SAG_Twitter_MEME_Can_IoT_Save_Jun19Recently, Britain's high streets suffered their significantly as sales plunged by 2.7 per cent compared with last year, following four months of poor results.

In the US in the past three years, more than 45 retail chains have gone bankrupt.

Traditional retail is under attack: Higher costs, smaller profit margins, tough competition from online sales and thrifty consumers have ganged up to create the perfect storm of challenges. But do not despair; there is a lifeline to grab hold of: The Internet of Things.

Retailers have been slow in joining the IoT party. I see this anecdotally from my retailer conversations, but it has also been observed by the experts. In 2018, Gartner said that retailers were not prioritizing IoT, which is “potentially a huge miss, as the IoT will play a major role in digital business scenarios.”

For a number of years I have seen retailers investing in point solutions that could be considered IoT, but the data has remained in silos – restricting the ability to make informed or automated decisions leveraging it. These missing connections have meant that retailers have missed out on the “network effect” of IoT which amplifies the value.

McKinsey views the potential impact of IoT, specifically in a store environment, playing a key part in doubling store profitability. ong3

But even outside the store, I have long believed IoT technologies have a much bigger part to play.  It offers the potential of a truly connected and unified version of retail. 

At Software AG we call this “IoT Connected Retail” and we break it into three parts:

  • Connected Inventory. Inventory is a huge asset and liability for retail; McKinsey suggest that managing that alone can add 1-2% in EBIT margin improvement. IoT can allow product to be tracked throughout the entire supply chain but also within a store. It can also enable automated replenishment – a key step towards the fully autonomous retail supply chain.
  • Connected Store. By leveraging IoT, the store has huge potential for retail cost efficiencies. This might include smart shelves or electronic shelf-edge labels that provide real-time pricing or monitor sales and traffic. Gartner calls it “Real-Time Store IoT Platform,” where actions and decisions around deployment of staff or inventory can be automated based on real events.
  • Connected Customer. This is where customers interact directly with the retailer through an IoT device. This could be in-home ordering using a scanner such as Hiku, or providing contextual offers to customers based on factors like their location.


While I have seen many small initiatives along similar lines, they seem to get little traction.  Very often this is because the business case is not seen as big enough; probably because they are looking at the cases in isolation – the siloed data limits things. Only by linking all the different technologies together and eliminating the silos can you unlock the value of the data and benefit from the network effect that IoT provides. Only then can you hope to attain really good actionable insights - and perhaps even automated decisions across the business. This is where the fun really begins with automation reshaping the entire value chain.

IoT has huge potential to help retailers progress.

Find out how Software AG is helping retailers benefit from IoT by clicking below.

IoT Connected Retail

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