Home Retail The Internet of Things: Retail’s Next Disruptor

The Internet of Things: Retail’s Next Disruptor


The (IoT) has triggered a tectonic shift in retail operations. The connection of billions of devices and their users surges a transformative wave that reflects how people shop, transact, and leave behind yottabytes of data for retailers to analyze and leverage for transforming their business. In the realm of digital ecosystem, IoT presents a plethora of opportunities for retailers to automate merchandising and operations, optimize supply chain, boost personalized marketing, deliver delightful customer experience, and explore newer revenue streams. It’s more than just a compulsion why retailers need to understand how consumers purchase goods and influence peers to follow their path as well. Though sounds a bit perplexing, the fact is smart retailers are aggressively coming in terms with disruptive technological innovations – social, mobility, cloud, and analytics (SMAC) and IoT.

The Internet of Things: Retail Industry's New Disruptor
IoT is poised to revolutionize retail by eliminating the digital divide between smart and conventional consumers, and reshaping the competitive landscape

IoT has started disrupting the conventional retail industry boundaries. While online retailers are fast forwarding towards delivering omnichannel shopping experience to consumers, it’s imperative for them to ensure convenience of shopping, product availability, on-time delivery, and smooth product replacement. For that, retailers require IoT-enabled infrastructure to collect data from consumers and products, analyze it, and then apply it for excelling in business. What further prompts retailers to adopt IoT is that consumers are far ahead of time by embracing the marching trends of connected and wearable devices. The consumers’ adoption of IoT devices is expected to grow faster in the coming time. According to Statista, the number of connected devices globally will rise to 50.1 billion in 2020 from 18.2 billion in 2015, and the number of connected wearable devices will grow from 97 million in 2015 to 601 million in 2020. This will significantly influence the retail business globally.

Revitalizing Retail Industry

In retail business, continuous improvement of customer experience in physical shopping or virtual shopping is the ultimate business goal. For that to materialize, retailers need to explore the innovative technological solutions that not only suffices the current business requirement but can embrace the future needs as well. IoT and machine-to-machine (M2M) communications are gaining traction in retail space to optimize operations and deliver superior customer experience. IoT helps connect smart devices, machines, products, people, and systems to produce huge data volumes. The marriage of social network and IoT-enabled machine data can provide invaluable insights about customers, market trends, and operations. Here are certain benefits that IoT-enabled retail ecosystem can provide.

Improve In-store Experience

While millennial consumers are largely devoted to online shopping, the traditional retailers need to provide improved in-store experience to bring in competitive differentiation. This is possible when brick-and-mortar retailers deploy IoT in physical stores to deliver delightful shopping experience to customers. For example, check-out counters can be replaced by a contactless checking to verify the products, which are marked with tagging technologies, when customers walk out of the store. Similarly, customers looking for a specific product can be communicated through SMS depending upon their search. Mobile beacons can provide information such as purchase history and personal preferences of frequent store visitors by enabling store representatives to deliver better customer services to loyal clients.

Optimize Store Operations

Data collected from IoT-enabled sensors and smart devices can help retailers to not only automate the store operations, but also improve the performance of store employees by providing them with critical information to better serve the valuable customers. A smart store that employs sensors and thermostats can control temperature and lighting by saving energy. Similarly, IoT-enabled cameras, RFID, sensors, and beacons can deliver real-time store data such as customer buying behavior, check-in and check-out on smartphones and tablets. Having specific sets of customer information, store representatives can provide improved shopping experience to customers.

Improve Supply Chain Efficiency

In a highly competitive business landscape of retail industry, traditional supply chain systems can’t contribute to the growing needs of mitigating risks in various business situations. For greater control on supply chain management, retailers can bank upon RFID technologies to improve inventory tracking. IoT-based devices can further provide real-time information to take smart decisions on movement of products. Retailers having advanced supply chain analytics solution can share critical information among stakeholders to ensure demand fulfillment faster and better. According to a study conducted by Gartner on end-to-end supply chain visibility, companies using advanced supply chain analytics can save upto 20 per cent in inventory, increase forecast accuracy by 25 per cent, improve consistent SLA upto 98 per cent, reduce freight charges from 5 per cent to 3.5 per cent, and lessen inventory stocks from 10 days to less than 7 days. An optimized supply chain can trigger improved top line and bottom line as well.

Personalize Marketing

Targeted programmatic marketing is the new normal marketing strategy deployed by retailers today. Buying requirements of customers can be analyzed from their shopping history, search history, and demographic information. With IoT-enabled beacons, retailers can communicate to target customers in and around the stores to increase store visits and eventually boost sales. Furthermore, onscreen information can be provided to customers when they move around the store shelves and aisles. Near field communication (NFC) can act as a catalyst for programmatic and personalized marketing.

Retail IoT Infrastructure

Technology plays a key role while designing a comprehensive retail IoT platform. Retailers should consider the flexibility of platform integration with the existing smart assets and enterprise applications that drive business continuity. For example, a retailer may be using Microsoft Dynamics AX retail solution to manage the operations and a host of smart hardware to drive IoT initiatives. In that case, it’s imperative for the retailer to deliberate on a platform that not only becomes synergistic with the existing applications, but also helps harness business value in terms of scalability and flexibility of future needs. Given the scenario, Microsoft Azure IoT Suite can be the preferred platform to integrate and transform the existing business processes. Because Azure IoT Suite is flexible enough to integrate with existing applications, processes, and smart devices to unlock the power of existing and new data sources. Retail solution providers like AlfaPeople believe that the right technology infrastructure is precursor to the success of a business.

The most important factor in executing a technology change decision is the consideration of business value that can be achieved through it. While pricing is always a decisive factor in technology infrastructure development, retailers should never undermine the growing business needs and competitive advantages that can be garnered eventually. Investment in IoT shouldn’t be considered as a cost center. Given the advantages delivered by IoT-enabled retail ecosystem, businesses can even generate more revenues. For example, retailers can increase upselling by delivering precise information to high-end customers when they visit stores or even browse a similar product on their smartphones. Adoption of IoT can reduce back-office expenses and improve productivity of store employees significantly.

The retail industry has of late realized the potential benefits of investing in IoT-enabled infrastructure. According to a report published by IDC, the retail industry IoT revenue may touch US$ 326 billion by 2018, with a compounded growth of 19.8 per cent CAGR through 2013-2018, while overall IoT revenue will be US$ 2.6 trillion alone in the APAC region. Doesn’t this sound a clarion call for the retail industry to act smart now?


IoT has fundamentally embarked on a mission to evolve the retail industry faster and smarter. While some retailers are grappling with the challenges of gripping to the strategic choice whether to adopt IoT-enabled retail operations or not, the early adapters are redefining the competitive landscape. From scores of implementation success of disruptive technologies in retail industry, AlfaPeople understands that IoT will continue to expand retail operations by influencing customers’ retail experience and delivering significant competitive advantages to the adapters. It’s a matter of choice how retailers design their technology infrastructure, leverage disruptive technologies such as SMAC and IoT, address privacy and data security issues and enable a seamless retail ecosystem for consumers’ delight.

Sanjeev-Dewan-alfapeople-ceoABOUT THE AUTHOR: Sanjeev Dewan  is Co-Founder & CEO at AlfaPeople India. Sanjeev has more than 32 years of experience in Global Markets in Strategic Planning & Management, Operations Management, Sales & Marketing, Business Development, Key Account Management and Team Management.