The 'Internet of Things' and Big Data Application in Retail


What is the Internet of Things?

Whilst not yet a full reality, The Internet of Things (IOT) is a future technology concept, expected to become widely established in the next 5-15 years, that could potentially change society and our interaction with the environments we live in forever. IOT is a network of any objects (Things) that are embedded with connectivity and sensors to communicate and exchange data with other entities such as the operator, other connected devices or the product’s manufacturer or retailer.

This creates an interconnected ecosystem of unique devices that can perform tasks for the operator more effectively and efficiently because of the data gathered and communicated by and with other devices in the system. This interconnectivity of smart, every-day objects may enable automation and intuition so a user could experience personalised usability with ease, like never before.

Any person, animal, device, physical object or ‘thing’ can be equipped with a micro computing device and a unique Internet Protocol address which therefore assigns a unique digital identity to each object. The unique addressability of each object is important in being able to communicate directly to only the applicable item. Each object can receive input in the form of data from its sensors or other objects/users and communicate that data in a meaningful way via the internet or a network autonomously and intuitively to a person or other entity such as another device or object. The data gathered could be internal or external and be used to improve the efficiency of the usage and the user (person). The challenge for developers is to be able to process the vast amounts of data that each ‘thing’ will receive and turn it into something meaningful and workable for the object and the system it exists within.

What is Big Data:

Big Data is a term used for data sets that are are so complex or big that traditional methods of processing and analysing data are inadequate for drawing meaningful insights or conclusions from it. Big refers to being too complex and too much data. Along with being complex, Big Data can be characterised by the V’s

Volume – Data size is ‘Big’ in number of data pieces.
Velocity –Big Data is generated quickly. The rate information is generated needs to match the speed of the analysis of that data.
Variety – Data needs to be categorised when analysis occurs to use it effectively so Big Data is often varied.
Variability – Big Data is often inconsistent which makes it hard to analyse.

Big Data is the type of data that is likely to be gathered from an environment with interconnected ‘smart’ objects. This means that the systems receiving and ordering the huge amounts of complex data need to be sufficient in order to effectively analyse and communicate and exchange information for the IoT to work efficiently and seamlessly.


‘Smart clothing’ may be able to communicate the state of the wear & tear on a garment, perhaps extending to the mood of the wearer, the physical location of the garment/user, frequency of wear (satisfaction of purchase?) and more. Retailers could use this information to improve the experience and relevancy of their communication to their customers.

Your company’s future smart interconnected inventory therefore would also need a smart merchandising plan for bricks and mortar locations, intuitive website user experience, social media & search plan and analytics for all of the above to better service the flow of individual customers through all of your revenue-generating channels.

How your products & customers interact with the world around them and your business is changing.

How your products & customers interact with the world around them and your business is changing.

Internet of Things is forever changing the retail experience

Back in 2014, Google bought Nest for over $3 billion, one of the biggest names in home automation, in 2018 Amazon launched AWS IoT Analytics, cloud-based platform allowing connected devices to communicate, and for the results to be analyzed. 

IoT is being used to personalize the in-store experience with offers connected to purchase and browsing history. It is providing invaluable insight into buying behaviours, allowing retailers to surprise and delight consumers across various channels. What is clear is that the retail landscape is certainly painting a more dynamic and interesting picture than the more traditional retail models of 20 years ago.

Although currently, companies are happy gleaning insights from existing data, they will also be looking for new information sources as the advantages offered by big data analytics become more mainstream. One way of maintaining competitive advantage is to deploy IoT in retail – an industry, which, according to a new research report by Global Market Insights, Inc., is predicted to reach over $30 billion by 2024. With 77 percent of retailers Verizon believing that IoT solutions help improve customer experience, we can expect to see many more brands employing IoT and analytics in their strategies going forward.


An aid to personalization and premiumization

IoT ultimately helps a brand to establish strong consumer connections, that are not based on pricing strategies alone. Once a consumer’s data is used effectively, a brand can compete more easily as they can improve stickiness by really understanding what a consumer wants. This approach lines up well with the current retail climate, in which consumers are paying more attention the brand. The focus in retail is now also about refining brand culture, aesthetic details, quality, personal customising, premiumization, connection construction and end-to-end experience. AI can accelerate the adoption of all these elements.

Clothing store Uniqlo is pioneering the use of science and AI to create a unique in-store experience.

Clothing store Uniqlo is pioneering the use of science and AI to create a unique in-store experience.

Decreasing churn and a sharper focus on the customer

We already know that attracting a new customer is up to seven times more expensive than keeping an existing one. IoT and Big Data application eases the task of remembering past purchase information, previous searches, and orders, suggesting complementary products and ensuring shipping details are correct. Data can also give insight into patterns of long-standing customers and, through clustering algorithms, can divide the customer base into groups, and help companies identify leads, personalize promotions and ultimately return churn with a slicker customer experience geared around the individual.

Clothing store Uniqlo is pioneering the use of science and AI to create a unique in-store experience.


Planning ahead 

Big data can also positively affect a company’s long-term view, and help brands to adapt their promotions and offers quickly, depending on the latest market demand. If a retailer is able to analyse buying patterns more closely, more appropriate pricing models can be created, instead of sticking to the traditional end-of-season sale model. For example, many travel website have used very adaptive pricing models depending on the popularity of specific destinations and the customer’s location identified by the browser’s cookies.

How will your business plan for the long-term potential applications of Big Data and The Internet Of Things?

Sam Clode