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The retail industry is undergoing a dramatic transformation. Brick-and-mortar retailers, including those that have expanded into the online space, are rethinking how they can compete toe-to-toe with the likes of Amazon, Walmart, and other online giants who lure customers with vast and quickly searchable inventories, personalized offerings, and crowd-sourced recommendations.

Of course, traditional, location-based retailers offer the advantage of in-person product interactions—being able to touch items or try clothes on—as well as the gratification of walking out the door with purchase in hand. But ultimately, to compete in the long-term, traditional retailers must reshape the customer experience into something more personal and immersive.

And that’s where the internet of things (IoT) in a retail environment can help. IoT for retailers presents some amazing opportunities to dial in the customer experience. IoT-enabled devices like beacons, video cameras, signage, RFID, and even smart shelves can provide real-time data insights on customer history and preferences, traffic patterns, and behaviors that can add up to increased sales and streamlined operations.

Below, I’ve outlined several ways that retail IoT can help traditional retailers compete more effectively. For greater depth, be sure to sign up for the IoT in Action webinar from Microsoft: Making IoT Mainstream in Retail (coming March 8).

Increasing retail revenue through IoT

Two key areas come to mind when it comes to increasing brick-and-mortar retail revenue: inventory management and personalization.

Accurately managing, tracking, and predicting the right inventory levels to meet customer demands is a common challenge across retailers. According to IHL, overstocked and out-of-stock items cost retailers approximately $1.1 trillion annually[i]. IoT technology such as RFID can help ease this pain point by increasing inventory accuracy to 99%[ii]. The real-time insights can help retailers predict customer demand to ensure shelves are stocked at the right levels and even facilitate automatic replenishment, ensuring increased revenue and happier customers. IoT technologies can also counter inventory shrinkage due to shoplifting, employee theft, and vendor fraud.

Personalization is something online retailers have down to a science, and consumers have come to expect it. IoT gives brick-and-mortar retailers the ability to get in the game and provide shoppers a more immersive, custom experience. Imagine walking into your favorite department store. Your phone vibrates, and you see an alert that your favorite brand of jeans is currently 30% off. IoT-enabled beacons can alert customers to compelling promotions that align with their personal preferences and shopping history.

Streamlined retail operations through IoT

IoT can help with multiple operations areas from layout efficiency to staffing to environmental controls. IoT-enabled sensors can deliver insights into shopping patterns and customer behavior that can then be used to optimize traffic flow and product layout to help shoppers to find items more quickly, increasing overall satisfaction.

Through connected IoT devices, retailers can get a much better sense of consumer behavior in the store to secure labor and productivity savings. Data insights can be used to optimize staffing levels and labor distribution to pre-empt lines and better meet customer demands. Advanced IoT even has the capability to check out customers automatically. 

And then there’s facilities management. IoT-enabled devices help retailers to save money by optimizing lighting, freezers and coolers, or HVAC. They can also use IoT to monitor equipment to reduce service calls and extend life by getting equipment serviced before damage is done.

IoT in Action Webinar: Making IoT Mainstream in Retail

Register for the IoT in Action Retail webinar on March 8, 2018, to discover how Microsoft enables retailers to deliver personal, seamless, and differentiated customer experiences. You’ll hear from industry experts at Microsoft and see key solutions from Microsoft Retail IoT Partner, Footmarks. For more on IoT, check out the new IoT in Action webinar series.


[i] IHL Group (2017), “What will it take for IoT to scale in retail?” available at http://www.ihlservices.com/product/what-will-it-take-for-iot-to-scale-in-retail/ (accessed 8 Feb. 2018).

[ii] IHL Group (2017), “What will it take for IoT to scale in retail?” available at http://www.ihlservices.com/product/what-will-it-take-for-iot-to-scale-in-retail/ (accessed 8 Feb. 2018).