Retail IoT: Applications, Challenges, and Solutions

The Transformation

IoT has transformed many aspects of the retail industry, from customers’ experience and experience management to the supply chain. These changes bring new issues.

Internet of Things (IoT) at its most basic concept, is a system that connects devices with sensors. They are able to communicate, analyze and share information about the physical environment using cloud-based software platforms and other networks.

The industry has experienced an entire transformation over the past 10 years, thanks to technologies like Machine learning, Artificial Intelligence and IoT. This has been used by over 50% of the major retailers across the globe. The trend is on the upward trend. Retail IoT applications are found in numerous industries that include industrial sensors used for manufacturing, in-store analytics devices, and connectivity systems that combine offline and online realms of customer interaction.

Sparklabs has predicted “an exponential growth rate in the IoT sector – from 2.5 billion units in 2017 and 5.4 billion by 2020. result, IoT will make retail forever different.


The Benefits of IoT

Innovative retailers are already reaping the benefits of using IoT applications with success. Here are a few benefits that the retailers can reap from IoT applications:

1. Enhanced Supply Chain Management

IoT devices like RFID tags as well as GPS sensors can be utilized by retailers to obtain complete information about the flow of products from its production to the time it is put in the store until the moment a buyer purchases it. The information obtained — like the amount of time it takes to transport as well as temperatures at which the item was stored etc.–can be analysed in real-time. This information is useful, particularly during the transport of perishable goods and where temperature storage is critical. Based on the opinions of some specialists about a quarter of retailers intend to upgrade the management of their supply chains by using IoT solutions.

2. Better Customer Service

IoT aids brick and mortar shops by providing insight into customer information while creating opportunities to leverage this data. For instance, retail IoT applications can combine the data from surveillance cameras, mobile devices and social media sites which allows merchants to better determine the behavior of customers.

8 in 10 retail shops have stated that IoT has enhanced the overall customer service. The same amount of stores claim that it has boosted the efficiency of their business.

3. Smarter Inventory Management

Management of inventory can be a hassle. Inaccurate inventory tracking can cause stock-outs or overstock that cost retailers around the globe billions each year. IoT can solve these problems through the automation of visibility to inventory. Through the use of smart inventory management software that are based on sensors for store shelves such as RFID tags, beacons or video monitors, as well as price tags that are digital retailers can boost the planning of procurement. When inventory levels are inadequate, the system allows the option of reordering the appropriate amount according to the analysis gathered through IoT data.

4. Automated Checkout

Check-out is the most labor-intensive and frequently not liked by customers. When checkout lines are long, customers go home without buying any items, which results in a loss of revenue. To prevent customers from walking out without making purchases, retailers can make use of IoT methods to improve the efficiency of points of sale (PoS) systems. Automated PoS will read the tags on the products when they leave the store , and instantly charge them using an app for mobile payments.

Successful Retail IoT Applications

1. Foot-Traffic Monitoring

In a smaller shop, pedestrian traffic in the mall can be tracked across several stores so that the entire shopping experience can be comprehended. In a smart shop it is possible to use footage-based foot-traffic monitoring in order to know the presence of customers in a particular specific area more than other. And, then, in real-time you can direct an employee to assist the customer , or review the data later to modify the layout of the store to ensure that customers are getting the best experience. Additionally, by monitoring the customers’ demand and traffic in the store in real-time, you are able to modify the current shopping experience.

2. Predictive Equipment Maintenance

Predictive maintenance for equipment is used for energy management, forecasting the likelihood of equipment failure and prevent other issues from occurring prior to they happen. For instance each grocery store has lots of complicated equipment like HVAC and refrigeration units. When these systems are fitted with sensors, they can predict maintenance issues that might influence the power usage for savings, or even track the temperatures to ensure the safety of food.

3. Demand Alert Warehouses

Demand-alert warehouse fulfilment is all about automated warehouses that are triggered by online and in-store demand. IoT lets you monitor the sales and potential in real-time. It can even help you monitor missed sales in stores. It’s important to know the fact that RFID is a proven component of IoT which can be utilized to provide more precise optimization of service levels and also for the management of inventory. Thanks to the technology’s power the warehouse of the near future is likely to be an open area where the pallets that are automated will self-organize based on demand.

4. Smart Fulfillment

In retail, moving goods faster is a key objective to reach. IoT could play an important role in maintaining transportation, tracking and optimization of routes. Naturally that many retailers have used GPS to monitor and track the transportation of goods for a long time but now, thanks to IoT it is possible to be able to see with greater precision how close a container of merchandise will be delivered to the shop.

Challenges and Solutions for Retail IoT Applications


Many retailers are not equipped with networks and infrastructure that massive quantities of IoT data. For retailers to make their retail stores digital it is necessary to have a reliable infrastructure, cloud-based solutions and solutions for end-users such as barcode scanners, tablets and MPOS. All of these would require significant investments.

The solution is that there isn’t a need to invest in infrastructure at the same time when it comes time to implement the latest technology. It is possible to start with small infrastructure modifications, e.g. making use of IoT to control AC or lighting system, which will yield the ROI faster. It’s possible to become advanced using your IoT solutions.


Many retailers are concerned about privacy and security concerns that are associated with IoT. The concerns have been heightened due to implementation of the GDPR (General Data Protection Regulation). The ability to access customer data offers retailers numerous options, but at it opens the door to cyber-attack threats as well as legal issues.

Retailers should collaborate in conjunction in conjunction with IoT development teams to ensure that the sensors and devices that they purchase are built with security features that are strong in mind, which includes the essentials like secure passwords along with more advanced security features like encryption that is end-to-end and regular software updates along with an IT system that constantly detects vulnerabilities and bugs.

Data Management

The process of carrying out IoT analysis with a speedy and timely way is a major challenge for retail companies due to the absence of appropriate skills and qualifications. There’s not enough technical or analytical expertise to draw valuable conclusions from the vast volume of data generated by IoT.

Retailers can engage domain experts or use third-party vendors with relevant IoT skills and certifications to manage data management. In overcoming these challenges they can have the opportunity to ensure that the IoT investment profitable, while also gaining an edge in the marketplace.


The implementation of IoT solutions can give invaluable insights for retailers. They can help improve the customer experience while increasing profits. With standard IoT solutions, retail stores are digitizing brick and mortar stores, which could yield huge ROI due to improved efficiency of your supply chain enhanced sales conversions for marketing and more. Therefore, it is evident that IoT-enabled technology has the potential to enhance customer service and enhance brand loyalty.

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