For Retailers the Dawn of the Internet of Things

Maybe it is pure coincidence that we posted two stories today related to the evolving concept of the Internet of Things (IoT). The concept itself is simple to understand ? marketers can learn more about customer behavior if customers’ activity is tied to methods of data collection. Probably the easiest example of this is for a retail store to identify a customer when they enter a store, such as via a smartphone app, and then send a signal to the store’s computer tracking system telling it to monitor the customer’s activity. This could also extend to newer mobile communication devices, including glasses (e.g., Google Glass) and connected wrist watches.

But as pointed out in both the story from Stores and the one from [email protected], the implications of IoT are not only about customer tracking. The Internet of Things may present a paradigm shift in how retail activity is managed. For instance, IoT may permit customers to walk into a store and walk out with products without stopping at a checkout line. Retailers may also be able to send specific promotions and other value-added services (e.g., recipes, design ideas, clothing suggestions) based on products customers have purchased.

The Internet of Things is not limited to monitoring product purchases, it also includes the use of sensor technology to assess store inventory (e.g., sends a message when stock is running low), change promotional displays (e.g., senses certain customers and delivers targeted messages), and tracking store traffic patterns (e.g., watches how customers move around the store).

Additionally, at a more advanced level, IoT includes products where sensors are embedded. For example, a bottle of wine may contain a sensor that could send a message back to a retailer indicating when the bottle has been emptied. The retailer can then text or email suggestions or promotional information for the customers’ next purchase.

Of course, privacy issues are the hot topic with the Internet of Things. The presumption on the part of marketers and technology folks, who are at the forefront of IoT, is that customers will want to give up some degree of privacy in order to obtain the benefits provided, such as individualized promotions and other loyalty programs. That, of course, will be something to watch.