Internet of Things in Retail

In the realm of retail, the Internet of Things (IoT) offers many opportunities for brick and mortar retailers to level the playing field with online competitors.

IoT may increase the store’s Customer Value by augmenting the customer’s shopping experience with additional product information or targeted special offers.

IoT may boost revenues by automatically managing inventory in real-time. It may also help stores to build customer profiles and engage with customers on a personalized level.

IoT may mitigate risks by tracking assets and preventing theft.

Customer Value

In today’s fast-paced business world, it is more important than ever for successful businesses to maximize the Customer Value they provide. Due to the loss of customers to online competitors, brick and mortar retailers are under pressure to level the playing field. This can be achieved by offering similar convenience and accessibility customers have grown accustomed to through online retailers. In addition, stores must build their unique selling points, such as exceptional customer experience.

A Model Example: Macy’s

One high-profile early adopter of IoT technologies was US retailer Macy’s. We will explore their implementation of an IoT system while highlighting existing benefits and additional potentials. Through their IoT implementation, Macy’s achieved an increase in revenue, efficiency and customer value.

Getting There and Around

As mentioned previously, convenience is becoming increasingly important to shoppers. With this in mind, larger stores and malls, including Macy’s, offer customers help in finding what they are looking for faster. Since GPS information is usually unavailable in-store, Bluetooth beacons can be set up around the store to determine the customer’s position. This helps customers to quickly locate products they are looking for, using their smartphones.

This approach holds potential beyond making the customer’s journey more convenient. Retailers can use this information to provide customers with targeted offers for nearby products. They can also gain insights about how customers explore their store and how they engage with product displays. The true potential of this technology can be uncovered by combining the location information with customer profiles.


Macy’s also implemented an RFID-based asset tracking system. The system makes it possible to track individual items on the sales floor and in the backroom. The tracking happens in real-time, giving the retailer an exact, representation of their inventory, down to the last unit. This technology allowed the company to replenish their sales floor stock more reliably. They were also able to better avoid out-of-stock situations or left-over seasonal items that had to be marked down.

Knowing the exact item count in real-time also allowed Macy’s to expand their omnichannel approach. They are now able to offer all in store products for sale on their website, down to the last unit, without running the risk of the item no longer being available. Because of the inaccuracy of traditional inventory systems, most competitors must keep a costly buffer items in stock when marketing in-store products online.

This kind of system does not only result in a more accurate and cheaper to maintain inventory. It also offers customers the opportunity to engage with the products on multiple levels. Smartphone apps can be used to scan RFID tagged items in order to access additional information about them or share them via social media.

At the same time, these smartphone apps can be used to localize the customer inside the store and provide them with special offers for items or add-ons they are already interested in.

Know Your Customer

A well laid out implementation of such an IoT system will also allow a retailer to combine and analyze the collected data in order to build detailed customer profiles. These profiles will be similar to the ones online retailers use to track and predict their customers’ preferences. They may include information such as past purchases, engagement with store displays, customer journeys through the store and much more. Additionally, these profiles can be augmented with information from smart loyalty cards and online accounts in order to give the retailer an even more thorough insight into their customers’ shopping preferences than online-only retailer may be able to.

These profiles will prove to be valuable resources for a whole range of activities, including:

  • Delivering tailored special offers to customers on or away from the sales floor
  • Improving customer service by providing representatives with relevant information
  • Gaining insights on the effectiveness of in-store display and promotions

Risk Mitigation

Once established, systems, like the one described above, can be utilized for a wide range of applications with relatively little additional expense required; asset protection is one of these applications.

Since a comprehensive RFID system allows individual items to be tracked throughout the store, theft scenarios can automatically be detected. If unsold items leave the store, for instance, the asset protection team can immediately be notified. RFID systems can also be designed to register the removal of tags from a product. The system can then flag the removal of tags in a non-designated area, such as a fitting-room, as suspicious.