The Thing About Connected Retail: Security for In-Store IoT Innovations


JUNE 2019

By: Matt Goggin

The creative possibilities are limitless in the world of connected solutions making physical retail shopping experiences better for consumers while making retail operations, and bottom line results better for large chain and “big box” stores.

The retail industry has been undergoing a massive digital transformation for decades, with unprecedented price competition, the dramatic success of e-commerce platforms including Amazon, eBay, and countless other alternatives, combined with pressure on retail giants to continually improve margins is forcing change and reinforcing the upside gains when “bricks and mortar” are combined with “sensors and data.”

People still like to go shopping, and while it may seem that online buying will eventually completely undermine physical retail, the facts show that in the U.S., online sales still only account for less than 15% of total retail sales.

With a stronger economy, according to Internet Retailer, growth in retail sales in physical stores reached 3.7% in 2018 compare to the prior year.

In a decade, the web more than doubled its share of retail sales (10 years ago, e-commerce comprised around 5% of total retail purchases).

What we’re seeing is a fusion of physical and digital retail buying behavior from consumers who may visit a store to “touch and feel” a product, pull up the same product on their smartphone while in the store, and buy it online at a discount, often with free shipping within a day. The consumer is in control, and retailers know this and are inventing new ways to keep consumers loyal and to serve them, whether in-store or online or a combination of both.

The Internet of Things (IoT) is already having an extraordinary impact on the world of retail, impacting the entire supply chain – from manufacturers to shippers, from warehouses to trucking, from backroom inventory in large retail stores to data that can be collected on smart shelves and pegs. Using these IoT solutions within the retail environment provides a detailed view of where every product is at any given time, even as the product is purchased by particular customers.

This level of granularity, orchestrated strategically, is a gold mine not only for retailers, but for their suppliers, who can collaborate together to keep the right products in the right locations at the right time, optimizing everything from inventory management and theft reduction to ensuring seasonal products are merchandised to be seen by the consumers most likely to impulse buy.

Here’s a short list of what’s already happening which illustrates how connected solutions are – and why security across networks, devices, applications, clouds, and physical/digital integrations is so mission critical.

  • Self-checkout kiosks
  • Mobile self-checkout using smartphones
  • Mobile shopping apps
  • Beacons and RFID and other signals guiding shoppers and making offers and recommendations
  • Smart shelves
  • Smart pegs
  • Camera-based security
  • Camera-based research (viewing shoppers interacting with products)
  • “Ambient” shopping experiences (next-generation gaming and interactive shopping play)
  • Sensors combined with AI capturing consumer behaviors at scale to drive improvements in merchandising and stocking levels
  • In-car shopping guidance (“take me to the nearest Target that has baby diapers on sale”)
  • In-store pharmacies and health clinics with telemedicine capabilities
  • Automated online ordering and in-store pick-up (when your washing machine runs out of liquid detergent and lets you know you can dash into Walmart or have the detergent delivered to your car or rerouted to your home)

There are dozens more applications in place today and hundreds more in the works and for all the right reasons: improving customer experience, improving operations, reducing shrinkage, improving products (as retailers sell data back to their suppliers), driving revenues and profits up and generally remaining successful and relevant.

As retailers, online and offline, strive to attract and retain loyal customers, they are by default collecting information about those customers – private information, behavioral information, and financial information including storing credit cards for one-click purchasing or automatic no-click purchasing.

Security – therefore – must be top of mind for any retailer who is upping their game and delivering more connected experiences across many different channels. Retailers are highly sensitized to this, with major breaches in retail stores resulting in stolen information and exposure of customer data, including credit and debit cards.

Benefitting from retail innovation based on IoT advances can only be achieved with the right security foundation supporting it, and that includes how data is transmitted and stored – data in motion and at rest.

Being able to manage real-time transactions at scale and do so with ironclad security at a reasonable price, is one of the hottest topics retail CIOs and CSOs are grappling with today; the same goes for IoT solution providers and device manufacturers.

The IoT blurs online and in-store experiences, blending data and activities that must work perfectly for the consumer (with no lag time which can cause a bad customer experience) while also collecting and leveraging information in a way that complies with PCI and privacy regulations.

With a combination of physical and digital retail solutions, and the opportunity to deliver continuous improvements in customer experience and business results, the growth of IoT in the retail industry is inevitable, and this means the need for more bandwidth, more edge and cloud computing, and more transactions which must be secured – and validated.

The IoT is already in use in stores around the world, and according to estimates from Grand View Research, retail IoT could be a $94 billion market by 2025.

Dispersive is working with systems integrators, IoT solution developers, and large, distributed retailers to move forward virtual, programmable IP networks. In these networks security is “built-in” and designed to interoperate with other security layers (including device security – sensors, beacons, POS systems, mobile, and more) and multi-cloud architectures providing more visibility, more control, and more power to all participants in the “digital retail tech ecosystem.”

Feel free to reach out to me to learn more.

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