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In Cloud Computing Last updated: March 21, 2023
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Learn the role of the Internet of Things (IoT) in sustaining, revamping, and growing the retail industry across products, geographies, and customer groups.

The retail industry is highly reliant on existing and emerging technologies. We can already see that the industry has changed a lot, from local drug stores and large grocery shops to online marketplaces.

Now you can order daily groceries, food items, and consumer goods online and get them at home. Furthermore, eCommerce retailers are experimenting with autonomous vehicles and drones for order delivery. 

That’s just the customer’s perspective. Emerging technologies are also helping the retail industry to manage the supply chain, warehouses, online ordering, secure payment gateways, and many more. IoT is another emerging technology that will take the retail business to the next level. 

Keep reading to learn how IoT contributes to the retail industry’s transformation journey.      

What Is IoT?


The Internet of Things (IoT) is the network of smart devices, ambient sensors, and software to offer convenience in home or office life.

IoT includes smart gadgets like Google Home, Amazon Echo, smart lights, smart thermostats, smart home appliances, etc. They connect to the home Wi-Fi and talk to each other to reduce energy waste and manual human effort in mundane tasks.

And, yes, IoT comes in quality and quantity for industrial applications like manufacturing, warehouse management, and the retail industry. This is known as the Industrial Internet of Things (IIoT). 

IoT in retail involves both the IoT (home-based) and IIoT. It adds value to the retail chain from production to consumers’ homes and everything in between.    

The Role of IoT in the Retail Industry

Here is how you can use IoT or IIoT in the retail industry:

  • Smart GPS tracking devices, RFID scanners, motion sensors, and cloud computing can help large retail chains and distribution agencies safely move products from point A to point B.
  • IoT can help retail stores and eCommerce websites offer personalized promotional offers to their target audience at home or in the brick-and-mortar store. 
  • IoT and IIoT in retail can collect numerous data points on customers, employees, vendors, and all stakeholders to make the supply chain of retail more secure.

These are just some of the basic scopes of IoT in retail industries. You can use IoT in creative ways in your retail store or on the eCommerce website. The idea is to gain an edge over your competitor by offering a smooth customer journey from product discovery to sales.    

How Is IoT in Retail Transforming the Industry?


IoT in retail helps businesses to understand how customers shop in online and offline stores. Where do most customers go? How do restaurant guests order? What are the hotel check-in preferences for guests? These important marketing questions can be easily answered using IoT analytics data. 

As a retail business owner, you no longer need to rely on third-party agencies for market trend reports, which may not apply to your business. Besides customer experience and marketing, IoT can also transform the entire retail backend, like staff management, supplies, ordering, vendor relationship, inventory, and business security. 

Find below some examples that explain how IoT is reshaping how retail businesses function in the digital age:

#1. IoT Wearables


Retail chains, hotels, restaurants, etc., can offer smart wearables to their loyal and premium customers. Using data collected from such wearable devices, retail businesses can prepare in advance for the arrival of VIPs and premium customers. Then, wearables can guide the customers to the right product shelves so they can collect what they need, check out digitally, and save time while shopping. 

Wearable devices can also help retailers to offer personalized loyalty points and discounts to loyal and return customers. Thus, they no longer need to display complex promotional offers within the store.

#2. In-Store Wait Time Notifications

Various in-store smart devices like smart cameras, motion sensors, and RFID scanners will constantly collect store data on store footfall and average customer check-out time.

Accordingly, the system will either display an estimated wait time outside the store on a distal screen or send personalized notifications directly to the registered consumers.

#3. Digital Product Guidance and Promotions

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Retail businesses can easily create a profile for each customer and guide them through their regular shopping lists. Customers no longer need to roam around the entire grocery store to find what they need.

To make this happen, retail stores can use Bluetooth Low Energy devices and sensors. Using such smart devices, businesses can push in-store guidance, promotional offers, etc., to the smartphones of the shoppers. 

#4. Real-Time Product Delivery Notifications

eCommerce retailers and physical retail chains that offer home delivery started using various IoT devices to send accurate and real-time messages about product deliveries.

Smart RFID scanners send product data to cloud software when the item leaves the warehouse. Then the cloud app uses GPS tracking of the delivery vehicle to create an estimated delivery time. It also factors in shipping speed, traffic conditions, stoppages, etc.

#5. Choosing Supply Chain and Logistics

Large retail businesses must smartly choose the logistics and supply side vendors to save on supply chain costs.

They can use IoT devices like GPS, RFID scanners, motion sensors, and smart cameras to test vendors before signing up for a high-quality service provider at an affordable price.

#6. Innovative Digital Stores

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One of the leading examples of IoT-based innovative retail stores is Amazon Go stores. At Amazon Go, customers can pick up what they need and get going with their regular business. No need to stand in queue and pay for the goods they buy. Amazon app automatically charges the customers as they leave the store.

For such a convenient and automated customer purchase journey, amazon uses next-generation technologies like sensor fusion, computer vision, IoT devices, smart cameras, Artificial Intelligence, and Machine Learning (ML).             

Benefits of IoT in Retail

Find below the benefits you enjoy by bringing in your physical and online retail store within reach of an IoT network: 

#1. Empower In-Store Staff

Various IoT devices and sensors can track customers within the stores all the time. If customers cannot find what they need, smart cameras and speakers can understand the issue and relay it to the in-store staff.

The store employee can approach the customers and guide them to the products they are looking for. 

#2. Reduce Waste

IoT devices can help retail chain owners manage electricity and gas usage efficiently. Smart thermostats, refrigerators, lighting systems, etc., can automatically reduce energy consumption when a specific store has less footfall. 

#3. Store Security

Bluetooth low energy, GPS tracking, RFID scanners, etc., based IoT devices can help store owners create a virtual barrier around their retail shops. Smart security cameras can constantly keep an eye on products on racks. Combining all these smart IoT devices, retail shops can virtually eliminate the risk of shoplifting.  

#4. Product Placement


Retail stores can use motion sensors and smart cameras to identify store areas that get the most footfall or are considered to be premium. Then, the store manager can place promoted products in these premium locations to earn better product placement and sales commission from manufacturers.  

#5. Retail Store Management and Tracking

If your retail shop is experiencing heavy footfall, it becomes challenging to restock the shelve. On top of this, if you do not know which product is running out of stock on the shelve, it could be embarrassing. 

You can take help from IoT devices like RFID scanners, smart cameras, object recognition software, weight sensors, etc., to create smart shelves. As soon as there is a spike in sales for a few products, the store backend or restocking team gets notifications to restock sold products.  

#6. Omnichannel Experience

You could create a robust IoT network inside the store and integrate it with your eCommerce platforms. Thus, customers who have already experienced shopping online at your online storefronts can experience the same convenience when they entire any of your physical stores. You can easily sync online and in-store promotions and discounts.  

Drawbacks of IoT in Retail Business

Like the benefits of IoT in the retail industry, there are some challenges and issues that you must prepare to face should you go the IoT transformation route for your online or physical retail stores. These challenges are as outlined below: 

#1. Security


The most obvious challenge for IoT in retail is cybersecurity. If the entire IoT architecture of the retail business is not end-to-end encrypted, then there is a huge risk of intrusion and ransomware attacks.

Also, businesses must regularly audit IoT devices and software communication networks to prevent loopholes and digital vulnerabilities.

#2. IoT Hardware and Software

There are only a few IoT hardware and software manufacturers like Intel, Google, Cisco, Bosch, Siemens, and others. This could create a market monopoly for smart sensors, devices, chipsets, firmware, and software.

Consequently, these manufacturers will control the market pricing, and unless they reduce the price to a reasonable level, it will be hard for small retailers to buy these products.

#3. Employee Training


Since IoT devices and controlling software are pretty new technologies, it would take retail chain owners to invest time and money to train their existing workforce. Retail businesses will also need to hire IoT data analytics experts to extract customer insights from their retail IoT network.

#4. Job Security Risks

IoT is another name for automation. Since businesses will need fewer human workers in their retail stores, there will be an increase in unemployment. Governments and corporates must plan for workforce rehabilitation.    

Future of IoT in Retail

The Internet of Things is becoming cheaper every day. Urban customers are adopting smart devices faster than expected by experts when IoT was in its early days of development. It is evident from various current market trends and statistics as outlined below:

  • Grand View Research estimates that the IoT in retail will become an approximately $161 billion industry by 2028 from a $31.99 billion revenue in 2020.
  • IoT hardware segment will earn the maximum revenue for IoT in retail, a whopping 60%, as expected by the above report on retail IoT report.
  • The software part for IoT in retail transformation will also grow rapidly to a gross market revenue of $3.38 billion by 2029, based on a report from Maximize Market Research.
  • Experts suggest that the revenue-earning potential of IoT device management will also grow to approximately $15.66 billion from $1.88 billion in 2022.

The above statistics clearly show a lot of business and career scope for IoT in retail in the future. For those involved in software development, hardware production, IoT device management, and maintenance, it’s a secure market for long-term investment and revenue earning.

IoT in retail and augmented reality will become the next iteration for retail industry transformation. Depending on customers’ activities across online and offline platforms, retail businesses can offer accurate product suggestions to customers who value quality and time over the price tag.  

Author’s Note

Just like shopping apps on smartphones, contactless payments, RFID scanners, and GPS localization, IoT in retail is another trending technology. All global reports suggest that the sector will see huge investment in the future. 

If you’re a business owner, look for IoT transformation opportunities to make your business relevant in today’s digital ecosystem. Are you a fresh graduate? Look for IoT learning resources so you can land exciting jobs in the IoT development and maintenance sector. 

Finally, if you are an IoT vendor, start exploring new clients in the retail sector to supply hardware and software to retail giants like Walmart, Tesco, Costco Wholesale, and so on.         

Now you know how IoT in retail can change the retail industry from raw material procuring, vendor discovery, store security, and the customer experience. You must adopt IoT now to enjoy the first mover benefit and definitely before your competing retailers enter the scene.

Next, check out open-source internet of things (IoT) platforms and tools.

  • Tamal Das
    Tamal is a freelance writer at Geekflare. After completing his MS in Science, he joined reputed IT consultancy companies to acquire hands-on knowledge of IT technologies and business management. Now, he’s a professional freelance content… read more
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