How is IoT Changing the Retail Industry?

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.

What is smart retail?

Smart retail is a term that is used to describe the concept of enriching traditional shopping with smart technologies.  The idea behind smart retail is much deeper than just pushing a customer to make a purchase, driving sales, and increasing revenues. The core idea is to provide consumers with more personalized interactions that will have a positive impact on their loyalty and their desire to visit the same store again.

To reach this goal, it is vital to concentrate on each step of a customer journey that starts from the moment when a person sees a supermarket (or its ad) for the first time and lasts till the moment this person leaves the store with purchases. Smart retail solutions are aimed at enhancing every component of this journey by personalizing the customer experience and boosting customer engagement.

Internet of Things and retail in figures

The global market for IoT in retail reached $42.38 billion in 2022 and is expected to hit $297.44 billion by 2031, with a CAGR of 28.4% in the period -  2023 to 2030.

The global IoT in retail market size

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 store managers accumulate customer feedback. This real-data information gathered by various solutions powered by IoT in the retail market helps to track buyer satisfaction and enhance the customer experience.

IoT sensors also let a retail store 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 a retail store helps effectively monitor the 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.

7 Key Use cases of IoT in retail

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. IoT in the retail industry 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 discount stores and other retailers track sales in real-time, monitor what goods are missing on the shelves, 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. Such stores 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 stores, staff can get information about changes in buyer behavior and 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, the staff of a retail business can see what products are in the 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 IoT retail solutions, stores 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 in the retail industry also help to personalize shopping experiences. For instance, retail businesses 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 in the retail sector can be used to streamline tasks related to cleanliness, safety, and comfort in stores. 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, stores can not only create the best conditions for customers but also optimize their operational expenses, energy management, and sustainability.

How IoT solutions helped retail business 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 large stores), 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 retailers adapt to the new reality.

  • Video analytics. While video surveillance technologies are nothing new in the retail sector, 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 stores 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 self-checkout kiosks. These solutions powered by IoT in the retail market started gaining popularity even before 2020, but after the beginning of the pandemic, demand for cashierless payment systems increased dramatically. An automated checkout system makes it possible to buy products without direct interaction with staff.


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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 retail solutions 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 in the retail sector.

Iot in retail

  • Modernization of supply chain management

Thanks to IoT, it is possible to get access to the most relevant real-time data regarding the movements of products starting from manufacturing to shipment. This information helps to optimize all the supply chain processes, better predict the time needed for delivery, and efficiently track the conditions of transporting and storing goods.

  • Facilitation of inventory management

The Internet of Things solutions, including RFID tags, shelf sensors, and beacons, can greatly enhance the visibility of inventory and increase the accuracy and value of related decisions. IoT can be used for gathering a lot of helpful inventory data that can be further applied to preparing vital analytics. Based on the results of deep analysis, retailers can better plan their further orders and understand the required amount of goods.

  • Improvement of customer experience

By using the data that are gathered by IoT sensors and devices, store managers can better understand the existing needs and demands of users, define trends, and accurately predict changes in them. With this information at hand, managers can find the best ways to offer clients an enhanced in-store experience and boost customer engagement.

  • Accurate foot-traffic monitoring

Smart retail systems are often enriched with video-based foot-traffic monitoring solutions. They help to detect the areas of stores that are the most popular among customers, define the time that they spend there, and find those zones that are practically invisible to many clients. Thanks to understanding general trends, retailers can reorganize their facilities to improve customer in-store experience and increase sales.

  • Precise maintenance forecasting

Predictive maintenance is one of the most popular cases of using IoT solutions in many industries. Thanks to a network of sensors that monitor the state of retail equipment, vehicles, and machinery, it is possible to avoid significant financial losses. When managers have a full picture of the state of different objects used at their facilities, they can better plan the time of their maintenance services and allocate a budget for them.

  • Higher efficiency in moving merchandise

When retailers have a good understanding of the exact location of different pallets, as well as their proximity, and the products that are placed on them, all movements of merchandise become much more sensible and better organized. IoT devices are also helpful for planning routes for moving goods at warehousing facilities and supermarkets.

  • In-store staff optimization

Such solutions as cashierless payment systems, AI-powered robot consultants, and smart security systems, allow stores to reduce their staff. Moreover, the use of such solutions helps supermarkets to concentrate more on providing more personalized in store experience to their customers as IoT tools not only automate processes but also accumulate valuable data about consumer behavior.

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!


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
  • RFID tags

What technologies are used for building apps powered by IoT in retail?

IoT in retail is closely tied to the use of GPS technologies and RFID tags. They allow retail stores to monitor products within the whole supply chain process. These technologies ensure the visibility required for tracking product movement, conditions, and location and 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 retail stores is a cashierless payment system.