Smart Retail 4.

0 IoT Consumer Retailer Model for Retail Intelligence and Strategic

Marketing of In-store Products

Athul Jayaram

Amity University Uttar Pradesh

Abstract
Retail 4.0 is the use of the Internet of things and Big Data Analytics at the retail stores to target and gain

more customers. It uses RFID's, sensors and consumer devices for data mining and predictive analytics.

Marketing includes the activities of the Enterprise such as product branding, promotion, and advertising.

With the advancement of Technology and change in the way the consumers make buying decisions, there is

a need for better marketing methods and strategies. In this paper, two models have been proposed a Retail

4.0 IoT Consumer Model and a Retail 4.0 IoT Retailer Model. Both the proposed models can be used for

retail intelligence and strategic marketing of consumer products.

Keywords

Retail 4.0, IoT, Consumer, Retailer, Strategic Marketing, Retail Intelligence

Introduction

Marketing is to gain customers for products and services. (Dibb, Simkin, Pride, & Ferrell, 2005). The

manufactured products and services are delivered to the consumer for the consumption and to fulfill their

needs. Marketing also includes activities such as sales and advertising. Sales are a very important function

of every Enterprise. Most Enterprises earn the most through sales. Without sales, a company cannot exist

long term. So, companies invest so much in advertising to increase their sales. Companies make effective

marketing plans for increasing the sales and for the overall growth of the company. A good marketing plan

can grow the company.

Internet of things is a new technology that can be utilized by both the consumers and the marketers for the
effective sales and use of products. Internet of things includes devices such as Smartphones that support

mobile applications (Atkinson, 2013) and sensors that are connected to a network and be uniquely identified

and generate data as well as collect it (Radhakrishnan, Sen, Vigneshwaran, Misra, & Balan, 2016).

Marketers
can use the collected data for the effective marketing by using the collected data and analyzing the data. The

collected data has enormous value to the marketers for identifying potential buyers and creating effective

marketing plans.

Literature Review

Various researches were conducted in the field of marketing and IoT. A Marketing System based on IoT

was discussed in this paper which can be implemented in stores using mobile phones. IoT was used to

understanding the performance of various systems and perform the maintenance when required by the

maintenance team also data was gathered and analyzed to understand the future performance of the various

consumer machines. An open service framework was proposed in another paper which can be used in any

field for the implementation of IoT is proposed in (Kim & Lee, 2014). The issues of massive data being

generated in IoT was discussed in (Sharma, 2015). Online shopping was made into offline shopping using

Augmented reality and RFID is proposed in (Baars, Kemper, Lasi, & Siegel, 2008). An IoT system was

designed to detect moments of eyes while they are doing online shopping is proposed in (Yamamoto, 2016).

An interactive marketing system was proposed in (Rajabi & Hakim, 2015). Organizational learning was

made possible with social network data and retail store data as in (Hart, Doherty, & Ellis-Chadwick, 2000).

Smart shelf using image processing techniques was proposed in another paper. A system for business

intelligence was proposed in (Gang, Kai, & Bei, 2008). An effective internet retail store concept is proposed

in (Huarng & Christopher, 2003). Applications for business intelligence is proposed in (Kocakoç & Erdem,

2010), (Olexova, 2014). A virtual shopping system was proposed in (Rajabi & Hakim, 2015). Strategic

marketing fundamentals as in (Varadarajan, 2010) and issues were discussed in (Wilson & Gilligan, 2012).

IoT
Internet of things includes devices that can connect to the Internet and send as well as receive information. It

includes sensors which are allotted an IP address and is connected to a network that can send and receive

data (Jalali & Bhatnagar, 2015). Sensors can transmit data of different type, including time, temperature,

pressure and any other types. By connecting the sensors, machine and devices provide immense information

that can be useful to analyze and understand the performance of an enterprise. It can help retailers create a

more personalized experience for the customers as well as improve the service being rendered to them.

With the help of IoT devices and sensors, data can be collected during different aspects of its functioning

(Mišura & Žagar, 2016). It can be further analyzed to understand the performance of various machines. The

collected data can be used for data mining and analytical purpose (Li, 2005). IoT can be used to detect when

the inventory is low, track good within the Enterprises, to send personalized coupons to the customers, as

well as implement sensors that can identify when a particular product is going to expire such as in the case

of fruits and vegetables. IoT is going to revolutionize the Retail Industry.

Retail 4.0

Retail 4.0 is the 4th transformation of the retail industry (Altinay, Roper & Doherty, 2007). The last

transformation happened around 1995 that witnessed the formation of various shopping platforms such as

Amazon and eBay. In retail 4.0 various advances of the computer science have been applied to the massive

transformation of the Retail Industry (Di Rienzo, Garzotto, Cremonesi, Frà, & Valla, 2015). Technologies

such as cloud Big Data Analytics and Internet of things have been applied for the next generation

experience. Also online and offline shopping experiences have been integrated into one that the consumer

doesn't feel any difference being in the online store or the outlets of the retailer. It is made possible with the

help of image processing and IoT technology. Various IoT Technology such as RFID, Beacons, Bluetooth

and wireless connecting protocols are used to form retail 4.0 IoT networks. Marketing is done intelligently

by collecting data from the users and analyzing it to find out useful information regarding the users

interest and buying

patterns. The collected data and applied intelligence can be used to form highly converting marketing

campaigns.

In retail 4.0, more value is given to digital marketing and social media. Also, the customer resource

management system is used to manage the date of customers and to give personalized experience to them.

Also, self-checking out at the store and the rise of digital wallets is part of retail 4.0. New things such as

dynamic pricing that change the price of the product according to demand and supply of products at the

retail outlet are also the part of this phenomenon.

Marketing model

Marketing includes activities such as advertising, selling and delivering products to people. Public attention

is captured with product design and media exposure. Marketing helps to gain customers and sell products.

The 8ps of marketing are used for efficient marketing and promotion. 8ps of marketing are a product, price,

place, promotion, people, process, physical evidence, productivity forms the key parts of any marketing

plan. The product is what the consumers need, it is supposed to solve a problem. The consumers are willing

to buy it for a price as it serves the purpose. The right product can attract a lot of consumers and make them

feel satisfied.

The place is the region where we can find consumers, be it online or offline. In the case of offline, it may be

retail stores where consumers can find the product easily. Selling at the right place is essential to form

customers and relationships.

Price is the value of the goods the customers are willing to pay for it. The price is not necessarily low if the

product is really useful, the customers will be ready to pay for it. Keeping the product at the right price is

necessary to make a sale (Lovelock, 1983).

Promotion is the business strategy for improved performance to gain sales and customers. It includes

advertising activities and promotions of the product and services through social media and other forms of

communication (McDonald, 1992). Word of mouth is the most converting form of promotion strategy.

Promotion helps to gain new customers for the product.

People include the right team and the right managers are necessary for the success of a marketing campaign.

Better the team better is the result of the campaign. A right team is necessary for effective marketing.

The process is the way in which we deliver service to the customers. Better the process better would be the

satisfaction of customers.

Physical evidence includes deliverables given by the firms to the clients mostly the form of receipts

products. Even the soft copy is considered to be a physical evidence.

Productivity and quality is a part of the extended marketing mix which cares about the product or service

you are offering to the customer. The firm has to improve the productivity for cost management and the

quality of products for customer satisfaction.

Proposed models

Retail 4.0 IoT consumer model

IoT2c (IoT to consumer) refers to the use of IoT by consumers in their daily purpose. Here IoT can include

the smartphones, refrigerator, washing machine, television, fitness sensors and wearable devices which are

consumer devices. 63% of the consumer devices connected to the internet are smartphones. It can help the

customer in their day to day use and improve the customer experience. It provides fast and efficient access

to services. Moreover, it helps to solve consumer problems quicker. It also helps in the automatic ordering

of products. The proposed retail 4.0 IoT consumer model is shown in Figure 1. It has the following parts.
1. Consumer components - it includes the IoT devices, IoT sensors, consumer online survey and consumer

feedbacks, membership card readers, customer billing systems- in-store as well as website and mobile

applications. IoT devices include every gadget used by the consumers daily for different purposes. It can

include smartphones, television, fridge and fitness trackers. IoT sensors include sensors which are used by

the consumers or workplace. It includes sensors such as temperature sensor, pressure sensor, pollution

sensors, heartbeat sensor, blood pressure sensor. Consumers can fill surveys and give their feedbacks easily

through the website and mobile apps. Membership card readers are kept in the retail stores for accumulating

and redeeming loyalty points. The data from the membership card readers is extremely valuable as it can

provide variable information for the retail store. Also, customer billing system present at the retail store

provides valuable information regarding the products which consumer purchase and the billing system

information can be used for predicting the future needs of the consumers. The data from the billing system

are generated either from the in-store billing system kept at the store and online orders generated from the

website and mobile applications.

2. Network refers to the interconnection of various consumer components such as IoT devices, IoT sensors,

membership card readers, customer billing systems. They are connected using various wireless and wired

connecting protocols. Most commonly used connecting technologies are wifi and rj45 cables. All the data

from the consumers which are collected are sent to the database through the network. The network needs to

be highly secured so that it can be protected from unauthorized access. Hence, network act as an interface

to connect different components of the consumer.

3. The Database is an arrangement of data so that it can be easily managed and modified. Data is stored in

the form of tables with a significant relationship between them. In the proposed model, the database plays a

key role in understanding the relationships between different data. A relational type of database is used for

storing the consumer data. The database is accessible from the network. The database has to be secured and

it should be accessible only to the retail administrator or manager. Every consumer has to be uniquely
identified either by a unique consumer id or a unique mobile number. All the data from different mediums

has to be integrated and related in a manner that the complete information regarding a consumer can be

obtained.

4. Cloud computing is the sharing of computer resources so that it can be used by many processes

concurrently. Also through cloud computing, all the resources of the enterprise can be shared. Moreover, the

system can be accessible from anywhere irrespective of the location of the administrator. The cost of

maintaining a cloud is affordable than maintaining a local server. With the centralization of data, the system

can be secured easily with the highest encryption and other data protection features. With the deployment of

load balancers and virtual machines, all kind of data can be stored easily without failure. Data processing

can be performed in the cloud with less requirement of processing power and memory.

5. Data mining is the processing of raw data and to create useful information from it. It involves the

following steps such as selection of data, preprocessing of data, the transformation of data and further

interpretation of data. Various data mining techniques such as anomaly detection, association, clustering,

classification, and regression are used. Data mining can identify different groups in the data which can be

used for predictive analytics that helps to predict the future sales and demands of the customers accurately.

Also, patterns and trends of the customers can be easily identified with the help of data mining. Association

rule in data mining helps to identify the relation between one or more events. As discussed classification

identifies new patterns in the data. Clustering is the grouping of data based on the similarity between them.

Forecasting can be carried out by identifying the pattern in the data which can lead to predictions in the

future.

6. Data visualization is the visual presentation of data. Patterns of data which cannot be identified in the

textual form of data can be easily identified in the graphical form of data. It includes statistical graphs and

charts. Processed data after data mining is used for visualizing the data. When there are terabytes of data,

creating graphs take a lot of time. Various techniques such as parallel processing is used for computing the
graphs of the customer data. By understanding the graph, new information regarding the customers and their

preferred product can be understood.

7. Customer intelligence helps to find the experience of the customers during the purchase and after use of

the in-store product. In other words, it helps to understand the customer, his needs and whether the retail

store is able to fulfill his requirements. Customers likeness towards a product can be understood by frequent

repeat purchases. The needs of the consumer can be predicted by various products he owns as well as

according to the salary, locality, job and family he has. Retail store visitors who don't purchase any products

can be made to fill surveys so that the store can be improved further. It helps to optimize the overall

customer experience so that he will recommend the store to others. It can be used as a tool to measure the

influence of the retail store on the consumers and helps to improve the services for them as well as predict

the chance of them returning back to the retail store.

8. Strategic marketing is a plan made to increase productivity by increasing sales and profits (Bowersox &

Cooper, 1992). It is often brought to a retail store by creating a marketing plan which can be easily

followed by the firm to increase customers, sales, and performance (Jocumsen, 2004). It can help to become

more innovative as well as have a higher market share. The companies need to follow a good strategic

marketing plan to ensure that potential buyers decide to buy the product from your retail offline or online

store. From the customer intelligence data, a proper strategic marketing plan can be made by the strategic

marketing manager for the firm. With the customer data, the ability of a customer to make a purchase can

be understood easily. Moreover, we can understand what makes the customers want to come back to the

retail store as well as what offers and discounts are the customers looking for at the store. When the right

discounts and offers are available for the products which the customers are looking to buy is available, there

is a high probability of the sale being made by the customer. So using the combination of the strategic

marketing and customer intelligence from the collected customer data, customized offers, and discounts can

be given to customers individually so that they make a purchase and save money. Today various stores

have their own mobile

applications so that customers can get the latest offers and products available in the store as well as provide

special discounts to the frequent buyers in the form of push notifications that is shown in their smartphones.

So better the strategy better will be the conversions and engagement with the products, brands, and the retail

stores.

Figure 1: The Proposed Retail 4.0 IoT Consumer Model

Retail 4.0 IoT retailer model

IoT2B (IoT to business) is the use of IoT in business. The proposed model is shown in Figure 2, IoT can be

used in the retail stores. There are various methods to use IoT in the retail stores. The proposed model has

the following parts:-

1. Smart Shopping Carts - It is the use of IoT in the traditional shopping carts used in the supermarkets

to carry all products. The customer takes the shopping cart if there are more than three products or if

the products are so heavy. Shopping carts can be made smart by using RFID. A passive RFID tag

can be attached to every shopping cart that helps to track the customer. This passive RFID tag can be

detected by RFID scanners. Using the collected data, the retail store can easily identify the pattern

of customer shopping, the products which they like the most, the area within the supermarket which

is visited less, sequence of shopping, most selling products, least selling product.

If an active RFID tag is used for every shopping cart then it can automatically identify the products

which are kept in the shopping cart. Moreover, if the weight sensors are used, then it can measure the

quantity of various vegetables and fruits taken by the customer. The collected data can be

automatically sent to the billing system by a wireless protocol such as WiFi. The billing system can

automatically bill the user and deduct from the credit card if the consumer has linked along with the

membership card, else he can swipe the card as he exits the retail store. The credit card swiping

machine can uniquely identify the customer by the unique RFID tag attached to every user.

2. Automated Beacon Checkout - this is the usage of the beacon to perform an automatic checkout after

selecting the products from the retail store. Beacon is used to automatically charge the customers. It

automatically collects the information regarding the products the customer has purchased. This helps

to eliminate unnecessary time waiting in queues, as the customers can checkout without the need of a

billing operator. As humans, can cause errors, automatic checkout is highly reliable than the manual

entry of purchased products. It can simultaneously bill the customers as they come out of the retail
 store. This system can easily manage millions of customers at the same time. The beacon can also

be used to broadcast the coupon to the users who are frequent shoppers. Special discounts can be

given to the users according to their purchasing capacity.

3. Real-time Customer Tracking and Analytics - can be easily deployed in a retail store. Real-time

customer tracking means the movement of the customers within the store is being tracked.

Moreover, the exact location of the customer within the store can be easily identified and

information can be used to identify which regions of the store are most populated and which

products the consumers and looking to back. The collected data can be used to perform customer

analytics. The type of product the customers want to buy can be identified using customer analytics.

Marketing campaigns can be tracked lively and the results of such can be easily measured.

4. Mobile Engagement- It can be performed using the customer's smartphones. The retailer has to make

the customer install the mobile application on the customer's smartphone. The retailer can welcome

the customer to store as well as provide coupons and personalized discounts to the customer. It can

make the customer full-time connected to the retailer. The retailer can easily engage with the

customers and lead to higher conversions from the customers. It can stimulate consumer behavior by

making decisions such as purchasing of products.

5. Smart Rack - this can be used in the retail stores to store various products including all types of

perishable items as well as non-perishable items. The smart rack can include various types of sensors

such as temperature, weight as well as quantity estimator. It can be used for automatic reordering of

products based on the quantity remaining on the rack. The temperature of the rack can be adjusted

according to the required temperature of the product. It can keep the products fresh and prevent from

getting damaged.

6. Dynamic Pricing - it can be applied along with the smart rack. The rate of the product is changed

dynamically according to the demand of a product. Product with more demand is priced higher

while
 products with low demand are priced lower. The dynamic pricing can be shown on an LCD screen

along with smart rack. The prices of the product need not be changed manually as it is automatically

obtained from the servers and updated live on the dynamic pricing screens. It is easy to use and

maintain compared to a traditional form of labeling items.

7. Smart Security - it includes various devices such as CCTV, infrared cameras and RFID scanners to

keep a check on the security of the retail store. CCTV camera can be used to ensure there can be no

theft inside the shop. Also, an infrared camera can be used to keep a check on the retail store in no

light condition. RFID scanners can be used to identify which products the customer has purchased

and which product the customer haven't purchased. Altogether, the following systems can effectively

secure the store as well as catch culprits who steals from the store.

8. Face Gesture Recognition- an IoT device is used for identifying the facial features of persons. The

consumer's likeness towards the product can be easily identified by the facial features that they

express happiness when they find the product they are looking for, they do not look at a product long

time which they don't like. By recognizing the facial moments, we can easily identify consumer

behavior towards brands and products.

9. Smart Mirrors - In the retail stores suggest for shopping cloth items, glasses, watches and other

accessories, the smart mirror can use to try the product without even physically wearing it. With the

help of a smart mirror, the customers can easily try out more products in less time. The customers

can feel so satisfied using smart mirrors that can enhance the physical appearance of the customer.

Due to the smart mirrors is a new technology, more and more customers will come to your store

which can lead to more conversions and sales.

10. Smart Screens - they are located at the retail store which is extremely useful for the consumers. It

can be used to search for products, find reviews of the product, know the latest offers and latest

products, as well as identify where the product is kept in the store. Smart screens can be extremely

useful for
the consumers who are new to the store as well as in the case if the store is extremely large like in

the case of hypermarkets and supermarkets. The customer can easily guide himself if he gets lost in

the crowd. With the feature of products reviews listing, the customer can know the benefits and

disadvantages of various products and compare them. The smart screen can also include videos

which may be small advertisements of products or how to use product videos. It can keep the

customer engaging and is a perfect medium for strategic marketing and to promote brands easily and

reach the right audience.

Figure 2: The Proposed Retail 4.0 IoT Retailer Model

Conclusion

Retail 4.0 is the next big revolution in the retail industry. It is the use of the internet of things and big data

analytics to improve the retail experience for the customers as well as perform strategic marketing and gain

retail intelligence. RFID, beams, wireless connection technologies, sensors and consumer devices are used

for better marketing in favor of your retail store and products for sale. The consumer behavior and consumer

buying pattern can be easily analyzed with the smart retail 4.0 IoT model. The proposed retail 4.0 IoT

consumer model and retail 4.0 IoT retailer model can be used for retail intelligence and strategic marketing

of consumer products.

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