From sensors in shopping carts to mannequins that send notifications to our smartphones, the Internet of Things (IoT) is transforming the retail in-store shopping experience dramatically.
Nearly 50% of retailers worldwide have deployed IoT technology, and 56% are allowing personal mobile devices to access the network in order to create new and engaging retail experiences, according to a study from Aruba Networks.
The study found that 80% of businesses that adopted IoT devices reported efficiency improvements and 72% of executives said IoT delivered increased profitability.
What’s surprising even more surprising is that 30% of retailers are using these networks to support location-based services that deliver personalized offers and product information to shoppers and only 18% of retailers with IoT deployed are using the technology for energy savings purposes such as remote control of in-store systems such as heating and lighting.
As more retailers adopt IoT technologies, they are seeking “smart spaces” capable of capturing the flow of customers and commercial retail owners need to understand these trends to better differentiate themselves from competitors and attract long-term tenants.
5 ways retailers are using IoT in commercial retail spaces
1. Retail in-store navigation with IoT-enabled devices
Have you ever walked into a grocery store and wondered which aisle your must-have organic brand of peanut butter exists? Identifying items or in-store navigation is one of the common problems that customers encounter in retail stores.
Retailers are now using IoT devices or sensors with integrated technologies like Bluetooth, Wi-Fi, magnetic positions and augmented reality, called beacons to help customers find their desired products faster. Research has shown that in-store navigation helps increase the path to purchase rate.
In addition to finding your peanut butter, your grocery store can now send you promos for items on sale that you might be running low in stock based on your last grocery list.
These solutions improve not only a customer’s in-store experience and but also the footfall ratio and conversion rates generating a powerful shopping environment that can help enhance product offerings and store layouts.
2. Energy management with IoT smart devices
Energy consumption is a significant cost consuming factor for most retail businesses, be it in refrigeration, lighting, heating, and air conditioning. Using these energy sources efficiently can bring cost savings of up to 20% per year.
Several IoT-based platforms that log, monitor and beep alarms or alert the in-store personnel about temperature, energy usage, heating, gas leakage and electricity breakdowns.
While in most leases tenants are responsible for paying utilities and other costs, the lure of 20 % cost savings in a building equipped with the IoT devices can be a huge plus especially in procuring long-term tenants such as grocery stores.
3. Theft prevention with geo-fencing
Nearly $25 million worth of merchandise is stolen from retail shops each day, according to the National Association for Shoplifting Prevention (NASP). Retailers are starting to use an IoT based geofencing technique to prevent retail shrinkage, which often includes shoplifting, employee theft, and paperwork error.
Geo-fencing relies on the global positioning system or a radio frequency identification (RFID) tag that allows a store operator to create a virtual barrier or zone around specific locations in retail shops. When a customer tries to move product from the particular location, an alert is triggered, and a message is sent to the store in-charge.
Geo-fencing enabled in IoT devices or beacons can help retailers in keeping goods safe, tracking customers and employee movements, managing company-owned resources to minimizing incidents of theft and loss.
4. Digital signage for personalized advertising
As in-store retailers, face-off with online shopping and e-commerce giants like Amazon personalized in-store advertising is starting to emerge. Retailers are now able to collect insights from customers’ in-store behavior, social media, shopper preferences using IoT devices to offer personalized promos inside the store.
Now the mannequin in the window or a digital advertising billboard could carry a sensor that ‘talks’ to the smartphones of passersby sending customers personalized ads and offers based on their preferences. Digital smart screens will soon use facial recognition to identify the customer and change their display to something tailored to them based on customer data.
5. Heat maps enable retailers to meet real-time shopper demand
Since store staff can’t be everywhere at once, more retailers are using heat maps to monitor day-to-day operations. Heat maps help retailers zero in on things like heavier-than-normal crowding around popular merchandise- prompting managers to set up additional displays or re-distribute staff to locations with high traffic such as dressing rooms.
Retailers are also using heat maps on a broader scale, by comparing a route from one location to that of another to test new layouts in one or multiple locations and analyze analysis of traffic patterns to pinpoint dead zones or bottlenecks that may be remedied by adjusting store layouts or relocating merchandise.
Preparing for the future
With the cost of sensors, data storage, and connectivity all falling, more firms will move forward in adopting IoT applications. Tenants will likely soon come to expect IoT features, meaning that a building lacking them may trade at a discount.
The potential growth in worldwide IoT sensor deployments for the commercial real estate market is expected to grow 78.8% between 2015 and 2020, according to a report by Deloitte Center for Financial Services.
The data collected from IoT devices is fast becoming a differentiating factor when it comes to attracting prospective tenants. Building owners with information about foot-traffic, occupancy rates, and customer flows are using data to market their properties to prospective tenants and better compete in the marketplace.
Retail commercial real estate owners who can meet unmet consumer demands and provide more sophisticated services to their tenants and transform tenant and user experience, could charge premium prices and improve margins.