Background

The Internet of Things (IoT) is a key in the digital world of connected living. The networked objects may be ‘smart’ (i.e. embedded with some processing capability), they may be objects that have been tagged with unique object identifiers (e.g. Radio-Frequency Identification or RFID for short, smart labels) that identify and link virtual information to the physical objects via smart devices or augmented environments. Smart environments in which these services are enabled are frequently location aware (location of people and objects). IoT services are designed with the goal to enable people to interact with these networked objects in order to provide an added value to businesses and people. It is worth noting that there is no standardized top-down design approach when it comes to IoT infrastructure.

Drivers for Change

1 Change in Customer Behavior and Expectations

One of the key drivers in retail is an increasing demand for a seamless experience between online, mobile and in-store shopping. Many brands understand the importance of a unified user experience and have started streamlining online and in-store shopping experiences to provide a more uniform environment. An example is the fashion house Burberry – the flagship store in London’s Regent Street mirrors many of the design elements found in the online presence and vice versa. One can also experience an increase in multichannel retailing with high street brands using their physical retail stores to fulfill online orders. It has to be expected that retailers will further integrate online and high street shopping experiences in the near future.

2 Multichannel Retail

One of the current buzzwords in retail is “metailing”. The idea behind me-tailing is that retailers offer highly personalized interactions with customers based on information gathered in real-time through mobile, social and instore channels, as well as any other customer touchpoint16. This vision of providing such personalized experiences implies that retailers are prepared to harvest the data from multiple channels and convert it into intelligence that adds value for the customer but also for the business as it can help identify those customer segments that are deemed most profitable.

2.1 Curation

One of the trends in retail is the curation of products. Retailers are increasingly searching and filtering a multitude of information about products with the aim to organise and present it to shoppers in meaningful ways. One can see that this can be a very successful strategy.

2.2 Payment

Another area where Internet of Things technologies will impact retail is mobile payments. It is already possible in many shops to use NFC readers, tap and go systems or virtual wallets and the number of shops that support these forms of payment will likely increase at a fast rate. Customers appreciate the simplicity and convenience that many of these transaction systems provide while for retailers mobile payments provide opportunities to engage in more personal ways with their customers e.g. through loyalty schemes.

3 Technical Building Blocks

Internet of Things applications in retail are often based on recurring technological building blocks. In this section we identify and discuss some of these frequently employed technologies and their purposes in retail.

The IoT-enabled Retail Space of the Future

To date most of the deployments of IoT technologies in retail have focused on the inventory and supply chain management with RFID tags used at the stock keeping unit (SKU) level (i.e. pallets or cartons) rather than at the item level (i.e. tagging individual merchandise). Item-level tagging has been reserved to higher value items due to the historical cost of RFID tags. However, there are other reasons for the resistance to item-level tagging as well as cost.