Tuesday, July 16, 2024

Internet of Things (IoT) in Retail

Datamation content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

A quick trip to the local supermarket, big box store, or comparable brick-and-mortar establishment will reveal how pervasive the Internet of Things (IoT) has become in retail.

However, self-checkout kiosks and hyper-personalized in-aisle advertising displays are just a small sampling of the current customer-facing retail IoT innovations.

Behind the scenes, in the stock rooms, warehouses, and fulfillment centers, IoT innovations have also radically transformed the way customers’ orders are assembled, handled, and shipped.

IoT in Retail Today 

The pandemic has caused a seismic shift in demand for IoT in retail. For example, customer-facing IoT solutions for enhancing physical in-store experiences are giving way to solutions for optimizing the back-end fulfillment and support process.

According to a study by Microsoft, almost nine out of 10 (87%) retailers regarded the use of connected technologies inside their stores as a critical component of their success, with 92% having already implemented IoT in their stores, in some shape or form. That said, retail IoT adoption efforts can be drawn out and complex, with 88% of retailers experiencing failure in one or more of their IoT projects implementations.

Still, retail IoT adoption is accelerating as consumer demand for online shopping and e-commerce continues to surge. With in-person shopping experiences shuttered for the greater part of the last couple years, online shopping and web-based retail activity has surged globally in the face of the pandemic. That said, retail brick-and-mortar establishments are gearing up to receive physical, in-store customers again. To re-open to the so-called “new normal,” a new category of IoT solutions have emerged for improving customer hygiene and safety during their visits (e.g., enforcing social distancing, detecting the use of face masks, maintaining crowd control, and more).

According to Grand View Research, the global retail IoT market size is anticipated to hit $182.04 billion by 2028, at a compound annual growth rate (CAGR) of 26% over the forecast period. This growth is due to continued consumer demand for more seamless shopping experiences and smart payments coupled, with the commoditization of sensors and IoT hardware and other drivers.

5 Examples of IoT in Retail

IoT is a key enabler of smart retail — the hybridization of brick-and-mortar shopping modes with modern technologies and innovations. It’s worth noting that while in the past smart retail was driven by the quest for new operational efficiencies and ways to improve customer satisfaction, these days public health risk reduction and customer safety are now also crucial IoT drivers.

From smart signage to robot customer service agents, the following are some leading examples of IoT in retail:

1. Personalizing the In-Store Experience with Beacons

Introduced by Apple, beacons are minuscule Bluetooth devices capable of sending push notifications and providing location-based services to mobile devices based on their proximity/location. Popular brick-and-mortar retailers, such as Urban Outfitters, CVS, Timberland, and Macy’s, have been early adopters and innovators in the retail beacon space. For example, they use the technology to offer limited-time discounts, announcements/invitations to special events, and other promotions while customers are physically in the store.

2. IoT-Enabled Inventory Tracking Solutions 

IoT-powered tracking systems enable end-to-end product and inventory visibility and awareness, from the time they first enter the warehouse to the time they arrive at the purchaser’s residence or place of business. These IoT solutions provide both customers and retailers continuous situational awareness regarding the status and whereabouts of their orders, resulting in reduced support requests/calls and improved customer satisfaction. And as automated self-service storefronts enable more sales volume at the front-end of retail operations, IoT-enabled inventory and warehouse management solutions on the back end enable retailers to scale with customer demand. The growth in IoT adoption to support retail back-end operations is also on the rise. A report by Grand View Research predicts that the global IoT in warehouse management market will reach $19.06 billion by 2025.

See more: How the Internet of Things (IoT) is Used by Volkswagen Group, BigBelly Solar, Deep Sky Vineyards, Citizen Care Pod, and Canutillo Independent School District: Case Studies

3. Automated Self-Service Storefronts

Fully automated stores use a variety of solutions such as motion-activated smart cameras, shelf monitoring systems, beacons, and other IoT technologies to provide a fully automated, end-to-end in-store shopping experience — guests need only walk in, select the items they wish to purchase, and walk out. Payment is automatic, and customers receive an electronic receipt on their mobile devices. Though Amazon Go is currently the leading player in this category — with 29 automated stores in operation — competitors are steadily gaining ground on the market leader in response to global market demand for automated storefronts. According to a recent survey by SOTI, 73% of shoppers surveyed prefer self-service technologies (e.g., self-checkout, price checking, product assistance) over interacting with a live customer service staff member, a 10.6% increase from the previous year’s survey. Suffice to say, the pandemic has significantly increased demand for retail IoT solutions in this space.

4. Reducing In-Store Customer Wait Times

IoT solutions are being deployed by brick-and-mortar retailers to help customers better manage in-store wait times. For example, stores often use IoT-enabled stationary sensors to track customer movements during checkout, alerting store employees automatically when a new aisle should be opened. This is especially critical during the pandemic, when long lines and crowds pose an elevated public safety risk. 

Additionally, IoT technologies enable the faster retrieval of items from stock rooms and warehouses. In the past, employees would be tasked with combing through aisles of inventory manually, leading to extended customer wait times and potential purchase abandonment.

5. In-store Robot Customer Attendants

Like automated, self-service storefronts, robot customer service agents were once relegated to science fiction. These days, in-store robots are becoming increasingly common. These robots rely on a constellation of in-store IoT sensors and wireless technologies to help customers locate specific products, take physical counts of available inventory, find misplaced items, and more. This enables human customer service professionals to focus on providing higher-level customer satisfaction efforts and activities.

According to a report by Coherent Market Insights, the global retail robot market size was $7.1 billion in 2020 and is anticipated to top $55.8 billion by 2028 at a CAGR of 30.1% over the forecast period. The high cost of developing and manufacturing retail robots translates to a higher price tag to the retailer — significant roadblocks hindering widespread adoption. The vast array of required components (e.g., sensors, radios, actuators, cameras, microcontrollers, and touch screens) also make for a significantly complex final bill of materials (BOM). However, the commoditization of sensor hardware and IoT components in recent years has enabled leading robotics vendors to bring more cost effective retail robots to market.


Though online shopping continues to supplant in-store purchasing experiences, brick-and-mortar retailers will nonetheless continue to undergo IoT-enabled automation.

Consumers can expect to see even more spectacular IoT innovations on the retail floor and at the point of sale.

However, it’s conceivable that most future storefronts in urban areas will be automated, with some specialized in-person retailers focusing on select groups of clientele. Retail IoT will, therefore, increasingly shift to improving the customer experience on the fulfillment side, allowing for orders to be processed and shipped faster and with less errors.

See more: Best IoT Platforms & Software

Subscribe to Data Insider

Learn the latest news and best practices about data science, big data analytics, artificial intelligence, data security, and more.

Similar articles

Get the Free Newsletter!

Subscribe to Data Insider for top news, trends & analysis

Latest Articles