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How is IoT changing the retail industry?

September 7, 2022
7 min
IoT in retail industry

Today’s technologies are rapidly changing almost every industry, providing new opportunities to increase revenue and expand the target audience by reaching wider circles of potential customers. Taking the retail industry as an example, it’s clear that the Internet of Things is one of the most popular and highly demanded tech trends. But why is there such an important role for IoT in the retail industry? That’s exactly what we’ll focus on in this article. 

This blog post will cover some IoT retail use cases revolutionizing this sector.

Internet of Things in retail: Market overview

The global market for IoT in retail reached $28.14 billion in 2021 and is expected to hit $177.90 billion by 2031, with a CAGR of 20.3% in the period 2022 to 2031.

Iot in retail

Retail companies use IoT-powered solutions to enhance the buyer experience, decrease operational costs, boost business growth, and increase their overall performance.

IoT devices enriched with special sensors let retailers accumulate customer feedback. This real-data information helps them track buyer satisfaction and enhance the customer experience.

IoT sensors also let retailers monitor products and their transfer across the entire supply chain. 

Another benefit to deploying IoT in retail stores is the opportunity to detect the location of shopping baskets and carts otherwise considered lost. Being able to monitor the location of such objects allows stores to avoid the expense of replacing them. IoT sensors can also help retailers get notifications when carts and baskets are damaged.

IoT in supermarkets helps effectively monitor store space, conduct inventory and supply chain management, and track customers’ demands.

Moreover, IoT applications in retail allow for automating and streamlining the supply chain, significantly reducing operational costs and excluding human error from the logistics process.

IoT retail Use Cases

Let’s have a look at some of the most popular examples of IoT in retail.

Predictive equipment maintenance. Every supermarket has many types of equipment that can be enriched with sensors for alerting management when maintenance is required. This makes it possible to avoid equipment failure, ensure product safety and avoid financial losses, for example when a freezer unit fails.

Demand-aware warehouse fulfillment. RFID-powered IoT solutions let supermarkets track sales in real-time, monitor what goods are missing in stores, and use the received information related to customer demand to plan further supplies. When it comes to warehouses and work organized there, it’s worth mentioning increased interest in using IoT drones to optimize the working process.

Smart supermarkets. There’s a rather wide use case in this industry that includes a huge range of IoT solutions. Smart supermarkets rely on connected IoT devices for collecting physical data that is further processed by digital platforms to be used in making better decisions. In smart supermarkets, staff can get information about changes in customer demand during the day, analyze how buyers are moving around a shop (possibly thanks to GPS-powered smart carts), which shelves are drawing more attention, etc. If such solutions are properly designed and implemented, they can ensure both higher corporate efficiency and a better customer experience.

Real-time monitoring of goods. Thanks to devices such as smart shelves and RFID cameras,  supermarket staff can see what products are in highest demand and which should be restocked. Thanks to timely restocking, you can reach not only a higher level of customer satisfaction but also higher profits, definitely a win-win.

Supply chain and logistics management. IoT devices enriched with various kinds of sensors ensure excellent visibility across all stages of the supply chain (from the manufacturer to the shopping bag). Using these devices, retailers can reduce operational costs, improve efficiency and offer a superior shopping experience to customers. You can read more about the Internet of Things in logistics in one of our previously published blog posts.

Personalized shopping. IoT solutions also help to personalize shopping experiences. For instance, supermarkets can use Bluetooth beacons that send notifications to smartphones based on the location of a buyer. When a potential customer who might be interested in special offers or discounts is close to the supermarket, his or her smartphone will receive an alert in real time.

Facility management. IoT technologies can be used to streamline tasks related to cleanliness, safety, and comfort in supermarkets. Visitor-counting data and presence-detected data can be taken into account for identifying the most frequently used areas, to create the most appropriate cleaning and sanitizing schedules. Wireless IoT sensors provide managers with information on supplies of cleaners and other consumable products so that they can be replenished in a timely fashion. Environmental sensors help to monitor ventilation, lighting, and temperature. With this information, supermarkets can not only create the best conditions for customers but also optimize their operational expenses, energy management, and sustainability.

How IoT solutions helped supermarkets amid the COVID-19 pandemic

While the world seems to be moving past the difficulties we all faced during the first wave of coronavirus, many businesses are still affected by restrictions. Retail (especially supermarkets), was perhaps not the sector that suffered most. However, it did have to find the most innovative ways of working with customers to sustain the demanded level of service and to meet requirements related to COVID-19 measures. IoT solutions greatly helped supermarkets adapt to the new reality.

  • Video analytics. While video surveillance technologies are nothing new for supermarkets, some companies have begun using cameras to enhance inventory management. Now RFID-equipped cameras help staff understand the demand for various products and customer behavior. But that’s not the end of the functionality of these cameras. They also help supermarkets monitor the number of visitors that are shopping simultaneously and restrict their number by COVID-19 requirements.
  • Autonomous cleaning robots. Amid the pandemic, strict requirements were imposed regarding cleaning and sanitizing frequently touched surfaces, including self-service areas. shopping carts, countertops, etc. This is time-consuming, so to facilitate these tasks, autonomous robots were developed to fulfill these functions.
  • Contactless checkout kiosks. These solutions started gaining popularity even before 2020, but after the beginning of the pandemic, demand increased dramatically. They make it possible to buy products without direct interaction with staff.

Real-life examples of using the Internet of Things in retail

If you think that retail IoT solutions are just innovative projects that haven’t been implemented in supermarkets, we’re here to tell you that’s not true. Of course, some cutting-edge retail IoT devices are still waiting to be deployed at points of sale, but some are already being used. Our list of retailers using IoT is proof (of course, this is not a comprehensive list; just a few of the brightest examples). 

  1. Walmart. This retail giant uses a smart-shelves IoT solution. AWM’s SmartShelf has edge displays and optical sensors that show product pricing and other related information. These devices also send data about inventory levels. They are also able to detect a buyer’s age, ethnicity, and gender. This information helps to detect the most appropriate content to be displayed.
  2. DHL. The worldwide shipping company uses autonomous mobile robots in some of its facilities. These robots are intended to optimize warehouse operations, thanks to decreased labor costs and enhanced speed and accuracy of order fulfillment.
  3. Room & Board. This furniture and home furnishings retailer use a counting system and retail analytics system developed by Flonomics. This tool allows retailers to define optimal staffing levels on different dates and at different times during the day. Thanks to this information, shops can adjust their marketing strategies to the ongoing conditions, better manage traffic flow, and improve customer experience.

Benefits of IoT in retail

Let’s summarize the key advantages of such solutions that greatly boost the popularity of IoT services among retailers.

Iot in retail

  • Modernization of supply chain management
  • Facilitation of inventory management
  • Improvement of customer experience
  • Accurate foot-traffic monitoring
  • Precise maintenance forecasting
  • Higher efficiency in moving merchandise
  • In-store staff optimization

Pitfalls of integrating IoT applications in retail

Though the advantages of using IoT in the retail industry are quite tangible, before deciding to implement IoT-powered solutions you shouldn’t ignore the challenges associated with them.

  1. Security issues. As IoT solutions are based on a network of remote devices, they can become an easy target for hackers. Moreover, providing employees and customers with access to gathered data can look promising from the perspective of potential benefits, but it also increases risks.

How to solve this issue? End-to-end encryption, user verification, secure username and password, and constant software monitoring increase data privacy.

  1. Necessity to work with huge volumes of data. The task for retailers is not merely to gather data from sensors and devices but also to efficiently handle it. However, retailers do not always have the technical skills to do that.

How to solve this issue? There are two solutions. You can either hire specialists with relevant skills or rely on a third-party partner.

  1. Lack of infrastructure. It can happen that a company doesn’t have the necessary equipment to process huge volumes of data received from retail IoT devices.

How to solve this issue? The only thing that can be done is to purchase the necessary equipment. But it’s important to plan these investments wisely to ensure seamless digitalization and modifications.

Final thoughts

As you can see, the Internet of Things is one of the most promising directions for tech solutions for retail. Thanks to the new opportunities IoT offers retailers, it’s possible to bring the buyer experience to a completely new level, facilitate many tasks for staff and increase profits. Undoubtedly, with this scope of benefits, the demand for such products will keep growing in the future.

If you are planning to launch a solution powered by IoT for the retail industry but still haven’t found a team that will help you, please remember that at Cogniteq we are always at your disposal. With our rich expertise in IoT software development and deep understanding of today’s trends in the retail industry, we know how to build a solution that will bring real value to your business and ensure its stable growth. Leave your inquiry on our website and get a free consultation with our experts!

FAQ

  • What devices can be implemented in retail IoT solutions?

It’s hardly possible to list all the existing options. But the most widely spread ones include:

  • digital signage
  • top-of-the-shelf displays
  • beacons
  • smart carts
  • price displays
  • smart shelves
  • cameras
  • What technologies are used for building apps powered by IoT in retail?

IoT in retail is closely tied with the use of GPS and RFID technologies. They allow supermarkets to monitor products within the whole supply chain process. These technologies ensure the visibility that is required for tracking product movement, conditions, and location as well as for planning a delivery time and restocking.

  • What is the most popular case of using the Internet of Things in retail?

Though there is no precise data that can demonstrate the popularity of each type of solution in percentages, the most obvious example today in a great number of supermarkets is a cashierless payment system.