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IoT in Retail: Changing the Customer Acquisition Landscape


IoT in retail has the ability to complete revolutionize customer acquisition. In the world of retail, customer acquisition holds great importance. Retailers focus a considerable amount of effort in many channels to acquire new customers.  While the cost of customer acquisition continues to rise, and consumers become more fickle, retailers need new tools to attract new customers. The Internet of Things (IoT) offers an innovative, data-driven approach to attaining customers. 

When technology offers opportunity, retailers should take advantage of it. IoT in retail is enabling more connections and smarter workflows across the spectrum. It’s transforming the way in which retailers strategize to attract and gain new customers. In fact, the potential economic impact of IoT in retail could be as much as $1.2 trillion in 2025. Let’s look at IoT’s impact on customer acquisition and its future state.


How Beacons Work

One important part of IoT in retail is the use of beacons. Beacons are small Bluetooth devices that send alerts to smartphones based on proximity. They were first introduced by Apple in 2013. In the retail industry, beacons allow for customers to receive messaging, which could include discounts, special events, or other reminders.

Macy’s was an early adopter of the technology and began using beacons in 2014. When customers open the Macy’s app in-store, alerts on promotions and discounts are sent. The app also knows where the shopper is in-store. If a shopper enters the shoe department, it might remind them of brands they liked online.

Beacons work with customers in-store but also passersby. Alerts can lure customers into the store through appropriate promotions. This strategy does work as research has found that over 70% of shoppers say beacon-triggered content and offers increased their likelihood to purchase in-store.


More Data Drives a Better Understanding of Customer Preferences

Retailers collect a variety of different kinds of data related to customer preferences. Each connection shoppers make with retailers is available in a heap of data. Everything from customer loyalty cards to online purchases is all available to retailers for examination and analysis to discern buying patterns and behaviors. IoT in retail takes this to the next level.

Consider this example. Customers are extremely tech savvy, especially those that are digital natives. Many use apps in-store to shop or obtain more information. By using IoT sensors in-store, they may determine that lines are longer than expected. Sensors detect this then send a push notification to app users with some kind of incentive to remain in line. Because you “know” this customer, you have insights on what motivates them, whether that be a discount on a particular item or a prompt to remind them they can use self-checkout.


Discounts Get Personal

For frequent shoppers, wouldn’t it be nice to reward them for their loyalty? Customer acquisition isn’t just about getting new customers. Retaining the ones you have is also a part of the puzzle. With IoT, retailers have the ability to set up sensors throughout the store. These sensors are triggered by a customer shopping in that area. If the sensors pick up a “known” device, it can then push information about the items in that general area.

Here’s an example. If a shopper is looking through a selection of jeans, and that customer has the store’s app or is using the store’s Wi-Fi, then the smartphone and its owner are recognized. Maybe the customer profile for this shoppers has data about past purchases or other customer preferences. And just like that, a push notification or text could be sent to offer the customer an extra discount on jeans or a reminder that certain jean styles are currently on sale.

Additionally, IoT can track items a customer viewed online then send the customer a personalized discount when she arrives in-store. Imagine if your data-driven machine learning engine knew that the customer was looking at jeans online then visited your store. Rather than offering some general discount, it could be tailored to fit that customer.  Think of the impact to your conversion rates.


The Smart Fitting Room

Fitting rooms have been part of the retail experience for decades. It’s time for an upgrade, which can have a significant impact on customer acquisition. If a shopper is trying on clothing, then they are much closer to making a purchase than other browsers. By delivering a smarter fitting room experience, retailers can deliver incentives to close the deal.

Smart fitting rooms are becoming a huge trend. Designer Rebecca Minkoff’s stores have a connected glass shopping wall in fitting rooms that are collecting a lot of data on this specific experience. RFID tags tell define what items are currently in the room. Associates can then offer additional complementary items based on this data.

Through the wall, shoppers have the opportunity to see if a particular size or color is available in the store. If it’s not there they are offered a shipping option. This interactive experience didn’t require the sales associate to hunt down any items. It’s just become easier for the shopper to purchase something the store didn’t even have. Shoppers are happy and frustration-free.

Another great use for beacons in-store is simply as a sensor that notes when people are in the area or touch a specific item. These beacons, when activated, can then serve up in-aisle messaging on digital screens. Imagine your customer browsing makeup aisles.

Makeup for most is a very individualized purchase based on a variety of factor like skin tones. If the aisle was “smart,” sensors would know when a user touched a certain brand. This could prompt specific messaging about that brand with promotions around speaking to what shade of lipstick would look great with the foundation they picked up.

This messaging and how personal it feels could lead to much higher acquisition rates. It’s something that can be tracked as well. Retailers would know if that messaging prompted that piece of inventory to then be purchased moments later.


IoT in Retail Drives Customer Acquisition

IoT in retail has the ability to impact many areas of retail. When the impact equates to stronger customer acquisition, then it has real impact to your bottom line. Technology and retail really are a well-suited pair. There are so many opportunities. Explore them with a retail tech expert like CB4. We take you from patterns to recommendations to make the retail experience enhanced for shoppers and more profitable for you. Connect with us today to see how we can help you acquire more customers with smart technology.


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