Over the past years, IoT adoption has become a more common practice across the retail industry, and the trend is gaining momentum today. According to Allied Market Research, the global retail IoT market is expected to reach $177.90 billion by 2031, growing at a CAGR of 20.3% from 2022 to 2031.
One of the reasons for IoT growth is that the technology helps retailers gather and access valuable data, which is required for more intelligent and effective decision-making. Moreover, by developing IoT solutions for retail, enterprises can leverage automation, optimize business performance, and enhance customer experience, increasing competitiveness.
This article covers the concept of IoT in retail and highlights seven technology use cases.
The top use cases for IoT in retail
Here are several examples of how to use IoT technology for retail operations.
1. Automated checkout
Checkout has always been one of the most time-consuming processes for store employees and customers. Sometimes, the customer can even leave a store to avoid wasting time in a long queue.
IoT allows retailers to speed up and simplify checkout by bringing advanced automation capabilities. For example, a retailer can implement an IoT-powered system that scans products’ RFID tags and automatically collects payments via customers’ mobile apps when they leave the store.
A retailer can achieve several business benefits when adopting an automated checkout solution. For instance, by eliminating the need to stand in lines, a retailer can improve the customer experience and thus stand out from the competition.
Among other things, by implementing IoT, a retailer can reduce staff costs while enhancing employee productivity. After all, store employees are no longer required to spend time on routine checkout activities. Instead, they can focus on more essential tasks like customer engagement and retention.
2. Product layout optimization
The layout is one of the critical factors that determine whether customers will purchase a particular product or not. As IoT allows retailers to optimize product layout and placement, the technology can be extremely valuable for increasing sales.
For example, a retailer can implement IoT sensors that collect information about customer behavior in specific store departments or product areas and monitor how consumers react to a particular product layout. Later, this information can be used for layout optimization.
This way, using IoT, a retailer can sell more products from particular brands and manufacturers or increase sales of products with a limited expiration date. In addition, an optimized product layout can help a retailer increase the average check size, thus improving overall business profitability.
3. Inventory management
Inefficient inventory management can lead to understocking and overstocking, which are bad for a retail business. Without enough inventory, a retailer cannot meet the demand, reducing customer satisfaction. On the other hand, if a retailer has excess inventory, the operating costs can increase, negatively affecting retail business profitability.
Fortunately, retailers can mitigate these risks by adopting IoT for inventory management. As an option, a retailer may tag inventory with RFID tags, each containing a unique identifier (UID). With these tags, retailers can track any item remotely, which helps speed up and simplify inventory audits.
Additionally, the technology allows transferring the inventory data automatically to local or cloud storage and, if necessary, updating it in real-time. Such data centralization also simplifies inventory audits, reducing human factors and enhancing service quality.
4. Retail facility management
Ensuring effective facility management is one of the most demanding responsibilities for any retail business, and IoT can come in handy. First, retailers can use IoT sensors to monitor the condition and health of their facilities and equipment.
For example, these sensors can track humidity, temperature, and occupancy parameters. An IoT-powered system can automatically alert human specialists if these parameters deviate from the norm.
In addition, retailers can use IoT to reduce operating costs through more intelligent resource allocation. In particular, a retailer can implement a smart lighting network. The latter can operate at increased power during peak periods and automatically turn off when no customers are in the store, reducing energy consumption.
5. HR management
Customer satisfaction is highly dependent on service quality, which, in turn, hinges on human resources, making HRM critical to the success of a retail business. The good news is that IoT can help retailers transform their HR management by making it more efficient and intelligent.
For example, a retailer can establish a network of wearables that would collect employee data and provide it to HR managers. Using wearables data, HR managers can track employee health, performance, stress, and well-being to manage and allocate human resources more efficiently.
6. Product usage monitoring
Even when a customer has already purchased a product, a retailer can continue tracking the item with IoT. First, by analyzing IoT data, the retailer can alert customers in advance when their product requires maintenance. In addition, the retailer can collect product usage data and then utilize it for marketing purposes.
Marketing is another aspect of the retail business that can benefit from IoT. For example, sensors and other connected devices can collect consumer data, helping retailers better understand customer preferences and needs. Based on this data, retailers can offer more personalized programs and discounts or provide more targeted advertising.
The Internet of Things technology is no stranger to the retail industry. Moreover, the adoption of IoT in retail has been on the rise in recent years.
One of the reasons for such IoT popularity is that the technology provides retailers with valuable data, leading to more effective decision-making. In addition, IoT technology helps transform multiple aspects of retail, making businesses more productive and competitive.
For example, retailers can implement IoT to streamline inventory management, facility management, HRM, and marketing operations. Additionally, IoT can help retailers establish automated checkout and remote product usage monitoring.