next wave of disruption along the following areas in retail:
- Supply Chain Management
- Inventory & Warehouse Management
- Marketing
- In-Store Experience

Supply Chain Management
Supply chain management is quite likely to be the area where IoT can have the maximum impact. Today, the flow of material is essentially separate from the flow of information. Imagine a situation where a product or raw material is able to also tell retailers, suppliers, and logistics providers which customer the product is intended for or which product the raw material is to be a part of. Information about the ambient environment, wear and tear incurred during transportation will be particularly important for food retail. With this information available, retailers will be able to better manage their inventory, reduce order fulfillment times and bring down expenses. In short, retailers will be able to re-think and re-engineer their logistics systems.

Inventory & Warehouse Management
Usage of radio-frequency identification (RFID) is already extensive in inventory and warehouse management. It is likely to be extended with more connected services in the future. Smart shelves and smart inventory can signal when they are going empty or when a perishable product is going to expire. These events can then automatically trigger replacements at the store level and communicate this all the way back into the supply chain. Retailers will be able to fully automate picking operations by using data from smart shelves and deploying robots in the warehouse. This is, of course, made possible by inter-connecting the products (things), shelves, robots, order management and supply chain systems. Amazon's acquisition of Kiva Systems in the past is already signalling intent in this direction. Additionally, smart products are going to make shrinkage reduction much more efficient by avoiding the error prone manual inventory checks on the shop floor and shipments from suppliers.

Marketing
Beacons that recognize the presence of a mobile operating system and a particular customer on the shop floor will bring in new ways of targeted proximity marketing inside stores. Based on browsing history, social presence, and previous online buying history, retail stores will be able to more accurately fulfil a customer's buying requirements and even offer special offers on items the customer intends to buy. The newer Apple and Android devices are able to intercept low energy ‘beacons' from the shelf. Apple's iBeacon technology is now deployed in all its stores in the United States, giving potential customers more detailed information about products on display based on their location in the store. One of the biggest stumbling blocks of this area would be the reluctance of customers in being bombarded with marketing material on their mobile. Switching to a pull-on-need model for the customer can mitigate it while offering the same benefits.

In-Store Experience
As traditional retailers will have to increasingly cope with the shift of consumers to online retail, there is a good opportunity for retailers to employ IoT to help revive physical stores and improve a customer's shopping experience. It is quite likely that the in-shop experience will act as that competitive differentiator.
The Fast-Moving Consumer Goods sector can benefit from the deployment of no-checkout counters, where smart phones docked to a shopping cart will be able to automatically checkout items dropped into it by reading RFID or other item-level tagging technologies.
Retail apparel stores could start to offer virtual changing rooms, which will be equipped with a RFID reader, camera and a tablet. Based on the data it senses from a customer's selection of apparels, the changing rooms will offer ways in which they are able to virtually try out clothes, try different sizes before finalizing on a purchase. Smart checkout counters with automated picking services would then deliver the purchased items at the checkout counter giving the customers a hands free shopping experience, much like an online store.
Shop floors equipped with cameras using real-time video analytics will be able to sense a customer's mood, giving them a chance to interact with a personal assistant to help them with a more personalized shopping experience.

Conclusion
The Retail industry has been a pioneer in the usage of RFID technology. It was in the constant need to optimize the supply chain at Procter and Gamble that Kevin Ashton started the RFID research consortium and eventually gave the world the "IoT". Widespread adoption, however, has some stumbling blocks.
First, the cost of sensors and item-level tagging has to fall significantly. Second, the industry needs to invest in its technology backbone, specifically around big data and real-time analytics. Trends indicate that these are likely to change positively to spur large-scale adoption of IoT. If this continues, IoT is sure to drive the biggest disruptive phase for the retail industry in the coming years and I as a consumer cannot wait to see what's on offer.