The Internet of Things (IoT) is the network of physical objects that contain embedded technology to communicate and sense or interact with their internal states or the external environment. The topic was a key item on the agenda at the recent National Retail Federation (NRF) 2015 expo in New York and has the opportunity to be truly transformative. It’s an area of retail that is full of buzzwords, but is likely to have a significant influence on future customer retail interactions.

Gartner predicts that there will be 4.9 billion connected things in use during 2015 (up 30% from 2014) and 25 billion in use by 2020. The IoT will impact all facets of consumer’s lives including ‘connected’ cars, homes and offices.

There is a significant opportunity for brands to use the IoT for retail innovation and connected products to make their instore experience more immersive. One tangible example is customer checkout - imagine being able to walk into a store, grab what you want and simply leave. Through a range of sensor technologies placed strategically around stores, retailers will be able to recognise customers uniquely as they enter the store, stores will have customer payment preferences on file, customers will then be billed when they leave the store with the merchandise, essentially bypassing the checkout.

The Internet of Things has the opportunity to be unobtrusive, reduce customer fiction and provide efficiencies (particularly at peak times), however there are opportunities for more immersive experiences. For example, using connected products to allow customers to learn more or have personalised recommendations made for them instore. Retailers could present information in the physical store that the customer has already researched online via their laptop or mobile device. Meanwhile, credit card providers have already partnered with several retailers to offer real-time promotions based on a customer’s location and credit card activity.

The number of connected devices in the IoT will generate inconceivable volumes of data. To provide perspective of the scale of data involved, a new fleet of Boeing planes by Virgin Atlantic will reportedly generate half a terabyte of data per flight. Virgin Atlantic IT Director David Busman recently noted “Literally every piece of that plane has an Internet connection, from the engines to the flaps to the landing gear”.

Ultimately the IoT isn’t just a way to get people to spend more money - it’s an opportunity to help customers get exactly what they need and for retailers to gain a better understanding of each customer’s interests and habits.

Want to learn more?

  • IFTTT (If This Then That) is a service that lets you create powerful connections and a great starting point to understand the possibilities of connected services.
  • Harvard Business Review has a good synopsis of the complexity of managing privacy in the IoT.
  • Cisco has a good visual summary of how the IoT will help retailers and other businesses deliver information and offers to customers.