How the retail industry benefits from IoT solutions

Three years later after the Covid-19 pandemic, we can clearly see the changes it has driven across industries. There’s barely any industry left that hasn’t been affected by the worldwide lockdown. Retail is not an exception. This sector has undergone serious transformations due to a massive shift towards online. Physical stores had to quickly adapt to those new realities as people were shut in their homes for months without the ability to do usual things like going out shopping or whatever. However, that was the time of e-commerce flourishing. 

The retail industry has already changed a lot – from small local stores and large grocery shops to online marketplaces. Yet the process of transformation is going on. 

We should say, retail and technology are the two sectors going hand in hand today. Today retailers are highly reliant on existing and emerging technologies. Among numerous technological advancements driving the evolution of retail, IoT has the power to take the retail business to the next level. 

Retail industry leaders place high hopes on IoT solutions as they believe it is going to be the main game changer that can completely reshape our perception of shopping by making this process delightful, fast, easy for customers, and streamlined for retailers. 

Find this interesting? Then keep on reading to learn how exactly IoT contributes to the retail industry’s transformation journey. Explore the main ways IoT is applied to improve business operations and start generating higher revenue.      

The concept of smart retail

Smart retail sounds like something high-end or even fantastic, doesn’t it? But it has been around for a while with many businesses have been applying this approach. 

We bet you’ve seen automated checkouts, smart delivery services, and dynamic pricing in quite a number of stores, cafes, or restaurants. People have quickly got used to such innovations but actually, this is what smart retailing is about. This involves using IoT-based sensors, inventory-managing devices, etc. to reduce manual labor, scale up the overall efficiency, and boost business profitability. Smart retail IoT applications are helpful in terms of tracking trends and detecting errors before they get critical, and providing predictive equipment maintenance. All these elements are crucial for building a transparent and decentralized supply chain that is no longer an option but rather a necessity in modern retail. 

The Role of IoT in modern retail

We wouldn’t lie if we said the role of IoT technology in retail is enormous. There are so many ways IoT can be effectively applied – and this list is constantly being updated! Retailers and marketers are leveraging the capabilities of IoT and gathering valuable customer and product data that is later used when building efficient marketing strategies and plans. 

As already mentioned, retail and technology are advancing in parallel, interconnecting, and scaling each other up. Smart retailing has accelerated the Internet of Things’ growth whereas the advantages of IoT technology have triggered the development of the retail sector. 

A few figures

Addressing the Grandview Research, the IoT-enabled retail sector would be valued at 94$ billion by 2025. The massive growth is driven by countless benefits the emerging technology offers. Now IoT solutions help retailers to improve customer experience, cut labor costs, accelerate growth, and enhance the overall performance of infrastructure and network components. The global IoT in retail market size is expected to grow at a compound annual growth rate (CAGR) of 28.4% from 2023 to 2030. This results from the inclusion of in-store and digital operations in the retail sector. 

How IoT makes shopping efficient and enjoyable

IoT solutions are advantageous for retailers as well as for customers. Innovations are meant to make our lives easier. Smart work has replaced hard work smoothly. Many things such as decision-making, data collection and analysis, and workflow automation have become easier and better thanks to IoT. The adoption of IoT has turned the retail sector upside down and become vital, because of rapidly changing lifestyles and ever-evolving corporate environments. 

If you implement IoT-powered apps correctly, you will be paid off for forward-thinking. See how you can create value for your business and gain an edge over your competitors with IoT. 

Shopping process automation 

Automated checkouts no longer surprise us yet we have to mention them. The Internet of Things brings fantasy to reality. People don’t need to waste hours in a shop staying in long queues at the checkout. This is so time-consuming and labor-intensive. They can pick up items and leave the store with their purchase being paid automatically via smartphones. And there’s much more to it! Now shops can utilize top-notch predictive technologies and collect things for you to pick up whenever you want. All you have to do is just send the details of the things you require to vending machines and pick them up from the driveway.

Better customer service along with a high level of personalization

IoT allows merchants to provide a more inclusive shopping experience with a level of personalization that was impossible ever before. This leads to an increase in client satisfaction, engagement, and loyalty.

Emerging technologies enable retailers to establish strong contact with their shoppers in real-time. Customers get push notifications about new products and personalized offerings even without a website.

Offering loyal customers discounts and rewards is another win-win solution. Give bonuses in exchange for your customer’s loyalty. IoT sensors are set up to offer loyal discounts when a customer reaches specific products with their smartphones. iBeacon is one more technology contributing to highly personalized services. It is implemented to send promotion and sales info right to customers’ phones using Bluetooth.

All in all, IoT allows focusing on target customer segments therefore customizing advertising and marketing. This way retailers accurately detect constantly changing shopping patterns through search trends and Internet browsing and organize merchandise as per the target audience’s demands with ease.

Smart inventory management and logistics

IoT makes inventory management straightforward. IoT-powered sensors, beacons, and RFID (Radio Frequency Identification) tags push inventory reorganization. These solutions are introduced to improve the control over goods. The sensors and tags collect all the critical information related to the sort of goods, their availability, and their expiration date so no human intervention is needed. 

Furthermore, IoT devices provide exact and detailed tracking of an item’s travel. Position, speed, and weather conditions – retailers can monitor the process down to the smallest detail in real-time, get an accurate arrival time, and avoid losses or incorrect deliveries. Talking about the customer side, advanced gadgets allow buyers to monitor the delivery process and see when exactly the order will reach their door.

Cybersecurity

Technology is evolving – that’s true. But hackers do not stand still as well. Cyber security has become topical over recent years and many people have concerns about IoT for this very reason. But let us take your anxiety away. Despite some flaws, IoT has considerable advantages retailers may make use of: 

• Device authentication for individual device identification 
• Access logs for examining and tracking criminal activities
• Advanced software as well as physical devices ensures data security within supply chains
• Encryption prevents unauthorized access by transforming sensitive data into code

Buyer behavior tracking

Placing items on store shelves is not random. This requires thorough analyses of customer behavior and their movement across the store. We’re talking about in-store merchandising and guided selling – these are supposed to be well-designed to boost sales. The data obtained through efficient display setups, store layouts, and store space allocation help retailers organize their space in the most correct way. Moreover, checkout line wait times can also be tracked in order to advance customer service by increasing the number of employees or placing self-checkout stations.

Centralized solutions

This is topical for retail businesses with multiple locations. Connecting all the branches effectively may be quite a challenge but centralized IoT solutions make it possible to connect and monitor all the branches simultaneously. 

Process standardization

When it comes to a retail chain, the same store experience should be provided to all customers. And there are numerous details adding up to this that retailers should keep under control. Unfortunately, a manual or conventional approach that most retailers still rely on today is not as effective as required. 

What if there was a platform connecting all the stores centrally? Well, the advancements in the IoT world today bring this to reality and solve this problem effectively. 

Higher occupant comfort

These days customers expect shopping to be not only quick and simple but also comfortable. Such factors as temperature, air quality, and light do matter! They add up to the desired level of comfort. But controlling them manually is time and effort-consuming, right? Luckily we’ve got IoT that is very helpful in terms of ensuring maximum occupant comfort through changing the intensity of lights during the daytime or unoccupied hours and lowering or increasing the temperature of HVACs based on the number of people in a store.

Maintenance

Getting timely updates about the products’ condition is essential for retailers. IoT technologies provide businesses with comprehensive information about how each item is used. IoT sensors, for instance, are effective for predicting and preventing malfunctions. 

Investing in digital maintenance results in increased equipment reliability, uptime, and cost savings. Referring to a McKinsey report, fully digital predictive maintenance can trigger the growth of equipment availability by 5%-15% while lowering maintenance expenditures by 18%-25%. This proves the power of predictive maintenance and condition-based monitoring.

Indoor environment 

IoT sensors can also monitor the air quality inside the retail store, including levels of carbon dioxide, particulate matter, and other pollutants. This information is used to adjust the HVAC system and ensure that the indoor air quality is healthy and safe for both customers and employees.

Price optimization

Have you heard about the 4 Ps of marketing? They are Product, Price, Place, and Promotion. 

Price is the deciding factor for the majority of customers. That’s why optimizing prices is vital for your business, and guess what? IoT lets you do it automatically by considering the usual demand VS supply ratio along with the prices of the same product that other retailers offer. 

Drawbacks and challenges

And that is the moment we need to warn you not to get blinded by the numerous benefits IoT brings to retail. Of course, the pros are dominating over the cons making the technology so influential and powerful. But before implementing it, one should know what’s ahead. You can learn more about the challenges that retailers face when implementing IoT solutions here.

Once you decide on the retail business IoT transformation, be ready to accept challenges. Don’t worry – we’ve covered a piece of work for you and prepared a list of the most common issues you are likely to face. We don’t say they’re catastrophic yet one has to be careful. 

Data Privacy and Security

IoT devices manage a large amount of data, including customer information, and store operations data, which must be well protected from cyber-attacks and breaches. If the entire IoT architecture is not end-to-end encrypted, then the risk of intrusion and ransomware attacks is very high.

Retailers must ensure that the data collected by IoT devices is secure and comply with data privacy regulations. Furthermore, regular audits of IoT devices and software communication networks are a must-have.

High Implementation Costs 

IoT solutions can be quite expensive to implement, particularly for small retail businesses. Purchasing and deploying IoT devices, as well as organizing employee training can come at a high cost and be a significant barrier to IoT adoption.

Technical Complexity

IoT solutions can be complex, and retailers may lack the required technical expertise to implement and manage them. This can result in delays in deployment and increased costs.

Reduction of workplaces

IoT is all about automation that, for better or for worse, leads to reducing the required number of human workers. There’s a risk of an increase in unemployment so a plan for workforce rehabilitation must be considered. However, now even the smartest technology needs human intervention for proper operation.  

Innovations are not meant to completely replace human employees – rather unite forces with them and enhance the working process for better results. 

Prospects of the retail sector with IoT

With IoT implementation, the prospects of the retail industry seem promising as ever before. IoT solutions get cheaper and therefore more accessible. The adoption of smart devices is gaining momentum currently. 

IoT is becoming the next iteration of retail industry transformation right in front of our eyes. Retailers will be able to provide even better services by offering accurate product suggestions to customers and fulfilling all their requirements. Consumers, on the other hand, will find the products they need.

Conclusion

Will IoT adoption be an easy trip free of obstacles? Probably not. Will it be worth the time, money, and effort? Absolutely! IoT transformation opens up a whole new world of possibilities for your business growth. Retail, in its turn, offers huge scope for those involved in IoT software development, hardware creation, device management, and maintenance and is reasonably considered the sector to see massive investments in the upcoming years. 

A steadily rising number of devices linked to the Internet and gaining smart components serves as reliable proof of the potential for more data to be created, as well as for much better CX. Taking all the facts and figures into account, we can surely conclude that IoT is very likely to emerge as the key to modern-day retail.