will IoT save retail?

As I write this article, one of the trending posts on Reddit shows a 7x price difference between a brick and mortar large office supplies store and Amazon on a Cat-5 Ethernet cable. There are hundreds of comments and most point to the fact that we will always vote with our wallets and that retailers might still survive but they better get their houses in order and address the inefficiencies behind those outrageous prices. Will the Internet of Things (IoT) and its Connected Devices save retail?

The convenience of eCommerce goes beyond pricing, and retail stores are taking a hit, as illustrated by Macy’s, Sears, Sports Authority, and Office Depot closing doors at many locations in 2016. Can IoT technology stop this trend in its tracks? The rise of IoT in retail shows that many companies feel this is the case, and perhaps their saving grace, but there are causes for concern when it comes to connecting retail commerce to the Internet, and most companies are either not ready or do not know how to go about it.

In recent years, the retail sector has been investing big in the Internet of Things. Juniper Research forecasts that by 2020, retailers worldwide will spend $2.5B on IoT-related hardware alone, including beacons, RFID tags, sensors, and their installation costs. This investment represents a nearly fourfold increase from 2015.


IoT can indeed deliver substantial benefits for the industry. For example, one of the biggest points of waste in retail is the management of inventory, as overstocking, understocking and the resulting deep discounting of those products cost the industry more than one trillion a year in missed opportunities.

The National Retail Federation reports that retailers spend $175 billion a year on IT technology, but that empirical data shows the minute you finish your inventory, it is 10 percent inaccurate due to human error. IoT Sensors could provide retail companies with increased visibility and tracking abilities, and therefore more accurate and up-to-date inventory management.

Many big name companies are banking on this and hoping to offer compelling customer experiences that can’t be delivered by e-commerce. The new Amazon Go stores have been hyped to a substantial degree recently in the news, where customers will be able to walk in, grab their items, and leave without ever checking out with a clerk. They are also beginning to connect our fridges, washing machines, and other appliances to the internet so that they can order supplies on our behalf. Target is testing different IoT projects such as the “connected living experience” at a Minneapolis store which will educate customers through product displays. Walmart and Disney are also incorporating IoT to track customer data and deliver insight.

However, many are concerned about what this means for companies and their clients regarding privacy and cybersecurity. IoT privacy and security was one of the core topics that more than 100 tech leaders from different sectors and regions brought to the attention of lawmakers in DC on Feb 14, 2017, as part of the CompTIA event. The supply chain in IoT is complicated, and there is a void concerning standards designed to ensure the privacy of consumers and the security of the Retailers embracing IoT. At that event, a panel of lawmakers, industry experts, and representatives from the NSA explained how the security exposure starts with the lack of visibility of every component and the particular exposure of each chip, device and communication channel.

we protect computers and servers but our mobile and IoT devices are exposed and an easy target” at CompTIA DC Fly In Feb 2017


IoT Security exposure starts with the lack of visibility of every component – OCP Chief, NIETP, NSA/DHS | NICE/NIST | Transmosis Inc | Lifejourney Inc

CIO reports that as companies roll out these sensors and adaptors to connect consumer appliances to online grocery carts and grocery items to apps, hackers can get into the gateway to the back-end server where data is transmitted. Each device or sensor is a point of vulnerability to hackers, and considering IoT still lacks security standardization being in its beginning stages, retail companies open themselves up to significant risk with their customers’ personal data.

IoT devices are the weak links and expose our networks. We need CyberSecurity and Privacy Standards in IoT – at CompTIA DC Fly In Feb 2017

One such security risk lies in IoT’s dependence on periodic updates. However, less than one of every two manufacturers offer remote updates for their smart “things.” Manufacturers don’t conduct these updates themselves and rely on their customers to perform this function, but less than a third of users update their connected devices as soon as updates become available. That percentage is set only to get worse as customers have more and more devices to manage. If retailers wish to protect their consumer data, they need to take on more responsibility themselves; otherwise, they will be exposed to liabilities and business losses.

Leading retailers embracing the internet of things are very likely going to create new, promising value in their business and may improve the slump in brick and mortar sales. But the Retail sector must have plans in place to address the security risks associated with these devices. Otherwise, their innovation, investments, and efforts will just create new and more expensive problems that will accelerate the pace at which they go out of business.


“8 Retail Chains Closing Stores In 2016.” Bankrate.com. Bankrate, n.d. Web. 02 Mar. 2017.
Goldman, Sharon. “Retailers Get an IoT Wake-up Call.” CIO. CIO, 28 Nov. 2016. Web. 02 Mar. 2017.
Millman, Rene. “Users Risk Security Issues by Not Updating Connected IoT Devices.” Internet of Business. Internet of Business, 20 Dec. 2016. Web. 02 Mar. 2017.
CompTIA Fly-In DC Feb 2017 – Luis J. Salazar