8.2 Internet of Things (IoT) and Connected Sensors

Retail leaders are beginning to create competitive separation by understanding where customers are in the store and using that information to meet their needs.

At this big-box store, Jill uses the retailer’s app to organize her shopping list and look for bargains. The store’s Bluetooth-equipped light sensors communicate with her phone to understand her location as she moves through the displays. Her experience reflects what studies have shown: shoppers are often willing to give up some privacy in exchange for a more personalized experience.

When Jill enters the health section, her phone lights up with a coupon for a branded headache reliever—a higher-margin product than she usually buys. A map created by a geographic information system directs her to the correct shelf. At checkout, the retailer learns whether the coupon triggered a purchase and updates Jill’s profile accordingly.

For retailers, the benefits of IoT go far beyond any one shopper. In aggregate, this data can inform decisions such as how to design an entire store. Jill and other users of the store’s app benefit from digital extras like coupons, but even those without the app contribute anonymously to improving the in-store experience.

By triangulating signals, the store can understand shoppers’ movements and answer questions like: Which product locations drew the most attention? What displays did customers most enjoy seeing? Mapping these insights helps planners modify store layout, product mix, and promotions.

This, in turn, enhances retail success—allowing traditional companies to close the gap with online competitors.