The retail sector is one of the early adopters of the Internet of Things (IoT) concept of system and sensor integration to provide better management and business intelligence. So far, the main business cases for IOT technologies in retail have been inventory management and customer engagement. A&s spoke with several industry players to hear about current applications and future path for IoT in retail.
One of the sectors that stand to benefit the most from the Internet of Things (IoT). In past years brick-and-mortar stores have been fighting a fierce battle with online retailers. One of the great benefits e-commerce gives consumers is an enormous amount of available information. With a click of a button the customer can learn everything they want to know about the features, price, and availability of a product. Adoption of IoT concepts in retail can help brick-and-mortar stores recover some of the lost sales by leveraging the information they have in the store for an improved shopping experience. “IoT includes everything. Each and every device, all the things in a store, can or will produce data, and that data will be used to better manage the store. An obvious example of this currently is POS systems. The POS system produces a wealth of data, both product and shopper, which then flow into analytics platforms to get analyzed and, eventually, acted upon,” said George Shaw, Head of R&D at RetailNext.
IoT implementations are gaining pace and spanning across different platforms. “We are only limited by imagination. In few years you will be able to walk up to a kiosk in a store and type in a product name, the kiosk will tell you where the item is and even show you a feed of from a camera where the item is on the shelf, a mobile app can direct you to the item within the store or order it for you if it’s not there,” said Scott Thomas, Global Director of Business Development for Retail & Banking at Genetec.
Another possible use-case is multifactor authentication to enhance security. “Facial and voice recognition can be used to identify clients for additional payments security. Another example is using the shopper’s cell phone to verify they are indeed at the location of purchase. If somebody is trying to make a purchase but their cell phone is located elsewhere this could raise a flag to the store attendant to double check the transaction,” described Jerry Hwang, Senior Strategy Manager at Toshiba Global Commerce Solutions.
IP CAMERS AS IOT DEVICES
The introduction of IoT devices in retail is an evolving process. “It’s not a cliff, where we all of a sudden have IoT. More and more devices are getting data-enabled and added to the data ecosystem all the time and we will continue to see it grow at an increasing rate of deployment,” Shaw said.
In this sense, IP cameras are already IoT enabled devices and can provide “more than security” in terms of insights and business intelligence. Today network cameras can be integrated with many other systems and provide more than just loss prevention and security, and also provide business intelligence and marketing insights.
The use of surveillance cameras is expanding from their traditional role in security to business applications. A surveillance system combined with intelligent video content analysis can be a tool to improve the business efficiency. Retail stores can make good use of video footage captured by cameras for further content analysis. From this footage, retail store’s management can recognize customers when they step into the store, count the time that the shopper spends in front of a shelf, reduce the time that clients spend waiting for in-store service etc.
Loss prevention in the retail businesses is concerned with inventory shrinkage and the shortage of currency. Losses related to POS transactions can be a main cause of the shrinkage for the most part. An effective POS-DVR surveillance solution can help employers deal with these situations.
The GeoVision POS–DVR surveillance system uses video text overlay technology to provide visual contextual awareness that helps reduce shrinkage and protect asset against business losses. While working in conjunction with GV-Data Capture, the GV-Series surveillance system can turn into a POS/DVR surveillance system, which helps you with tools to remotely monitor cashier area, associate POS transaction data with videos, record videos for retroactive analysis, and even output alarms for emergency events.
A case study: a nationwide convenience store introduced GeoVision POS–DVR surveillance system at a franchise, which helped identify and correct employee POS manipulation and training insufficiency. The result was a 98% improvement on internal shrinkage within one month after the initial use. Within two months after the initial use of GeoVision POS–DVR surveillance solution, the convenience store identified 5 refund frauds and cash handling wrongdoings, and several shoplifting cases.
Cliff Crosbie, SVP of global Retail at Prism Skylabs added: “Retailors integrate the data from video analytics within their existing staffing and POS systems. Whether through a counting API or CVS file, it’s easy for retailers to measure in-store conversion, make smarter staffing decisions, and assess the effectiveness of marketing and promotional campaigns. As for heat mapping, it’s a great tool for A/B testing store design, understanding which products customers interact with most, and making more strategic merchandising decisions.”
These solutions are becoming very popular and a recent conducted survey, on average, 30 percent of the respondents globally are interested in using such a solution, whereas markets in Northern Europe have a figure at 50 percent.
However, practical understanding toward video analytics is still needed. “A certain amount of calibration is necessary for these analytics. Accuracy is still an issue and depends on the analytic. Heat maps are more accurate, directional analysis is accurate. Counting analytics however still have room to improve, in field conditions they provide about an 80 percent accuracy rate. Technology keeps improving and in the next 2-3 years we will have improved accuracy,” said Thomas.
Near Field Communication (NFC)
Apart from RFID, NFC is also picking up pace. Michelle Moulin, co-founder and CEO of Boston-based iZipline explained a few use-cases. The use of NFC provides instant engagement between brands and the customer’s mobile device for mobile marketing, track and trace, brand protection, product recall, and related analytics. “For example, an NFC antenna can be hidden behind a ‘tap point’ within reach of the consumer. When the consumer taps the point tailored brand content is sent to the mobile device. Another example is using NFC to eliminate product counterfeiting; the NFC antenna is embedded in the product packaging, making the package an individual package an individual, dynamic connection between the brand and consumer. By tapping or scanning the package consumers can make sure they have an original product,” she explained.
“iZipline’s cloud-based platform, manages vast deployment of NFC tags to deliver a customized, branded experience to the consumer’s mobile device. The platform allows brand managers to individualize the experience for each tap by pre-determining parameters, triggers and events that will customize the interaction. Brand managers can group and sort tags by location, and set a variety of conditions that will drive content or trigger consumer response. Conditions may include location, time of day, weather, and even the consumer’s language preference is indicated by his/her mobile browser settings. With NFC, consumers don’t need to download the app to get the information they are seeking. The connection is instantaneous and personalized. The consumer walks away with the information or offer in his/her hand,” added Moulin.
RFID IS KING
RFID tags are the most well-known example of IoT in retail. “Managing thousands of goods on display has significant time and labor costs. RFID labels tagged to the goods can help easily inventory the goods, identify the missing style on display, and replenish from back stock. By connecting to mobile devices, the shop assistant can help shoppers check the product availability, placement, and stock very easily,” said Atul Ghaisas, Business Development manager for Store Performance Solutions (SPS) in APAC at Tyco Retail Solutions.
“Tags are being applied at the macro level (in store signage) as well as at the micro level (individual shelves and products). Most recently are tags with trust transactions that enable coupons, loyalty, and sweepstakes via ‘proof of presence’ technology,” said Mark Robinton, Director of Business Development & Strategic Innovation at the Identification Technologies Business Unit of Hid Global.
“Within Toshiba, we are trying to combine RFID tags and sensors into apparel hangers,” said Hwang. “Toshiba is now testing this solution in Japan to see how effective it is in determining which prices of clothing are interacted with. Whenever a consumer takes a hanger the retailer gains information and insight about the consumer, which products are taken, which are put back.”
Combining RFID with other systems in the store can serve as a force-multiplier, making other systems like video surveillance be more effective. Thomas added that what we are seeing in tech now is the integration of different data points to help retail loss prevention. These integrations reduce investigation time and lead to more case closures. Take a supermarket suffering from organized retail crime (ORC), for example. An ORC group may be going after high priced health and beauty care (HBC) products. Video by itself would help identify the theft after the fact. I’ve seen supermarkets with up to 200 cameras in them and to pro-actively address the theft attempt you need a data point to alert them to the product movement. A possible solution here might be a RFID reader mounted above the HBC product. When a specified amount of the product leaves the shelf our video management system receives the signal from the RFID reader and pushes real time video to the security manager to let him determine if it’s theft.
RFID tags are an ideal platform to store and connect the different data points to create an Iot-enabled environment. Already quiet popular, RFID has the potential to keep integrating with different systems to improve store management and shopping experience, however , seamless integration still has a long way to go.
Connecting the different systems in the store to create an IoT environment is still an obstacle. Technology is not yet 100-percent mature and end-users are still locked into proprietary systems due to lack of standardization. “As per our understanding there are two major challenges in retail environment for full-fledged adoption of IoT and RFID. The first is that omni-channel retail requires 99 percent or higher inventory accuracy to efficiently and effectively promise product availability for customers. The retailer assumes the risk and cost associated with filling orders from a broader set of distribution points. A major challenge for retailers who sell multiple different brands is to enroll all the vendors to sign for the tagging program. Shoppers now make more than 10 percent of total retail purchases online or on a mobile device, and when they click on an item to find out if it is available to order, they expect that information to be available immediately. If it is not available immediately, they can simply shop somewhere else. The second is that retailers ultimately want universal tagging and automated checkout processes that are both reliable and secure. Mobile self-checkout is still not 100 percent trustworthy as they may not have built-in loss prevention mechanisms,” Ghaisas explained.
Another problem is lack of standardization. “There’s certainly talk of standards, and I personally feel standards are very important so that device manufacturers and data consumers don’t need to reinvent the wheel with regularity. However, there have been no substantial moves in that direction yet. It’s still difficult to integrate disparate devices into a single platform,” said Shaw.
FUTURE OUTLOOK
So far, IoT technologies in retail focus on two main aspects, improving store operations (e.g., better inventory management), and marketing and customer engagement (targeted marketing and messaging). Opinions differ as to which of these two domains will be more prominent in the next few years.
“I think both are important, but I think it’s pretty clear going forward that focus will be on the customer experience, and will be driven by marketing. The challenge of brick-and-mortar retailers is giving shoppers an incentive to visit the store, and, ultimately, that comes down to the in-store experience. Optimizing that shopper experience is essential to the success and survival of brick-and-mortar retailers,” said Shaw.
Toshiba’s Hwang sees a greater value in store optimization. “Customer engagement is the ‘holy grail’ for retailers, what do consumers like and what do they want? The industry doesn’t want to turn people off and is still trying to sort out whether customers will be willing to participate in these initiatives, e.g., should they be ‘opt in’ or ‘opt out’? What about privacy concerns? Will consumers agree to data being collected about them? There is still no expertise regarding the issue, not with retailers or consumers,” he said.
According to Hwang, retailers are still unsure in regard to how consumers will react to data being collected on them and therefore are hesitant in adopting new solutions. However, there are a few fields where ROI is clear and sought-after. “In the near term the impact of IoT will be strongest in utility management and building management. There is a lot activity in the field of smart meters and other sensors. Many retailers have a large real state footprint and efficient energy usage has a very apparent ROI in cutting utility costs. Store optimization and labor management is also gaining momentum. Here you don’t require too much engagement from the consumer, there no issues of privacy and dealing with the messiness of consumer acceptance and opting on,” added Hwang.
“Actually i think that’s all connected. IoT will bring all these aspects together and bind these aspects to make sure that better inventory management and sales predictions will help store staff and retailers to spend more time and energy in engaging with customers, providing better service and interacting with them through a larger emphasis on marketing, customer engagement and customer satisfaction,” added Thomas.
Retail revolves around the consumer, getting them to buy more and more. Interestingly, a successful deployment of IoT in retail might not be apparent to the shopper. “If retailers deploy IoT effectively, shoppers won’t know. The eventual outcome is a seamless, branded experience for the shopper. Retailers might think in terms of omni-channel or multichannel, but shoppers don’t. They think of it simply as shopping,” concluded Shaw.
Retailers have a lot to gain from successful implementation of IoT and will be among the first adopters of this technology. Some of the solutions currently being discussed are still far from realistic and companies are experimenting with many new technologies. To make sure adoption is successful and long-lasting, companies should remember to stay focused on the shopper and come up with solutions that bring benefit to consumers and retailers alike.
Source: asmag Magazine
