How IoT can transform the retail industry

By Pavan Kumar, Global Product Manager – IoT, SAP Labs India

One day, our coffee machines are going to be smart enough to recognize us and suggest the flavor of coffee we like (say 50% coffee +40% milk+10% chocolate+1 sugar cubicle), this entire process of identifying the person to running through the algorithms and pushing the offer out will happen within a span of 1 or 2 seconds before we press the button on the coffee vending machine. That day is going to be soon and will be brought to you by Internet of Things.

Gartner, Inc. forecasts that 4.9 billion connected things will be in use in 2015, up 30 percent from 2014, and will reach 50 billion by 2020. These devices would go beyond PCs, smartphones, tablets and range from alarm clocks to air coolers to washing machines to cars, basically, almost every machine and in short, IoT is going to create a virtual planet of machines- both human and non-human that “breathe” data.

IoT itself is the trend which is applicable to almost every industry be it aerospace, manufacturing, retail, healthcare and many others. Let’s see how today’s innovations powered by Internet of Things are trying to redefine the Retail sector.

Key areas where IoT is impacting retail

To set the context of the discussion, in the world of Retail, better Consumer engagement is going to be key for sales and brand equity. However, consumer retention can happen only if the supply chain is agile and smart to keep retailers up and running. The supply chain execution can be intact and flawless if predictive maintenance and “self” healing minimizes the downtime of the machinery and equipment involved.


Consumer Engagement – Understanding the digital body language of the consumer is going to take the center stage of consumer engagement made possible through fusion algorithms. Developing customized software’s for retail bridges silos of data across physical, digital, and social channels to personalize offers for deeper engagements with customers. In addition, predictive intelligence will help retailers to come up with context based personalized recommendations and offers. With innovations in short-range wireless communication technologies like beacons, NFC and other proximity sensors, retailers can push these hyper-relevant offers to targeted end-consumers.

New breed of vending machines called the Smart Vending Machines (SVMs) are coming into existence and they are going to be a popular mode of retail outlets. These new generation of retail outlets will be equipped with geo-fencing, telemetry sensors, barcode readers, NFC payment options, personalized gigantic touchscreens (42” HD) and connected to the Internet via the enterprise cloud. These machines are designed and enabled to deepen engagement with customers. Beyond vending, they take the interactions to a different level by allowing options like gifting, where, consumers can gift their family and friends who are connected through the social networks.

SVMs can also allow interactive games, showcase movie trailers and personalization. Since the machines are cloud connected to other vending machines, owned by the same company, the user can customize the machine with different themes, background colors, currency and language; so each time, the user logs on to any (other) machine, owned by the same company, it would remember the personalization settings and display in the appropriate language.

Another predominant trend in IoT is the concept of Smart mirror – these are designed for in-store clothes shopping, and capturing stills and video of anything that a customer tries on. Using simple hand gestures it also allows changes the color of the clothing in real time, without actually changing the dress. The smart mirror enables one to capture a variety of whole body stills or videos that can be shared with friends.

Smart Supply chain –
The traditional supply chain is rigid and needs to be redefined to meet the challenges of the digital era. This can be made possible with the advent of IoT and sensor technologies. Advance innovations in RFID-based smart shelves continuously scan items on the shelf and notifies the appropriate systems in case of misplaced clothing, goods running out of stock, potential theft, counterfeits and identifies the items nearing expiry date. During low or out of stock situations they create automatic replenishment alerts and send orders directly to central warehouses and to manufacturers.

Additionally re-order process is being redefined by building intelligence into inventory decisions by considering external factors like events, social sentiments etc. Popular and fast moving products are replenished more quickly so that they are always available and enable leaner inventories. Retailers being the face of supply chain, IoT enabled supply chain, inventory, logistics and fleet management can keep customer engagement at the peak.

Predictive Maintenance & Self healing –
Companies are looking for advance alerts of equipment failure rather than acting upon failure. With the advancement in sensors and embedded devices, multiple devices are embedded in the manufacturing equipment and different techniques like novel data fusion algorithms, machine learning methods and artificial intelligence are applied on top of this continuous stream of sensing data to not just predict when equipment failure might occur but also prevent occurrence of the failure by performing any required maintenance.
However, the future trend lies in not just providing optimal maintenance and service before a machine fails, but to ensure  that self-healing mechanisms are in place in case of failure.


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