The Internet of Things is going to make shopping a far more personalized experience. Stores will be able to tailor your shopping experience to your specific needs through the use of real-time analytics. They will be able to predict what you want, how often you want it and where you will want to buy it. Stores will use sensors to track both customer movement and inventory. Facial recognition will be used to create a shopper profile to identify both high value customers and known shoplifters. The data from these devices will allow stores to operate at a far more efficient level and personalize customer recommendations much more effectively than ever before. This, and more, adds up to the new face of the connected retail environment

1. What is the Connected Retail Environment?
By Tom Howells, Fraud & Technology Wire
December 7, 2015
Online shopping never really managed to run physical stores out of business. So, now the two
are melding into one. The Internet of Things is going to make shopping a far more personalized
experience. Stores will be able to tailor your shopping experience to your specific needs through
the use of real-time analytics. They will be able to predict what you want, how often you want it
and where you will want to buy it. Stores will use sensors to track both customer movement and
inventory. Facial recognition will be used to create a shopper profile to identify both high value
customers and known shoplifters. The data from these devices will allow stores to operate at a
far more efficient level and personalize customer recommendations much more effectively than
ever before.
Applications and Devices for the Connected Retail Environment
Inventory Optimization
There has always been a discrepancy between the inventory a retailer buys and the amount
they actually sell. Inventory shrinkage occurs due to shoplifting, employee theft and vendor
fraud. It’s estimated that shrinkage costs stores around 1.3% of their revenue. Video
surveillance technology combined with real-time video analytics can make make identifying
thieves more effective, especially if it is combined with RFID (Radio Frequency Identification) to
track individual items.
Monitoring the supply chain is another problem that retail stores face. Often predicting
demand for a particular item or a particular size has proven problematic. IoT can change this.
Shop shelves with built-in scales can track how inventory moves and automatically order more

2. from a manufacturer when supplies fall below a certain threshold. Over time, big data analytics
can be used to predict demand at stores and optimize, for example stock outs, in the supply
chain.
The Internet of Things can also be used to track the health of machines used in the retail
industry, like vending machines and ATM’s. Sensors can be used to monitor wear and tear on
parts in machines, allowing preventative repairs to take place before the whole machine breaks
down.
Customer Tracking
There is definitely pushback when it comes to cameras being used to track customer movement
in the retail environment. Stores like them as they can track where customers are going within
the store and can use this information to maximize revenues from strategic product placement.
The company Enlightened has come up with a non-invasive, anonymous way to track customer
movements; they put sensors in the light bulbs. These sensors cover anywhere the light reaches.
They can do the same job as cameras without tracking the identity of faces that pass by them.
Using the data these sensors obtain, retailers can identify areas in the store that encounter the
greatest foot traffic and place items accordingly.
Stores have started using Apple’s iBeacon to track customers as they go through a store.
This option is also preferable to cameras as customers can opt in or out by turning the Bluetooth
on their phone on or off. The iBeacon allows stores to see what customers are looking at based
on their location in the store. They can also monitor how long customers have been in the store
before they are offered assistance.
Companies can now track customer spending like never before. There is no longer a
divide between online and offline shopping; they are now the same thing. A retailer can track
what you have been browsing online and send a coupon to your phone as you near the store.
Based on your previous purchase history, retailers can use analytics to work out what you want
to buy and what your price point is for those products.
Loyalty cards are already used in most supermarket chains. Loyalty cards track what you
buy and offer promotional coupons based on past purchases at the checkout. The loyalty card
allows the supermarket to use big data to create a customer profile for you and also allows the
store to maintain inventory based on the characteristics of the customers that shop at that
particular branch of the chain.
Point of Sale
The traditional process for buying a product is typified by: find the product in the store, wait in
line to purchase it, perform a monetary transaction and walk out the store. The Internet of
Things is changing this. RFID tags emit data across electromagnetic fields that are picked up by
sensors. The continuing decrease in the price of RFID tags means they can be attached to almost
any item. These tags will be used to completely automate the checkout process to the point that
customers won’t even have to take items out of their shopping cart. Customers will walk past a
scanner that picks up signals from each item’s RFID tag, tallies up the price and then charges
your mobile payment account as you leave the store. Customers won’t even need to swipe a
credit card. Companies will also benefit from automated checkouts as they won’t have to
employ as many checkout attendants.
How Big Will the Market Be for the Connected Retail Environment?
The main benefits of IoT for the retail industry will come from the automated checkout. By
automating checkouts, retailers will be able to reduce staffing by up to 75%, which will cut costs

3. by as much as $380 billion in 2025 across the industry. This will also reduce checkout line times
by up to 80%, saving up to $135 billion in time. Overall, retail has the potential to create an
economic impact of up to $1.2 trillion a year by 2025 by adopting IoT technologies.
Risks for the Connected Retail Environment
One of the main concerns with IoT in retail is there are some options that do not give customers
the ability to opt out; if you walk into a store, you are effectively providing consent to let the
retailer create an online profile of you by either tracking your face as a unique identifier or
tracking your phone as you move around the store. It also appears that using video technology
without consumers consent is on the way to becoming the norm. Privacy advocacy groups have
given up in their attempts to secure standards for the use of facial recognition technology. They
walked away from 16 months of talks with retailers as they felt they wouldn’t be able to get the
privacy levels they felt consumers deserved.
Even though you are the only individual with your face in the world, this data is still
hackable and just as 40 million Target shoppers had their credit card information stolen through
hacking, facial recognition doesn’t help the problem. Target’s systems were infiltrated by a
hacker who compromised their heating and cooling supplier using a phishing email. From there,
the hackers stole a Target employee’s login credentials and then analyzed the network until they
found the company’s internal server for thousands of registers where customers swipe their
credit cards. They then installed malware which copied the details of every card swipe that took
place. Already with facial recognition technology, police use software like PittPatt to find an
individual’s name and social security number within two minutes. All you need to impersonate
someone to one of these systems is a photograph of that individual.
This article is part of our series called “A Guided Tour to the Internet of Things in the SIM
Connected World”. Next week we will be discussing the connected office, which will transform
the way we work.
Tom Howells is a contributing writer for Fraud & Technology Wire (www.fraudtechwire.com), a
weekly publication sponsored by Argyle Data, Inc.