IoT technology may be able to save brick-and-mortar retailers — provided they have a proper security strategy in place. After all, IoT introduces risks that go beyond the typical retail payment security concerns.
It’s easy to see why IoT technology is attractive to traditional retailers. Consumers have grown accustomed to a smoother, quicker, easier shopping experience online. IoT devices can help stores look and feel more like that online experience. But as with the adoption of any new technology, businesses need to understand the risks, ensuring they’re protecting their customers’ personal information, intellectual property and payment data.
Traditional retail in decline
There are many questions today about the longevity of the brick-and-mortar retailer. More stores are closing, malls are half-deserted and commercial real estate organizations are looking for tenants that are Amazon-proof. Consumers can now purchase almost anything with a single mouse click and have it delivered directly to their homes within a matter of hours, if not minutes. How easy!
The numbers also show that brick-and-mortar retail is declining. According to a recent report by CoStar, sales per square foot (at all but a few public retailers) have declined to an average of around $325 in recent years, down from nearly $375 in the early 2000s.
Contactless payments are one way in which IoT can be widely applied to brick-and-mortar retailers. While many retailers are allowing customers to pay in-store with their smartphones, customers also have the ability to pay with their Apple Watch using the Apple Pay technology. The Apple Watch-wearing customer merely has to double click a side button while the watch display is near a store’s contactless reader. The watch will vibrate and the payment is complete.
Taking it one step further, Amazon developed an entire store based on smart shopping technology. The advanced brick-and-mortar store, Amazon Go, is designed to challenge the “boundaries of computer vision and machine learning to create a store where customers could simply take what they want and go.” The flagship store, located in Seattle, is armed with IoT sensors used to understand customers’ interactions and behaviors. Amazon’s “Just Walk Out Technology” automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart. When customers are done shopping, they can just leave the store. Shortly after, Amazon charges customers’ Amazon accounts and sends receipts.
Other retail IoT devices being introduced into brick-and-mortar retail may sound whimsical on the surface — like Oak Labs’ “smart mirrors” which use a touchscreen to allow shoppers to customize their fitting-experience — but even they rely on trustworthy data to do their jobs.
Trusting the data
As businesses and individuals begin to enjoy IoT technology’s benefits, they also need to consider the security risks that are introduced. As we’ve seen many times, connected devices that were not designed with security in mind become easy targets.
For the technology to be successful, IoT devices must provide data that’s trustworthy. If you can’t trust the data, there’s no point in collecting it, analyzing it or making business decisions based on it. And that’s ultimately what retail IoT technology is all about. The concept of trust for IoT data is based on data security — from the time is it created and collected, through its wider distribution in the IoT ecosystem.
Think of it this way: If a smart mirror incorrectly records a customer’s size and orders an entire wardrobe that is too small, the retailer will lose credibility. Or if one of Amazon’s smart shelves incorrectly counts the number of ketchup bottles in stock and neglects to order more ketchup, a customer’s weekend BBQ might be ruined.
For now, we are seeing that an enhanced user experience can be easily enabled by IoT devices. If manufacturers get data integrity right, IoT technology might just be enough to save brick-and-mortar retail.
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