How IoT can drive the next wave of innovation for retailers

New Update
IOT Strategy

Ranjit Satyanath Ranjit Satyanath


Over the past few months the term “Internet of Things” (IoT) has been floating around in conversations and articles. Beyond a casual interest, this paradigm has not been completely explored by Indian Retailers. One reason for this could be that retailers have been overwhelmed by the sheer pace of technology in the past eighteen to twenty four months.

They had just about finished stabilizing their Point of Sales and core ERP systems when they realized the need to invest in Space Planning, Smart Replenishment and Customer Loyalty Management Systems. Of course the Analytic systems implementation is a never ending project - the Buying and Operations teams continuously discover that new dimension without which they absolutely cannot do their business reviews. Enter online retailers whose flush with funds and are creaming the market. Now brick and mortar retailers faced with softening growth have to revisit all their systems & processes and play catch up. For retail CEOs,  omni-channel retailing is the new frontier that has to be conquered in to meet their growth targets. In the midst of all this action, they can be excused for not showing too much interest in something as futuristic as IoT.

In reality, IoT is application of technology that has already been around for a while. Now this technology is being miniaturized and dumbed down. They are being put into devices and appliances that hitherto did not have them. These different objects can now “talk” to each other and the results are pretty interesting. Some early examples of IoT at work involve the ubiquitous Mobile phone and an app.


Air Conditioners are available that can be set to the temperature of your choice even before you’re home. Your set top box can be made to record your favorite program remotely. More recently some lighting companies have introduced bulbs that can recognize that you’re coming home and switch on automatically. The next wave of devices would possibly be in cars (talking to GPS Satellites to set your routes), TVs (that recognize the viewer and change to their favorite programs) etc. There are also some pretty interesting IoT applications for retailers within the store and enterprise

Imagine a scenario where a customer is trying on a top in a department store. The retailer has incentivised its customers to download and scan the bar code before trying them on. In doing so a notification goes to the Department Manager who keeps a size smaller and one larger on standby so that the customer does not have to go out of the trial room should the one she is trying on not fit. The customer loves the experience and the sale is closed. But say that the size is not available at the store but is in a nearby location or at the DC. The app gives the customer the choice of paying for the garment using the Mobile Wallet and the product is shipped to her home.

Beacons have been around for about two years now. Placing Beacons mapped to departments and product categories enable retailers understand customer buying patterns - which aisles are more traversed, what products interest customers more etc. Feeding this data into the retailers’ analytic systems can throw up several actionable customer shopping patterns. Store layouts could be optimized based on data thrown up by Beacons.


Smart vending machines can send notifications to the Supply Chain teams when they need replenishment giving the brand real time inventory & sales insights. It also can notify the service teams in case of any malfunction thus decreasing downtime which positively impacts sales.  Smart Signage solutions working in tandem with the retailer’s location aware mobile app can display messages that can incentivise buying behavior - e.g. displaying offers/promotions/new arrivals on the Wine Selection when a connoisseur walks into the cellar.

One of Europe’s largest CDIT retailers uses IoT technology to notify the customers and their call center on the position of their delivery trucks so that customers in real time are notified on the ETA of their orders. Also the technology is used to warn the SCM team should the driver digress from the route plan or do something unplanned.

Obviously, only imagination limits the extent of IoT applications. Other industries have been using  it for several years. The Aviation industry and nuclear plants are examples of industries that have been applying IoT on a regular basis say to detect engine malfunctions or higher than normal radiation levels. In this year’s NRF - retail’s biggest event, IoT was an underlying theme in several discussions. Chances are that in the months to come many more deployments will become evident.

Amazon’s Dash Button - a simple button press to order anything right from your home is already in production in a limited way. Amazon also has a Developer Program that allows third parties (brands?) to use it on their appliances. For example, a washing machine manufacturer can potentially facilitate their customers to order detergent on the press of a button placed on the machine. A printer manufacturer can do likewise for cartridges. The Wearable industry is expected to explode once Apple’s iWatch hits the stores. This is high quality customer data and retailers especially those in the Healthcare and Fitness business would love to get their hands on them.

While traditional retailers would love to believe that retailing is an art,  it is evolving into a science. Practices that differentiated a few years ago are now hygiene. Retailers need to be constantly questioning status quo and be ready to rip apart their existing systems and processes and adopt new ones should that become necessary. In this scheme of things adoption of IoT will likely drive the next wave of innovation in retailing.

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