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How IoT in Retail is changing the world for the better

How IoT in Retail is changing the world for the better


Retail is one of the most rapidly growing industries and has been encountering a strong inclination amongst people towards itself. Amazon, one of the big tech giants, has over 206.1 million monthly visitors which contributes to a revenue of over 350 USD. Joining the race we have AliExpress with a total of over 20 million daily visitors. 2019 turned out to be a transformational year for the retail industry and technology continued to change the engagement rules. Consumers got excessively demanding than ever making it harder to penetrate all the hurdles present in the market against your brand.

The modern technology is disruptive beyond imagination and holds the power to bridge the distance between brand, product, and the consumer. The market size of IoT in retail is estimated to grow to USD 94.44 billion by 2025 which seems to be a good reason why most of the brands have started to harness the power of IoT in retail. There are numerous ways in which IoT could be used as a tool to transform the retail industry and in order to understand those ways we first have to understand what IoT is.

The Internet of Things (IoT) defines the extension of the connectivity of the internet to everyday objects and physical devices used i.e. all the items that are used by us will be interconnected, can exchange data, and can be optimized as per our requirements. It breaks the wall standing between brands and wide range of opportunities in various fields like transportation, healthcare, and retail.

How does Internet of Things (IoT) contribute to the Retail?

There is a lot of possibilities in which IoT can improve the customer experience and just about as many in retail management. Here are the major opportunities for the Internet of Things in retail.

Personalized Customer Experience

IoT can prove to be a great medium for a brand to establish a personal connection with its customers. For instance, it can be used to attract the people passing by to visit your store via an IoT enabled notification to their smartphones. This technology can be used by retailers to gather information about the customers and could be used for microtargeting. It will allow marketing managers to make more precise choices and use advertising budgets in an effective manner. It can also be used to send timed and targeted notifications via Beacons based on the collected data about the customers.

Optimization of Supply Chain and Logistics

All the items can be tracked by using GPS and RFID and it will allow the brands to have a tighter grip on the vendors as it would become easier to monitor the delivery conditions such as location and time. It can also help in testing different vendors, modes of transport, and delivery routes to collect the data and build the cheapest yet most effective framework. The same can be implemented for product distribution and delivery to the end-user.

Innovating in-store experiences

User-friendly and smart fitting rooms with intelligent suggestions can be built using IoT and human workers can be replaced with smart solutions. It will transform the retail industry beyond imagination, just like Amazon Go is trying to do at the moment by using IoT on a larger scale to revolutionize in-store experience. It eventually contributes to an Interactive Shopping Experience.

OSHBot, a Lowe’s Innovation Lab creation, helps users find specific items and answers their questions.

Increased store management efficiency

IoT put together a lot of things that contribute to increased efficiency of business operations in retail. It includes:

  1. Automated packaging services
  2. SKU accounting and
  3. Drones for monitoring

It helps in reducing shrinkage, managing the storage units, and navigating the inventory in a convenient manner.

Cashier-less Checkouts

What seemed to be a thing of sci-fi, is a reality now. We are talking about robots. Robots are the best way to reduce the amount of workforce involved in in-store management. Instead of having human workers at cash counters, robots can be made to do it with the help of machine algorithms. This would be a great example of IoT on a smaller scale. It won’t replace humans completely but can reduce the manpower consumed which can be utilized somewhere else.

Benefits of Internet of Things (IoT) in Retail

It’s quite clear how IoT can be implemented in retail but what about its benefits? What are they? How will it benefit the retail sector? Here are the major benefits and try to understand how it will benefit the retail industry.

Better customer service

Cameras, sensors, and face recognition algorithms, all can be shed under the umbrella of IoT. They can be used to identify an impatient or confused shopper. The situation can be handled smoothly providing the customer with a pleasant and memorable experience.

Enhanced supply chain management

Customers can take benefits from the digital solutions provided by a brand while using their physical stores. It acts as an ideal way for retail companies to achieve harmony and synergy between the online and offline store experiences.

Smarter Inventory Management

Internet of Things (IoT) can be used to keep track of the number of products in the store, can drop you notifications about it or can drop a reminder to replenish stocks on time, making the process of inventory management easy and simple. They can also send you an automated report that will eventually help in reducing taxes simplifying financial management. 

Automated checkouts

Smart cameras and sensors can be used at check-ins and check-outs to assist the customers by avoiding the chances of crowding at the entrance or exit. It will help in smooth in-store functioning and better customer experience.

Automated checkouts

Reducing shrinkage and fraud

It adds a layer of traceability i.e. the process can easily be traced (delivery status) and tracked (time and location) at any instant and hence makes the complete process a lot more transparent.

Challenges in the Internet of Things (IoT) applications in Retail

Just like a coin has two different sides to it, everything has both positive and negative sides i.e. advantage and disadvantages or some challenges on the way if not disadvantages. There are some challenges faced by IoT in the Retail industry as well. The major ones are:


Threats regarding data security and privacy are pretty valid. Access to customers’ data provides retailers with a lot of opportunities but it opens the doors to cyberattacks and privacy invasion for the customers. To tackle this situation and avoid it from happening in the first place, retailers should work closely with IoT software developers in order to make sure that strong security mechanisms are used to build the devices. There should be end-to-end encryption, regular software updates and a non-temperable IT infrastructure to avoid bugs, errors, and other vulnerabilities.

Data Management

Retail businesses lack proper qualifications and field expertise because of which IoT data analysis becomes a challenge. IoT collects a huge pool of data and there isn’t proper technical as well as an analytical skillset in the retail sector to gain valuable insights out of it. As a solution, they can hire domain experts who can easily take care of the data management processes. By overcoming data management challenges, retailers can make their IoT investment profitable and can gain a competitive edge in the market.


IoT requires a huge volume of data and network components which most of the retailers lack. A robust network with cloud solutions and end-user solutions like bar code scanners is required for the complete digitalization of the retail business. But that would require a good amount of investment which might not be feasible for everyone. So, what can be done in such a scenario? One possible solution could be taking baby steps i.e. not investing in IoT or any other new technology in one go but in segments. For instance, using IoT to manage AC or lighting would result in immediate increased ROI and you can get more advanced with IoT solutions over a period of time.

Internet of Things (IoT) applications in Retail

Personalized alerts: Using smart devices, notifications and alerts can be sent to customers about new products, order status, etc.

Internet of Things (IoT) applications in Retail

Smart shelves: Counting and keeping a track of the number of items on a particular shelf.

Shoppers mapping: A track of the shoppers’ history can be maintained, allowing brands to reach out to them for new offers.

Inventory management: Notifications about replenishing the stock or generating reports to save taxes and simplify the financial management processes.

Asset Tracking: Can easily track your ordered item and know it’s status i.e. location, delivery date and time, expected arrival.

Final Words

The Internet of Things (IoT) has great potential to transform the retail industry. It might not seem to be an ideal choice for everyone as it requires a good amount of investment, but it can be harnessed in small steps. For instance, using it to digitize your store by replacing human workers by robots for payments and billing. It will contribute to an instant increase in ROI. IoT can not only improve the customer experience but brand loyalty as well which is a great factor for a brand’s success.