The store is not dead

The digitization trend in retail is much deeper that is commonly believed. It concerns almost every aspect of the business: supply chain, warehouse management, customer experience, sales channels, as well as what is perhaps the most associated with retail: the stores themselves.


The shops are changing, and their role in the retail value chain is changing, too; but they certainly will not disappear from our environment. The desire for the retail’s Holy Grail – for the omnichannel – leads to the disappearance of the border between the physical store, and the Internet one. This is due to various technological solutions, of which the Internet of Things (IoT) is especially interesting. More and more devices can be connected to the network, allowing them to communicate and exchange information with central servers or among one another. The number  of such devices worldwide in 2018 was 23 billion[1]. By 2025 this number will triple. This leads to new possibilities for the automation of human activities and processes, which were quite difficult to imagine before.


IoT for the shops.

IoT is not a novelty. Such solutions have been successfully implemented all over the world for several years now. We are seeing a steady increase in the number of such implementations, and the IoT market is in the stage of universal and mass adoption. One example is the RFID technology.


Thanks to the special tag (with a built-in microchip) attached to each product or package you can read them from a distance using radio waves. You can read them in bulk at once and you do not need to have them in front of your eyes, as in the case of the barcode that you need to check individually. This results in increased data accuracy across the entire supply chain, as well as significant process improvements – varying in importance depending on the specific retail sector.


Thanks to the RFID, fashion retail has reduced inventory time by up to 80%. This allows to run inventory checks much more often than the standard 1–2 times a year. The access to inventory information in retail stores in real-time – means lesser losses during the process, lesser lost sales due to lack of products demanded by the customer, as well as a better support for e-commerce and omnichannel through error-free Click & Reserve or Click & Collect.


Food or pharmacy sectors should think differently about optimizing processes using RFID systems. It is not necessary to add geotagging to each individual item (for example, a piece of butter or a shampoo bottle); improvements can be achieved in the supply and logistics process. For example, labelling storage containers gives you more control over whether or not shipping gets to the right store, how long it takes, and if the container was returned – and if so, in what condition it was.


Jewellery shops should pay attention to the RFID aspects that increase the safety of their goods. Special antennas located in the counters provide complete information about what, when and how long an item was viewed and tried on, and was it returned on the shelf. Daily inventory of goods will also be significantly accelerated or even automated.


IoT is not only RFID

An interesting area which has also been revolutionised by IoT-related technology is the maintenance of the store chains. Customers expect a phenomenal shopping experience every time they visit the shop, they expect comfort and proper conditions. Any failure, either a broken air conditioning or a broken cash register is a potential loss and means a dissatisfied customer.


A lot of environmental parameters can be measured today: temperature, humidity, air quality, vibration, and the sound produced by various devices, or even their energy consumption. A comprehensive analysis of such data provides knowledge which the unequipped human eye and instinct are unable to observe.


For example, looking at the electricity consumption of a device over time, you can make predictive data analysis and foresee when a malfunction will occur. On this basis, the recommended time of maintenance or service is selected, which does not necessarily have to be similar to a regular review of maintenance. That results in obvious cost savings. A completely new model of action for both retail and facility management companies, this model is known as Predictive Maintenance. It is precisely the direction we have chosen, and we already see that this is the only right road.


IoT in customer service

Most of the technologies from the IoT family are not directly visible to the customer, however, they affect the improvement of customer experience and customer interaction with the store and the product. Let us take NFC as an example. It works just like RFID bus uses a much shorter distance, of up to a few centimetres (NFC is known, for example, for contactless payments). It also has the advantage in that every new phone has a corresponding reader. An NFC tag can be placed on a shelf or in a price tag, and the phone’s app triggers an action on it, such as opening a web page or displaying information about a product or discounts.


Data is the new crude oil

The technologies described above have an important common denominator. They are not necessarily valuable in themselves. Nevertheless, they allow to collect a huge amount of data on key processes and aspects of the retail business. The data allows more effective and intelligent decisions and the technologies themselves allow us to predict the future basing on statistics and Big Data analysis – which is, incidentally, so often confused with Artificial Intelligence (AI). Who would not want to know exactly what is going on in his business at any time?



Maciej Halbryt – Director at Sescom Innovation Lab, graduate of London School of Economics and Political Science, co-founder of PLUGin Foundation. Polish Innovation Diaspora. Passionate about new technologies and keen to find market gems through his work with start-ups.

The article was published in Retail Trends Polska magazine 1/2019, p. 58.


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