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IoT in Retail: Overview of Key Use Cases, Technologies, Future Trends
Nov 19, 2024
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Failing to connect tracking sensors in warehouses and install smart shelves in stores makes companies uncompetitive. By 2024, the total number of connected IoT devices could reach 18.8 billion, growing to 25.44 billion by 2030. Here are some examples of IoT in retail you may hear about:
- RFID sensors for inventory tracking;
- Infrared in-store footfall counters to analyse overall customer flow;
- iBeacons that use Bluetooth to connect to users' devices and send push notifications with promotions and discounts.
Choosing the right device and further technology integration depends on the size of your business, your sales algorithms and your company's growth prospects. Read this article to find out:
- What is IoT in retail right now?
- What emerging technologies should you be looking at to offer your customers a more competitive proposition?
- What benefits does IoT integration bring to business development?
What is IoT in retail
We've already mentioned the benefits foodtech businesses can get while using these technologies. Now it’s time to focus on the impact of IoT in retail industry. At its core, such a solution is still a system of interconnected physical objects equipped with sensors. IoT enables these devices to communicate, process and share information about the physical environment via networks and cloud-based software platforms.
One of the most popular examples that is often found in large retail chains is the self-service kiosks, which helps to drive the sales: Research Nester shows that 73% of shoppers choose this type of in-store checkout.
Investment and spending to develop IoT in retail is increasing. According to Fortune Business Insights report the global projected to grow to USD 350.85 billion by 2032, exhibiting a CAGR of 25.4% during the forecast period (2024-2032). As well as the income that companies and the largest economies in the world will gain from the implementation of this technology.
Here is the top leaders of Internet of Things (IoT) annual revenue from in 2024:
One of the reasons for this increase in revenue exceeding integration costs is the expansion of product distribution channels. IoT in retail market serves as a bridge between online and offline, keeping users engaged throughout the checkout process.
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How to use IoT in Retail Stores
There are three areas where the implementation of IoT in retail is pivotal for attracting customers and increasing sales.
Smart Shelves
In case you're suffering from poor inventory tracking, you're not alone: 62% of business owners don't pay the necessary attention to stock control, resulting in lost revenue. In addition, 43% of small businesses do not monitor their inventory at all.
Installed in retail areas or warehouses, smart shelves equipped with weight sensors or RFID tags can monitor stock levels instantly and alert staff when items are running low. This feature is particularly useful for fast-moving items such as snacks and beverages, helping to prevent stock-outs. By accurately tracking the movement of each product, retailers can adjust replenishment schedules, reduce manual counts and save on inventory costs.
The other use cases for smart shelves with RFIDs and other types of sensors are:
- Tracking changes in storage conditions – sensors can read changes in temperature, humidity and other indicators in real time that affect the condition of stock, and send alerts in a timely manner. The data also helps predict energy consumption and improve overall energy efficiency;
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- Automated price adjustments – you can integrate dynamic pricing models into IoT-enabled shelves that adjust prices based on demand, time of day, season and other criteria. For example, a store could discount umbrellas on a sunny day, attracting customers who might not otherwise have considered a purchase;
- Anti-theft and loss prevention – RFID-enabled smart shelves can flag items that are removed from the shelf without being properly checked out, triggering alerts to help prevent theft. This is particularly useful in electronics and cosmetics departments, where high-value items are often targeted.
✍ Example. Tesco is using smart shelving in selected stores to track stock and alert staff to replenishment needs, saving costs and reducing waste by 15%.
Connected devices
IoT in retail stores can create a 'wow' effect for your customers, but only the right business logic can turn that first impression into increased sales, loyalty and repeat orders.
To provide a personalised user experience you can use the following technologies.
Beacon-based in-store navigation
Using Bluetooth-enabled beacons, stores can direct customers to specific areas of the store, highlight promotions and suggest complementary products. For example, a shopper looking for spaghetti could be alerted to a discount on sauce or cheese in the next aisle, increasing sales of related items.
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Personalised product recommendations
IoT devices linked to a customer's purchase history provide targeted promotions in a retail app, improving customer satisfaction and increasing the likelihood of a sale. For example, a customer who frequently buys organic products could be alerted to special discounts on new organic items when they enter the store.
✍ Example. Target uses in-store beacons to deliver real-time discounts and promotions to shoppers’ smartphones, increasing sales of targeted items by 30%.
Smart mirrors and virtual fitting rooms
Many fashion retailers are using IoT-enabled mirrors that allow customers to try on clothes virtually, which is convenient and saves time. Some mirrors also use AR (augmented reality) to show how an outfit would look in different lighting conditions and even offer virtual try-ons, making the shopping experience more immersive.
✍ Example. H&M and Zara introduced digital fitting rooms in selected stores, allowing customers to try on items virtually before buying, increasing convenience.
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Energy management solutions
IoT integration can also highlight unseen but significant challenges that owners of a retail chain organisation may face.
Intelligent Lighting Systems
IoT-enabled lighting adjusts based on time of day and customer presence. This technology is commonly used in stores that want to provide optimal lighting for customers while saving energy costs during off-peak hours. For example, lights can be automatically dimmed in areas without foot traffic.
Predictive Maintenance and Equipment Monitoring
IoT sensors detect and report early signs of equipment failure, enabling predictive maintenance. This helps avoid unexpected failures in critical equipment such as freezers, which can result in significant product loss and repair costs.
✍ Example. Walmart employs IoT-enabled refrigeration to manage temperature across stores, which has reduced energy usage by 20% while ensuring product freshness.
Olga V.
Business Manager
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What opportunities hides the Future Of IoT In Retail
The competitive race will be won by the companies that are first to embrace the future of IoT in retail. So here are the key trends to consider.
Integration with AI
Collecting and analysing big data with AI & ML technologies will affect many business processes:
- Improved customer insights – AI can process data from IoT devices to understand customer preferences and buying patterns;
- Demand forecasting – integrating AI with IoT-generated data can help predict future demand patterns, helping retailers stock accordingly and reduce waste. For example, AI-driven forecasting can help stores anticipate spikes in demand for certain items, such as holiday-related products or weather-dependent goods, improving stock accuracy;
- Real-time customer service – AI can anticipate and address potential issues before they impact the customer. This could include notifying a customer of a delay in their order, or offering a discount on a replacement item if an item is out of stock.
Expansion of omnichannel experiences
Today, customers can create a shopping list in a retailer's app, receive real-time guidance in-store and pick up their order without queuing. IoT ensures that click-and-collect orders are prepared and monitored to enhance customer convenience. Inventory sensors communicate with online ordering systems, letting customers know precisely when items are ready for pickup.
More ideas for getting customers' attention:
- Push notifications with relevant discounts;
- Reminders for abandoned carts;
- Suggestions based on purchase history contribute to an enriched shopping experience.
The impact of 5G technology
- Faster, real-time data processing – IoT devices will be able to operate at higher speeds, making real-time data and feedback more accessible. This is critical for applications such as smart checkout systems, where fast data processing is essential for smooth operation;
- Seamless device connectivity – 5G will support a greater number of connected devices simultaneously, making it easier for retailers to implement IoT solutions across multiple stores without connectivity issues;
- Improved customer analytics and insights – retailers will instantly process and analyse vast amounts of data from in-store IoT devices, giving them more accurate insights into customer behaviour and preferences.
Benefits of IoT in Retail
To sum up, you can scale your business through the following benefits of IoT in retail.
Enhanced Customer Experience
Here are some ideas on how to increase customer loyalty:
- Personalised shopping journeys – IoT-driven data provides insights into customer preferences, allowing retailers to create tailored shopping experiences.
- Reduced wait times with checkout-free systems – IoT technologies such as Amazon's 'Just Walk Out' technology enable seamless checkout processes, allowing customers to skip traditional queues altogether.
- Interactive shopping – IoT helps customers engage with products before making a purchase.
Improved Inventory Management and Efficiency
IoT offers valuable savings in the following areas:
- Reduced out-of-stocks and stock-outs – real-time inventory tracking optimises storage space and ensures customers can find what they need
- Reduced waste – IoT technology enables better monitoring of expiry dates and storage conditions, reducing food waste by up to 20-30%.
Cost Savings and Optimised Operations
After implementing IoT, you will see improvements in these processes
- Reduced labour costs – IoT devices help reduce labour-intensive tasks such as manual inventory counting by providing real-time data on product levels, reducing the need for regular manual checks;
- Energy efficiency and savings – intelligent energy management systems significantly reduce operating costs by optimising lighting, heating and cooling across stores;
- Predictive maintenance – IoT reduces unplanned downtime and extends the life of equipment, resulting in significant cost savings over time.
FAQ
What does IoT mean in sales?
IoT means using connected devices to collect data about customer preferences, behaviour and product performance. This data is used to create personalised shopping experiences, predict demand and optimise product placement. IoT also supports digital payment options and faster checkout processes, making shopping more efficient and engaging for customers.
How is IoT being used in retail?
IoT can be implemented in retail stores through various technologies, such as smart shelves for inventory tracking, beacons for personalised promotions and automated checkout systems. IoT sensors are also being used to monitor energy consumption, reduce waste and improve equipment maintenance. This enables stores to provide real-time inventory updates, offer targeted discounts and maintain optimal environmental conditions to enhance the in-store shopping experience.
Is Walmart using IoT?
Yes, Walmart is actively using IoT technology throughout its operations. For example, Walmart uses IoT for real-time inventory tracking and energy management in its stores. By using sensors and data analytics, Walmart can ensure efficient store operations, monitor refrigeration units for food safety, and maintain optimal energy usage, thereby reducing costs and improving service quality for customers.
