Connecting the world of physical objects into a smart network, IoT technology brings new business opportunities for retailers and provides data-driven insights for decision-makers. According to Grand View Research, the global IoT retail market was valued at $42.38 billion in 2022 and is expected to grow at a CAGR of 28.4% from 2023 to 2030. The statistics show that more and more retail businesses are implementing IoT solutions to explore new ways of connecting with customers, boost sales and streamline business operations.
This article explores popular and non-trivial use cases and examples of how IoT tech can help retail companies.
1. Predictive equipment maintenance.
IoT solutions enable retail stores to monitor and manage their equipment, including HVAC systems and refrigerators. The malfunctions of these systems in retail food stores happen unexpectedly and can lead to food spoilage, energy overconsumption, and loss of revenue.
Walmart is applying IoT technologies for effective store equipment management. For example, the retailer uses sensors and IoT applications to monitor the temperature of individual refrigerators and the equipment’s condition to take proactive measures and prevent its breakdown. Apart from refrigerators, Walmart utilizes IoT sensors to remotely control its HVAC systems in stores in a particular U.S. region or individual stores, reducing energy consumption and utility costs without negatively impacting the customer experience.
2. Supply chain and cold chain optimization.
Interconnected IoT devices, including GPS and RFID tags, allow retailers to track the entire journey of their products, from production to the customers’ sites. Businesses can collect real-time data on how the goods are stored and transported, their location and their condition during delivery.
IoT technology is especially relevant in managing the supply chain of sensitive products like food with short shelf life or medicine. Humidity and temperature sensors continuously monitor the goods during transportation to ensure safe delivery.
Relying on real-time data, logistics managers can identify delivery delays, make the supply chain more efficient and prevent products from spoilage due to the timely identification of some environmental condition deviations.
Controlant, a leader in the pharmaceutical supply chain that uses around 200,000 IoT SIMs in its devices placed in trucks, pallets and boxes. The devices are connected to the IoT platform and transmit data to Controlant’s data center. The data is shared with Controlant’s customers in real time, alerting them about potential issues or allowing them to optimize supply routes. Customers use the transmitted data to ensure their goods are safely transported and the delivery complies with healthcare industry regulations.
3. Inventory management.
With innovative inventory tools, retailers can always be sure the necessary goods are in stock in a particular store. IoT sensors such as RFID tags, beacons and cameras gather real-time data that help retailers improve inventory management processes, eliminate the risk of items being out of stock and help provide the utmost customer service.
Macy’s stores brought their sales flow inventory to a new level with RFID tags. By regularly tracking and counting the stockroom’s inventory with RFID tags, Macy’s improved inventory visibility and ensured the required goods were available for consumers to purchase. In addition, Macy’s used RFID tags for asset protection by receiving real-time information on where exactly, when and what item was stolen. Such RFID data is critical when goods are stolen to be resold and also gives valuable insights into which stores require more attention in terms of security.
4. Exceptional customer experience.
Adopting advanced technology in retail stores makes the shopping experience more engaging. For example, IoT solutions can collect data on how customers react to specific product placement techniques and help personalize the buying experience by improving product layout strategies. This information can streamline selling unwanted products, goods of a particular manufacturer, or stuff with a limited shelf-life.
Example: Ahold Delhaize
One of the world’s largest food retailers, Ahold Delhaize, deployed electronic shelf labels (ESL) across its network of retail stores. ESLs let buyers conveniently obtain pricing information and pay with mobile phones or NFC cards. In addition, the technology provides for automated price reduction of products close to the expiration date. The ESL powered with Microsoft capabilities allows the retailer to remotely update over 3 million ESLs in just 80 minutes.
A food store chain, GetGo provides another example of how an IoT-enabled technology can transform the customer experience. GetGo replaced the traditional cooler aisle doors with digital smart screens running in Microsoft Azure IoT Edge runtime. Digital screens, in contrast with conventional doors, significantly changed the in-store experience by providing the customers with relevant information on the beverages’ pricing, promotions and nutritional information. Smart merchandising helped GetGo improve the consumer experience and increase sales.
Self-checkout systems in retail stores significantly streamline the customer experience and improve stores’ operational efficiency, eliminating the need for customers to wait in long queues to buy goods. Self-checkout solutions comprise barcode scanners or RFID readers to identify purchased products and integrate various payment methods like credit cards, mobile phones and NFC. In addition, modern checkout systems can read tags from each product when the customer leaves the shop and automatically charge the consumers in their dedicated mobile apps.
A young startup, Mashgin, offers self-checkout systems that do not require barcodes or RFID tags to scan a product. Instead, the AI-powered checkout system uses multiple cameras and creates 3D models of goods regardless of their placement or packaging. As a result, Mashgin’s self-checkout system helps customers purchase products up to 10 times faster than a traditional cashier. The solution can be placed anywhere from retail stores to stadiums and cafeterias.
The future of retail is at the joint of physical and digital worlds, so integrating IoT in the retail industry is not just a trend but a necessity for retailers to win in this race. Multiple successful implementation examples prove that, despite being rather costly, IoT solutions bring many benefits to retail businesses, from improved supply chain and inventory management to superb customer experience with IoT-powered shelves and self-checkouts. Therefore, by delaying the integration of IoT into your business, you risk missing out on the new opportunities and value the IoT can bring.
Elizabeth Karpovich is a Technology Research Analyst at itransition, a U.S.-based software development company. She closely follows digital trends and innovations and analyzes how technology can streamline business processes across industries and daily lives.