The Internet of Things (IoT) in the retail industry – Growth and advancement opportunities
IoT is one of the leading technologies that has transformed many industries significantly. From manufacturing to retail, this technology is embraced for its advancements, benefits, and opportunities worldwide. If we talk about which are the most emerging sectors in the past few years globally. Undeniably, the retail industry tops the list as it has seen massive advancements and digital transformation from the past few years. And now, the perfect combination of data analytics and IoT has turned this industry into a prosperous field to invest in.
With the arrival of IoT in the retail sector, manufacturers and retailers have seen numerous possibilities that bring more profound insights into consumer behavior. If we talk about the market size of IoT in the retail sector- The global Internet of Things (IoT) in retail market size is expected to grow from USD 14.5 billion in 2020 to USD 35.5 billion by 2025, at a compound annual growth rate (CAGR) of 19.6% during the forecast period.
These stats show how dramatic transformations the retail sector has experienced with the innovative IoT technology. In this post, we will cover a few FAQs that the retailers usually ask. These questions help retailers to understand how IoT is taking the retail sector to new levels.
What is IoT in retail?
IoT in retail is mainly helpful in identifying the customer’s behavior. It tracks, analyzes, records, and transmits the personalized information of the customer’s shopping experience by closely monitoring their routine purchase behavior. This helps marketers and retailers to understand their customer’s preferences seamlessly. Furthermore, the integration of IoT with the system and devices allow retailers to interact with their customers in real-time. This improves the communication among them and generates the loyalty of the customers for the brand.
Apart from the consumer behavior, the retailers also get meaningful insights that help them in building and managing innovative packaging, inventory management, merchandise placement strategies, and more.
What are the business benefits of IoT in retail?
Investment in innovation is always challenging for businesses as they are unsure about the ROI and benefits, they will get after investment.
But today, more than 80% of retailers agreed that IoT would be the future of retail due to the immense benefits it offers. Following are some of the best benefits that your brand can leverage by integrating IoT in your business system
1. Smart inventory management
A lack of accurate tracking of inventory costs the retailers loss in billions annually. But implementation of IoT eliminates the chances of these losses by automating inventory visibility. Smart inventory management solutions help retailers to improve their procurement planning. So, whenever the product is low in inventory, with the smart IoT analytics data, the retailers get the idea of filling the adequate amount of stock.
The advancements of digitization also lead to the rise in hacking activities. As a result, the adoption of IoT in the retail sector increases. Device authentication and encryption are the two significant benefits that IoT offers to retailers in terms of security. On one end, the encryption helps to convert the sensitive data into codes, on the other side device authentication helps identify the specific devices to prevent unauthorized access and to track malicious activities.
3. Supply chain management
IoT in the retail supply chain helps monitor the movement of goods from the manufacturing location to the spot where the final delivery occurs. With the help of RFID tags and GPS sensors, the retailers get the complete picture of the transportation, including the time it takes to reach the destination or the storage temperature if there is any perishable product transported.
4. Enhanced customer experience
3 out of 5 retail stores have acknowledged that implementing IoT solutions in their retail business helped them attract more customers than ever before. Apart from the customer’s enhancement, their business efficiency also raised manifolds.
5. Automated checkouts
When it comes to retail shopping, manual checkouts are the most disliked process by the customers. The checkout lines are always long which makes customers uninterested in purchasing items and as a result, they leave shopping in between. To eliminate this practice, IoT automates POS systems that help retailers read each product and generate the bill digitally which can be payable by the mobile payments app of the customers.
6. Personalized communication
IoT solutions help retailers get detailed information about their customers to provide them personalized shopping experience and increase their satisfaction level. The data collected by smart IoT-enabled devices allows retailers to create more customized marketing strategies and advertising campaigns to target potential customers to a great extent.
7. Innovate in-store experiences
Integrating IoT solutions in retail stores results in improving the in-store experience of the users. Services like automated checkouts, shelf assistance, and customized offerings play a vital role in attracting customers in great numbers. Moreover, retailers also get assistance in fraud detection, real-time visibility, shelf management, and stock fulfillment which leads to better and smooth business operations.
8. Smart order fulfillment
Order fulfillment and warehouse management have always been critical tasks for retailers. As a result, big market giants like Amazon, Alibaba, and more are using IoT solutions for managing their warehouses and inventory. Another best example of the market giants that are using IoT for its order fulfillment is Kroger; this US-based retail company has installed 2200+ smart shelves with RFID tags in their supermarkets that can detect items and send the data to IoT systems which are further analyzed by retailers for inventory count.
Which is the most critical area where IoT is essential in retail?
Logistics and supply chain is the critical area where IoT plays a significant role. In logistics and supply chains, IoT tools help in improving operations, increase efficiency and prevent loss. The IoT sensors are used to monitor the goods throughout the supply chain. It comes with various tracking systems that help to generate valuable insights, including location, goods safety, on-time deliveries, temperature maintenance for better quality control and traceability.
Deloitte proves this fact; according to it, 74% of retailers who have used IoT technology in their logistics and supply chain have seen an immense surge in their annual revenues.
What are the best examples of IoT in retail?
Following are the trending examples of using IoT technology in the retail sector-
1. Smart shelves
Smart shelves are emerging trends that simplify inventory management in the retail sector. It comes with three elements: an RFID tag, an RFID reader, and an antenna. These tags come with an integrated circuit and a microchip antenna that transmits the data to the reader. These smart shelves automate inventory management. It makes sure that the products are not overstock or understock; whenever the items are running low or expired, it sends notifications to the managers and updates on the sales.
Beacon technology helps in enhancing the customer’s loyalty and boosts sales. According to the reports, the Global Beacon Technology Market is forecast to be worth USD 35.15 Billion by 2027, according to a current analysis by Emergent Research.
Beacon devices in the retail sector are used for promotions and sending push notifications to the customers related to real-time offers, discounts, shares once they come into the coverage area. The personalized offers and discounts notifications enhance the interest of the customers towards the stores and purchases.
3. Automated checkouts
Self-checkouts have become another trending practice in the retail sector. The IoT-enabled checkout system replaces the cashier team and eliminates the rush in the store. Now, this system verifies the purchasing products of the customers and discusses the amount. This practice enhances customer interest in the stores significantly. Moreover, it is helping retailers in saving the cost of recruiting new people for multiple checkout spots.
Robots in the retail sector have gained momentum for their customer service and data gathering. According to market reports, the Retail Robotics Market was valued at USD 4.78 Billion in 2018 and is expected to witness a growth of 31.89% from 2019 to 2026 and reach USD 41.67 Billion by 2026. Retail robots are primarily used to collect data about the products and the customers’ buying patterns that help increase the efficiency and accuracy of inventory management. With the use of robots, the retailers get the holistic IoT solution. One of the best examples of using robots in retail is the European grocery retailer Auchan Retail Portugal, which uses robots.
5. Digital signage
Digital signage replaces the traditional print media; now, with the help of in-store digital screens or intuitive touch screens, retailers impress their customers. This IoT technology helps improve the in-store experience of the customers by displaying the advertisements in more realistic and appealing ways. The system collects the data and displays advertisements, catalogs, and even personalized ads to the customers, increasing customer engagement to the next level.
So, don’t wait for the digital transformation, be a transformation.
Retail companies using IoT technology in their current business system have unlocked the doors of immense possibilities. These IoT-enabled systems help companies to increase customer engagement and enhance their product’s global reach. IoT has already brought dramatic transformations in the retail sector that significantly impact the profitability and brand enhancement of the companies. Hence, integrating IoT is a profitable deal for the businesses who wish for a good start in this sector or are already existing players.
To know more about digital transformation and other solutions like data analytics, feel free to reach out to us. We are a leading digital transformation company that helps clients globally transform their businesses with cutting-edge technologies that add value to their business.
Grocery shopping with your voice-assistant
How we helped a US retail giant deliver hands-free shopping experiences?
Let’s build the next big thing!
Share your ideas and vision with us to explore your digital opportunities
Hiring Employees vs. Consulting Firms: How To Ensure Maximum ROI
Choosing the right approach can significantly impact your business's ROI when hiring...read more
Planning a Cost-Effective Digital Product Development
Digital product development can be an exciting journey, taking an idea and...read more
11 Tested & Proven Ways to Reduce IT Costs for Your Business
‘How to reduce IT costs’ has been searched numerous times after COVID'19...read more
Vandana Parashar is a Content Writer and a learner with an ongoing curiosity to learn new things. She writes for B2C and B2B businesses, creates content that holds attention, builds authority, and drives action.