How to Use Internet of Things (IoT) in the Retail Industry

By: Julia Nasy
17 Jul. 2023
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As the Internet of Things (IoT) rapidly develops, it is becoming increasingly relevant for businesses of all sizes across industries. The adoption of the IoT in the retail sector began around the early to mid-2010s. Then it was positively affected by the COVID-19 pandemic, showing a high growth rate during this period. According to the latest forecasts, the global IoT size in the retail market is expected to reach $177.90 billion by 2031. The statistics mentioned above clearly show a lot of potential for business and career opportunities in the future of IoT in the retail industry.

Today we can see how IoT retail solutions are changing the industry. Delivery from groceries, pharmacies, and online markets is already commonplace for us. E-commerce retailers do not stop there and experiment with autonomous vehicles and drones for order delivery. But this is only from the customer’s perspective. At the same time, the Internet of Things covers inventory management, supply chain processes, secure payment gateways, logistics and other essential elements within the retail industry. This article will explore how IoT benefits the industry, highlight the key advantages of its adoption, and discuss the most popular smart retail solutions in use today.

Before proceeding with specific examples of IoT retail solutions, let’s consider how the technology can be used in this space and its numerous benefits.

How IoT Benefits Retail Industry

Less Waste

Integrating IoT solutions into internal processes such as store monitoring, inventory management, logistics optimization, and others helps retailers to reduce costs associated with product waste and loss. Connected devices add transparency to the inventory and delivery processes, providing better precision and enabling predictability. This is especially crucial for businesses involved in the sale of perishable products.

Layout Optimization

Smart devices track customer behavior and provide valuable insights to store managers. Cameras, beacons, and price trackers collect data about the path of foot traffic, such as where customers go first and where the store’s hot and cold spots are. These detailed reports help to identify premium store areas and optimize store layouts, finding the most effective one.

Improved Customer Experience

IoT technologies are also widely used by brick-and-mortar stores for making targeted and personalized offers to customers. IoT devices, sensors and shopping applications gather data on customer preferences. This information can help retailers personalize the shopping experience, offer targeted promotions, and provide better service.

Process Standardization

Chain stores should ensure the same quality of products and the same customer experience for their customers across all their branches. Different nuances, such as indoor air quality, temperature, light levels, music, etc, contribute to the in-store experience. The manual approach to establishing processes and procedures across all retail locations can be inefficient. IoT-based platform that connects all branches helps to solve this problem effectively.

Energy Efficiency

One of the most fundamental needs for retail business is energy efficiency. Smart energy management systems help to save energy, reducing the overall energy consumption in brick-and-mortar stores. They create various scenarios for lighting, HVAC, and gadgets for the optimization of energy consumption without affecting the employees’ work or shopping experience.

Smart Retail IoT Solutions

Inventory Management

By leveraging IoT technology, businesses can gain real-time visibility into their warehouses. Sensors, RFID tags, and smart shelves track the location and condition of products, inform about overstock, analyze data on popularity, and predict consumption. Due to this, retailers always know when inventory levels are low and what products need to be replenished first. Smart warehouses also reduce human errors, as the system automatically stores all collected data without human intervention. Therefore, IoT-based product inventory ensures better precision of operations, hefty savings, and the availability of products to consumers on time.

Logistics and Supply Chain Management

The Internet of Things enables businesses to track products at every shipment stage. GPS and IoT devices help to optimize logistics operations. With them, retailers can monitor real-time product locations and routes, ensuring on-time deliveries. As a result, companies reduce fuel consumption, minimize delays, and improve overall fleet management. IoT also facilitates the monitoring of product conditions. Embedded sensors inform drivers as soon as the temperature inside refrigerators begins to rise. And this allows for taking measures in time and preventing food from spoiling.

Companies can use IoT technologies to test different vendors, vehicles, and routes before signing the contract. Motion sensors, GPS, smart cameras, and RFID scanners collect data about the entire supply chain process, which can help to find the cheapest and safest option for the smooth transportation of products and customer satisfaction.

Related reading: IoT Logistic Applications

AI-Powered Smart Shopping Carts

A smart shopping cart is a multifunctional retail solution. Embedded sensors track the movement of the wheels and share inside-store journey data. Further analysis helps retailers to define the most footfall areas and optimize the layout. Smart Shopping Carts also help to buy groceries without waiting in a checkout line. They use a combination of scale, camera, sensors, scanning hardware, and AI to detect when items are placed in or removed from the cart.

In the case of Amazon, when shopping is done, customers exit the store through a designated lane, where their purchase is billed to their Amazon account. Smart shopping carts in other stores are equipped with a payment terminal for fast payment. As a result, these solutions help to improve business processes and customer engagement.

Smart Shelves

For the first time, the smart shelve technology was introduced to the public in 2016. Since then, this retail solution is becoming increasingly popular, facilitating the work of merchandisers. An application helps employees lay out products according to the planogram, and it timely notifies them when consumer goods run out, preventing empty shelves. At the end of the day, all collected data are shared with a store manager to provide customer-related insights, such as which products are in high demand and which ones are not. Due to this, retailers can identify interests and better manage inventory based on this customer data.

One more benefit of smart shelve technology is tracking misplaced items. Unfortunately, this is a common issue which can cause a bad effect on retail businesses. The solution timely alerts employees about misplaced products, allowing them faster solve the problem without prejudice to the sales and the inventory.

Predictive Equipment Maintenance

For businesses dealing with perishable goods, maintaining proper storage conditions is essential. And malfunction or breakage of electric appliances, including refrigerators and HVAC systems, can spoil goods, leading to significant reputational and financial losses. Different IoT sensors connected to one system facilitate asset monitoring and prediction of its failure. Therefore, IoT retail solutions can ensure smooth equipment operation.

Challenges of IoT in the Retail Industry

Implementing IoT in the retail industry still needs improvement. There are a lot of areas in this sector where digital transformation is facing challenges. Below are some of them.

Smart Retail Solutions and Cybersecurity

IoT solutions generate massive volumes of real-time insight, including customer information and transaction details. Retailers should take appropriate measures to prevent data breaches and unauthorized access. Networks of connecting devices should have secure passwords and end-to-end encryption. Regular software updates are mandatory to scan bugs and vulnerabilities. Adopting crypto wallets is much safer for customer privacy, identity, and authentication.

Related reading: IoT Cyber Security


To ensure a successful implementation of the Internet of Things, retailers should prioritize the creation of a robust network, as well as the adoption of end-user solutions. But limited resources can make it difficult for some stores. In this case, retailers can follow a step-by-step transform approach, gradually moving from simple to more complex IoT applications.

Data Management

A lot of businesses struggle with large amounts of data that come from IoT devices. Due to a lack of expertise, and technical and analytical skills, some brands have to hire domain experts to set up and maintain IoT systems. The second problem related to data management is legacy systems, which are unable to maintain IoT technologies. Optimization of existing systems and different data storage strategies (hybrid or multi-cloud storage) will help retailers deal with it.

The Future of Retail is IoT

IoT adoption has completely changed how stores interact with customers, providing new and personalized shopping ways and making retailers more efficient overall. Looking at the examples mentioned above, there is no doubt that the Internet of Things is the future of the industry. Today, IoT solutions define the direction of both physical and online retail stores in the coming years.

Technologies and equipment availability is a major catalyst for the growing demand for top IoT applications. The cost of cameras, sensors, RFID tags, and actuators reduces, making these devices more accessible. 5G, in turn, speeds up data transfer, increasing operational efficiency. Mass adoption of smart retail trends, such as electronic shelf labels, robotics, innovative digital stores, augmented reality and other cutting-edge technologies, are expecting us in future.

By: Julia Nasy
17 Jul. 2023
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