How Can IoT Improve the Retail Industry?

Updated on Feb 22nd, 2024


Internet of Things (IoT) is transforming the retail industry. In fact, industry leaders consider IoT retail solutions to be a complete game changer that can make shopping a delightful and streamlined experience for the shoppers and transform how companies and shops market their product. 

With the help of IoT, retailers and marketers can gather critical customer and product data which they can then use to build better marketing strategies and business plans. Retailers can use IoT applications to boost efficiency, improve sales, and elevate customer experience. Due to these, and many more, advantages, IoT is considered a vital technology for the retail sector. And that is the reason why retail businesses around the globe are investing heavily in developing their own IoT retail solutions.

But, how exactly does IoT transform the retail industry? Well, let’s find out! 

This article will go over the benefits and challenges of implementing IoT in retail in further depth. Furthermore, we will look at the top use cases of IoT in the retail industry. 

  • IoT Solutions in the retail sector can assist in improve customer experience, lower operating costs, improve inventory management and provide high-quality services.
  • According to Microsoft research, in the United States, IoT is commonly used for security and retail analytics.

What is IoT?

IoT is a network of connected devices, sensors, objects with unique identifiers (UIDs), and the ability to exchange data without necessitating human-to-human or human-to-computer interactions. 

How Does IoT Function?

IoT sensors collect, send, and respond to information from their environs using embedded systems such as CPUs, sensors, and devices. IoT devices link to an IoT gateway and perhaps another edge device to share sensor insights, which are then either routed to the cloud for analysis or examined locally. 

“The Global Forecast report to 2026, IoT market size is expected to grow from USD 300.3 billion in 2021 to USD 650.5 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 16.7% from 2021 to 2026.” according to the markets and markets. 

IoT gives businesses a real-time view of how their systems work, offering details about process efficiency, supply chain, logistical operations, etc. Retail businesses also invest in IoT development services to automate internal processes and save money on staffing. IoT also reduces waste and enhances service delivery by lowering the cost of manufacturing and delivering items and providing transparency into consumer transactions. 

Role of IoT Applications in the Retail Industry

IoT is transforming the retail sector by providing endless new possibilities. It is quickly becoming an essential part of any supply chain, whether to provide highly tailored shopping experiences or offsite product interactions.  

IoT also aids retailers in leveraging real-time data from IoT sensors to determine when a product is about to run out of stock or what customers have purchased that day.  

In such fashion, the digitalized future of linked gadgets is reshaping the lives of consumers and radically redefining how the retail industry operates.


Top Challenges Faced by Retailers

Some of the biggest challenges faced by retailers today are:   

  • Inventory Overhead – Retailers typically have to invest additional money and raise their budgets due to higher overhead costs. There’s a narrow line between ordering too much merchandise and worrying about running out of stock. Of course, having too little inventory prevents you from making sales, but having too much stock increases your production and storage costs.    
  • Customer RetentionWhile customer acquisition has always been a challenge, customer retention is becoming a bigger hassle for most retailers these days. Due to online options and almost infinite options, retailers struggle to hold on to their customers.     
  • Choosing the Right Tech – In the age of modern commerce, retail technology and retail software development is critical for a company’s success. As customers’ journeys get more complex, businesses struggle to find the software solutions for their shops. Since the retail technology market is so saturated and there are so many options to choose from, most retailers have a hard time finding the right one. That is the reason why a lot of businesses these days go for custom IoT app development services to get the perfect solution for their company.    
  • Maintaining Price Points – Maintaining price points on high-end products has become particularly difficult, as buyers are either deferring purchases or choosing low-cost alternatives due to the current unclear scenario.

How is IoT Transforming the Retail Industry? Top Potential Benefits


1. Improves Customer Experience

Whenever it comes to customer experience, a mobile user linked to a network has great expectations from a retail store. Customers expect prompt service, accurate information, and a speedy delivery of goods. The introduction of IoT technology has aided retailers in achieving customer expectations and enhance their experience. Robot employees and self-checkout are IoT solutions that improve the user experience as well. 

2. It Helps to Predict Future Demands

IoT sensors collect data on customer purchasing behavior and provides forecast about purchases based on that data. 

3. Reduces Frauds

One of the most significant advantages of IoT solutions in the retail industry is that they provide an additional layer of security and traceability to the product management and delivery processes.

4. Data Analytics

IoT can also allow employees to examine trends such as failing items, product turnover rates, product positioning optimization, and acquiring knowledge of changing customer tastes and preferences.

5. Easy Inventory Management

Inventory management is more straightforward with IoT. Beacons, sensors, and RFID chips are used in the inventory management system to help synchronize assets with data centers. Smart displays, smart price tags, and CCTV cameras with image analytics capabilities are examples of IoT solutions that help improve control over goods in the stockroom or on the front shelves. 

Read More: IoT Software Development: A Complete Guide

Top Use Cases of IoT in the Retail Industry

With customer expectations getting loftier and competition in the market getting fiercer, retailers have no choice but to invest in IoT development services. With IoT retails can make their organizations more efficient, productive, and profitable. There are multiple use cases for IoT in retail and given below are some of the most popular ones.  


1. Smart Shelves

It’s been noticed that a significant amount of time and energy is spent in a retail business maintaining a record of various products, i.e., confirming the availability of a product and knowing its condition. To eliminate this inconvenience, smart shelves are a much better option. IoT technology automates product monitoring in the retail industry and decreases the risk of damage and theft.    

IoT-enabled smart shelf detects misplaced items or items that are running out of stock in the shop inventory and notifies the employees. Smart shelves also aid in precise and cost-effective inventory management. The RFID tags are connected to a reader, which allows the smart shelves to detect in-store thefts. Furthermore, it reduces the amount of money spent on security staff. 

2. UAVs for Deliveries 

Drone delivery of smaller goods is one of the most recent brave ideas in the retail industry. At the current time, there are still certain implementation challenges, such as lack of legislation, high propeller noise, and attacks on the distribution system. Despite this, IoT solutions are advancing every day. More people will soon be using this mode of delivery since the benefits are undeniable: remarkable delivery speed cost savings across the entire delivery process. 

3. Auto Checkout/Self-Checkout

One of the biggest complaints shoppers usually have is the inefficient checkout process. Due to long lines and poorly staffed checkout counters, the sales of a shop take a significant hit which ultimately hurts the revenues of the shop. However, IoT can help streamline the in-store checkout process with auto-checkout.  

This solution reads the tags on each item as customers walk out of the door. 

 The checkout system checks for RFID tags on the items and deducts the cost from the customer’s mobile payment app 

The self-checkout the design enhances the customer experience and raises the likelihood of returning to the store for future purchases.

4. Smart Logistics

IoT sensors in facilities and during transportation can collect data on the storage and movement of goods, vehicle fuel usage, routes, load factors, and other factors. Data is processed and already in the form of ready-to-use reports before being entered into the system and, for instance, into a mobile application that alters environmental conditions in real-time or alerts responsible parties. As a result of deploying such sensors, product losses due to poor storage conditions are reduced. 

5. Fraud Prevention

IoT lets you to track your supply chain and inventory in real-time, allowing you to see if something was taken and if yes, then who took it. This goes a long way toward protecting your business from hidden losses by enhancing CCTV surveillance with sensors. The IoT is the ideal security solution to put in place in your retail store. 

6. Personalized Messages

Loyal customers expect benefits such as personal discounts or awards in exchange for their loyalty. Setting up sensors that offer loyalty discounts to loyal consumers when they reach specific products with their smartphones is one of the most effective ways to reward your customers’ loyalty.    

Stores can employ IoT systems to provide tailored offers to their customers. Many companies like Starbucks, for example, utilizes iBeacon technology, which uses Bluetooth to deliver promotion and sales information to the customer’s phone. 

7. Assets Tracking

In a large retail business, it’s difficult to track a missing cart or any other item. On the other hand, asset tracking using IoT has proven to be effective in locating missing objects. Different sensors are installed on the assets to provide the store owner with precise location information. Asset tracking allows owners to prevent assets from being stolen or misplaced. A sensor for asset tracking can last for years before it needs to be replaced.  

Many highly respected firms offer mobile app development services that you employ to build your custom asset tracking app. This app will let you monitor the various IT resources and employees remotely.  

Challenges of IoT Implementation

Despite its many advantages, many retailers are still unwilling to invest in IoT because of some concerns and challenges  

Security and privacy are two main concerns when it come to IoT retail solutions. While having access to real-time data gives retailers a lot of advantages, it also makes way for cyberattacks. IoT systems developed using top security standards like end-to-end encryption, the latest IoT development frameworks, and advanced algorithms can help retailers safeguard their data and offer optimum security. 

Also, to acquire significant insights from IoT devices, retail employees need to have a sound, AI-based analytics engine, which they either need to get developed or buy off the shelf and train themselves. Both of these options are costly and require a lot of time and money. Information is a key asset that must be managed correctly. Without proper data management, it is impossible to ensure data integrity, which is necessary for traceability. So, companies should also invest in data security and availability.  

But while there are plenty of challenges in implementing IoT in retail, with the right technology partner backing you up, this process can become easier.

Read More: How Can IoT Enhance Your Business Growth?

Why must Retailers Invest in IoT and IIoT Development Services?

Smart IoT devices can improve the consumer experience in a variety of ways. They have the power to alter the entire supply chain. As per Business Wire, the worldwide IoT in the retail industry is predicted to reach USD 35.5 billion by 2025, with a 19.5 percent compound annual growth rate (CAGR).

Many retailers may profit from automation thanks to newly developed IoT sensors and beacons, which actively engage customers and boost sales.

Retailers can benefit from enhanced IoT analytics in the form of increased efficiency and productivity as well as lower expenses. IoT is generating new business opportunities for retailers through innovation and by changing old retail business models. Many companies hire IoT developers to build user-friendly, in-store apps. They can enhance customer experience and even provide services like custom suggestions or “You might also be interested in…” alerts. 



By deploying IoT-based smart solutions, retail businesses are redefining the sector. IoT applications in the retail sector can assist in improving customer experience, decreasing operating costs, enhancing inventory management and provide high-quality services.  

And if you are looking to transform business by developing custom IoT retail solutions, then Matellio is the right technology partner for you. With years of experience and infallible instincts, our IoT experts provide crucial insights into the retail technology sphere. We offer top-tier IoT development services with the help of a talented team of designers, software architects, QA engineers, and IoT developers. Our services are designed to help businesses big and small and we follow the agile development methodology which allows us to put the client in the middle of our development process. 

To benefit your retail business with out IoT development services, reach out to our experts.

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