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How does IoT play an essential role in the omnichannel retail experience?

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One of the biggest challenges faced by retailers today is to provide a unified customer experience in a world where physical and online buying are highly blended. One of the recent solutions to this is the Internet of Things (IoT). Starting right from the awareness phase till after-purchase, IoT has the potential to be a key player in deriving insights from the wealth of data collected by machines & users. Retailers who are able to capitalize this data have proven to create an enhanced omnichannel experience for their customers.

The major reason for the popularity and effectiveness of IoT lies in the 3 Ps in focus: Proactiveness, Predictiveness & Personalisation. All three matter to the customer journey and experience far more than we can imagine.
--> Proactiveness can nudge a customer that their running shoes have worn out after 2 years of usage and they should buy a new one.
--> Predictiveness can, based on history, predict if a new launch of a product would interest a certain consumer or not.
--> Personalisation can mean using customer data from their online history to guide their in-store experience and even upsell them on items in-person.

IoT is the key to getting one step closer to the customer using historic & real-time data paired beautifully. Today IoT stands in its nascent stages, but IoT interactions will multiply in the years to come with Chatbots, Augmented Reality, and more. Popular retailers such as IKEA and Converse are using IoT + AR to merge the shopping experiences into one that’s unforgettable!

What is IoT?

Internet of Things or IoT refers to the physical devices with sensors, software or technology to collect and share data. 

Think of your Alexa, or Google Home smart assistants. That small device can control any internet-run device in your house - from lighting to security systems! That is IoT at home.

According to a McKinsey Global Institute study, 127 new objects are connected to the internet every second and this number is growing exponentially. Furthermore, they add that IoT has the potential to generate $4T to $11T in economic value by 2025.

A great example of IoT taken to a new level is Amazon’s 1,800-square-foot store in Seattle. AI + IoT sensors replace the check-out counters. Instead, the store uses technology to link the customer’s Amazon account, and a virtual cart tracks purchases and adds items picked up by the customers.

Is IoT the future of retail? Yes! Implementing the right IoT technology and devices for better value and customer satisfaction is the key to prepare retail companies for the future.

What do retail companies want to achieve by IoT deployment<digit>1<digit>?

According to a 2020 survey, 63% of retailers deployed IoT as part of a broader digital transformation agenda, and the majority of them have less than 500 connected IoT devices. Once all the channels are digitized and integrated, the next step is to collect and analyze data to get meaningful insights to align business processes with strategic goals. 

As per the same survey, the top IoT objectives for retail companies are:

  • Quality of Service (QoS) – 45%
  • Customer Loyalty – 40%
  • Supply Chain Management – 40%

How does IoT help in enhancing the omnichannel retail experience?

IoT has tremendous potential to serve as the backbone of an excellent omnichannel strategy to support & facilitate a seamless, integrated, and consistent customer experience. The sole reason e-retailers can offer such a broad range of improved and personalized features is because they have access to a greater volume of data & analytics. 

IoT technology helps in intelligent sourcing & data management and cuts operational costs to generate business. 

Here are some unique scenarios showing how IoT can help the retail sector:

1. Smarter inventory management<digit>2<digit>

Businesses deploy IoT sensors in their warehouses to track real-time movement & use of inventory and other assets within their facilities. They are also utilizing shelf sensors to relay real-time inventory data to their management system. 

IoT and smart warehouse management assist in reducing waste & inefficiency. It eliminates costly and time-consuming mistakes by guaranteeing that inventory levels and equipment locations are clearly known, and regularly monitored. 

2. Personalized services<digit>3<digit>

Brands need to know a lot about their customers— their favourite products, past purchases, 

Example: Kroger grocery stores have introduced "never-before-seen shopping experiences" by storing and processing user data gathered near smart shelves.

The smart shelves at the stores are connected by IoT sensors that beam real-time information from every aisle & endcap. Individual customers are identified, and customized recommendations, promotions, offers, and other personalized content are extended via in-store sensors.

The smartshelves connect with Kroger’s App using Microsoft Azure AI, creating a unique guided shopping experience for customers as items are automatically identified in the app when customers approach images on the digital shelf displays, displaying everything from prices, promotions, and nutritional & dietary information. 

With the data and insights on usage patterns gathered from the IoT devices, brands can craft personalized communication, and craft new products & service offerings for consumers.

3. Energy Management with Smart Devices<digit>4<digit>

Energy consumption is a significant factor in any retail business. The annual loss retailers have to incur at the cost of faulty and inefficient energy management is huge. For example, every year, a single grocery retail chain will attribute nearly $2billion of loss to waste or spoilt food, with issues relating to its legacy refrigeration system, accounting for approximately 15% of this total—i.e., $300 million.

Research shows that IoT technology would save eight times the energy it consumes by 2030, equating to a net water savings of 230 billion cubic meters and a CO2 emission reduction of one gigaton.

IoT sensors can monitor beep alarms and alert the in-store personnel about electricity consumption, temperature, gas leakage, lighting, and heating. 

Store owners can use the information to know which critical in-store components are consuming the highest energy and decide how to manage them better.

4. Preventing theft with Geo-fencing

According to the NASP, more than $13 billion worth of goods is stolen from retailers each year. It's no wonder shoplifting is the number one contributor to revenue shrinkage in the retail business.

Geo-fencing enables a business owner to create a virtual barrier or zone around specific areas in retail stores. When a customer attempts to remove an item from a particular location, an alarm is triggered to deliver the message to the store manager. 

Geo-fencing capabilities built into IoT devices assist businesses in several ways, from securing products to tracking consumer and employee activity, managing company-owned resources, and minimizing theft and loss.

5. Use a Smart Shelf to ensure never-ending supplies<digit>5<digit>

Retail sector employees have to ensure that the products are always in stock and items are not misplaced in the product category shelves. Smart shelves help you automate both tasks while simultaneously detecting potential theft. 

Smart shelves fit with weight sensors and RFID tags & readers to scan products on display and stock shelves. Smart shelves alert you when inventory levels are low or when goods are mistakenly put on a shelf, resulting in a more cost-effective and precise inventory procedure. 

Additionally, as each RFID tag links to a reader, smart shelves can detect in-store theft, saving you money on security personnel and cameras.

6. Use Beacons to send alerts to customers

Beacons are small Bluetooth devices that send alerts to user smartphones based on location proximity. Retail businesses can use beacons effectively to send promotions, offers, and special discounts when the customers are near their shop.

Macy's has been using beacons since 2014. When shoppers open the Macy's app in-store, they are informed of its promotions and discounts. Additionally, the app recognizes your location within the store; for example, if you reach the makeup section, the app will remind you of the makeup brands you liked online.


IoT is everywhere in retail these days. It's hard to avoid the IoT trend when you see devices like Alexa, smart light bulbs, and smart refrigerators. Technology is no longer an option for retailers, it's a necessity.

Retailers need to have a unified point of view of their customers to provide a smooth omnichannel experience. IoT plays a significant role by providing a single view of the customer. It is a great opportunity to know your consumers better and curate business strategies around it to enhance sales, efficiency, and consumer experience.

Fynd is India's largest omnichannel platform helping retail businesses accelerate growth. Connect with Fynd to create a delightful, memorable, and connected experience for your customers everywhere.

<digit>1<digit>Accelerating the omnichannel retail experience with IoT. GSMA Intelligence. (2021, May 11). https://www.gsmaintelligence.com/blogs/accelerating-the-omnichannel-retail-experience-with-iot
<digit>2<digit>Retail IoT: Applications, challenges, and solutions. IoT For All. (2020, June 1). https://www.iotforall.com/retail-iot-applications-challenges-solutions
<digit>3<digit>How IoT can play a role IN omnichannel retail experience. Dzone IoT. (2019, February 7). https://dzone.com/articles/how-iot-amp-connected-smart-products-can-play-a-ro
<digit>4<digit>How smart devices and IoT are reshaping the retail industry. eInfochips. (2020, September 29). https://www.einfochips.com/blog/how-smart-devices-and-iot-in-retail-are-reshaping-the-retail-industry
<digit>5<digit>7 ways IoT is Changing retail in 2021. Forsey, C. (2021, February 4). https://blog.hubspot.com/marketing/iot-retail
How does IoT play an essential role in the omnichannel retail experience?
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