Karl Gorman
IoT in Retail

How to Use Internet of Things (IoT) in the Retail Industry

How can your retail business and the industry use IoT solutions? The retail industry has made tremendous progress, particularly since the rise of online shopping and increased internet usage. But there’s still a lot of ground to cover, and that’s where IoT retail operations come in.

The Internet of things (IoT) is a collection of interconnected systems and devices that communicate with each other over the cloud. Industries, businesses, governments, and individuals across the globe are beginning to understand the importance and great benefit of implementing IoT technology into their operations.

In this article, we’ll look at how the retail industry can boost sales, increase profits, and increase experience optimization with IoT.  When you’re done, you’d have learned how to implement and interface IoT in your retail business and the industry in general.

What Is The Retail Industry?

The retail industry includes all companies that sell goods and services directly to consumers, the end user. Unlike wholesaling, which involves selling to businesses and institutions, retail businesses sell the final product to the final consumer without go-betweens. Types of retail companies include electrical shops, department stores, supermarkets, convenience stores, grocery shops, etc.

As the world emerges from the Covid-18 pandemic, retail businesses are beginning to see the need to improve their processes with technology. Areas, where a retail business might be inclined to use IoT in retail include understanding consumer spending habits, solidifying customer loyalty, online shopping experience, market intelligence, and sustainability.

IoT in Retail

9 Different Ways To Use Iot In The Retail Industry

All this talk about how retail IoT solutions is the future sounds interesting. But how do you bring it home to the retail business in the neighborhood? Below are nine ways retail businesses can use IoT solutions and applications.

  1. Analyzing the behavior of customers
  2. Monitoring equipment and predicting maintenance problems
  3. Customer care efficiency
  4. Automated checkout
  5. Connected logistics
  6. Efficient inventory management
  7. Energy management
  8. Preventing theft with geofencing
  9. In-store personalized discounts

1. Analyzing the behavior of customers

Previous years required businesses to ask customers directly, either through physical feedback or surveys. This process usually takes time and resources to process and analyze the situation before the business can make decisions based on collected data.

With the internet of things, on the other hand, retail stores can record and analyze customer behavior. They can collect information on customer behavior and have the information ready for use almost instantly.

As a benefit, businesses can see how customers move along the aisles and can move things around to boost the customer experience and sales. They’ll also be able to tell what turns customers off and eliminate or improve those things.

2. Monitoring equipment and predicting maintenance problems

Machinery and equipment are an essential part of the retail industry. Retail businesses such as supermarkets and shopping malls use various equipment like refrigerators, freezers, air conditioning, cookers, and many more, to ensure that their operations are running smoothly and that customers are entirely or, at least, partly satisfied by the service they receive.

Retailers can use IoT sensors to monitor the working conditions of the cooling system and freezers that keep perishables cold and fresh. These sensors can track temperature, humidity, electrical power consumption, and the working conditions of the equipment.

The sensors monitor the equipment and predict when the machine might malfunction soon. You can maintain equipment more efficiently and prevent sudden breakdowns and poor service quality.

3. Customer care efficiency

Customer care and engagement are crucial to conducting retail business, whether a small or large business. But not every business, especially the ones that get many customers, can afford to hire many customer care agents to cater to their customers.

With IoT, customers can try out makeup and clothes without having to put on the clothes or makeup on their bodies. With some IoT devices, customers can visualize the clothes on their bodies and try as many clothes as they want without the stress of trying multiple clothes. The customers will shop faster, and the return rates will be lower.

4. Automated checkout

After product prices, the checkout process is one of the activities that can either hinder or lead the customer to purchase products successfully. When they meet long checkout lines, they are less likely to purchase items. They can even drop off the products they’ve picked and leave the store because of the lines.

So how can the internet of things help? Automated checkout involves positioning IoT self-checkout devices at the checkout station where customers can conduct the self-checkout process.

Implementing IoT-powered automated checkout will reduce the expenditure on checkout staff. You’ll save millions annually, and you can use what you have saved to purchase and install more IoT devices to help customers spend less time in the checkout queue.

5. Connected logistics

Transporting goods from one point to another comes with challenges, particularly tracking the vehicle’s location and maintaining the ambient temperature for perishable goods. The Internet of things (IoT) presents opportunities to tackle these problems through connected logistics.

Connected logistics in IoT tech enables businesses to track the number of logistic metrics such as temperature changes, tilting, light, shock, location, etc., using cold-chain monitoring, particularly for temperature-sensitive products like pharmaceuticals and perishable food items. This is done by installing IoT tech that senses all these metrics and communicates the data through gateway devices.

The benefit of connected logistics is that it’ll help businesses to prevent the theft of their products and transport vehicle through location and ambient tracking. It’ll also keep perishable goods fresh and be able to predict when packages will get to their location based on speed and terrain.

6. Efficient inventory management

Retail businesses that deal with goods and services have the colossal task of maintaining an updated inventory that always meets customer needs. However, this can cause several headaches as it’s not easy to appropriately manage inventory, mainly if a large business receives thousands of customers and even more products on its shelves.

If you’re not staying on top of inventory numbers and tracking, your business can experience costly “sold out” periods or overstocking products that are not needed at that scale. IoT applications in retail can prevent these issues through digital price tags, IoT inventory management software, product shelf sensors, etc.

By implementing these IoT retail tools in the retail business, you wouldn’t need to throw out overstocked perishable goods that go rotten. You can also avoid losing customers due to empty shelves and subpar in-store experience. IoT can also predict when you might need to restock and by how much due to shelf and customer behavior monitoring.

7. Energy management

Retail businesses require energy to keep their businesses running, especially if they require power to produce any product or to power essential equipment for heating, cooling, and lighting. From air conditioners, lighting, and special equipment to office computers, all consume energy and increase the electricity bill.

By introducing IoT in retail businesses through IoT devices, retail business managers can monitor and minimize energy consumption, save on annual energy costs, and reduce the wastage of perishable items. If there are power cuts, an IoT-enabled device or refrigeration system can maintain a steady temperature or prevent a breakdown by predicting the need for maintenance.

These devices can monitor and record equipment behavior and alert store clerks and managers about energy consumption, temperature levels, electrical breakdowns, gas leakages, etc. The devices can also enable the store managers to remotely control the equipment in response to the IoT device suggestions and data.

8. Preventing Theft with Geofencing

Shoplifting by customers and theft from employees and suppliers accounts for millions of dollars in business losses. With IoT, a business can install geofencing devices around the premises that are programmed with a Radio Frequency Identification system (RFID).

This sets up a parameter around the store or within specific areas inside the store. For example, let’s say a supermarket sets up geofencing around the store exits or just beyond the checkout stations. If a customer lifts an item and attempts to carry it past the geofence parameters, the alarm system will go off, and the manager will be alerted to the incident.

Geofencing also helps with tracking employee behavior and movement within the store. After all, the customer isn’t always the one shoplifting and stealing from a business. It might be an employee, and you’ll need to safeguard the business against them too.

9. In-store personalized discount

Who doesn’t love discounted shopping now and then? Retail businesses can take advantage of installing discount delivery sensors at specific points around the shop. The aim is for these sensors to target customers who have registered on the store’s loyalty program apps on their phones and send them discounts when they stand close to it.

For example, if a registered customer is shopping along the milk aisle and there’s a sensor on the shelf, the IoT sensor could send the customer a notification with a personalized discount for milk. If it’s high enough, the customer will buy the milk instantly because of the personalized offer.

Indirectly, this increases customer loyalty to your business because they’ll understand that you care about the customers even while trying to make your profits. Put these IoT discount sensors in different places around your retail shop and watch your sales rise.

What Challenges Do Businesses Face When Using IoT in Retail Business?

Implementing internet of things technology in your business, as with any new development, comes with challenges. The snag can come from your employees, current management, associated costs, and working systems. Below are some challenges you might face with IoT and the solutions to try:

Data management and interpretation

It’s one thing for a business to be able to gather information with IoT devices, and it’s another thing entirely for the businesses to have staff with the relevant qualification or experience to interpret and handle the data in a relevant way. Not many businesses can afford to hire a data specialist, and this can create a setback to the IoT pathway.

Without a data specialist to help the business make sense of the data and how they can implement the solution, investment in IoT devices and IoT solutions would only be a waste of time and resources. The devices will only gather dust until there are the human resources to handle the new tech.

To prevent this from happening, businesses must plan and include the cost of hiring an IoT professional to handle data management of IoT solutions. This way, businesses can guard against equipment redundancy, mishandling of equipment, and scarce resources.

Security and privacy

Privacy and security are some of the biggest concerns that retailers and customers have when it comes to implementing IoT technology into retail industry processes. IoT helps store managers to collect information on their customers and on how customers behave in regard to shopping habits. In the wrong hands, access to the collected data can cause harm to the business and individuals.

To prevent data breaches, negligence, and legal repercussions, businesses should invest in working with a software developer to program and safeguard their internet of things applications and ensure they’re free of data breaches. An IoT software developer can implement several security methods, such as passwords, two-factor authentication, regularly updating the software, and end-to-end encryption.

Infrastructural requirements

Some types of data, like big data, require a good load of space and equipment. Before you can use the internet of things to the fullest, you’ll need to have the required infrastructure that can support the collection and analysis of stored data and information.

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When you’re ready to improve and grow into a merchant store, you need equipment that includes cloud solutions, a robust network, etc., and these can be expensive. The good news is you don’t need to start with the complex equipment. You may decide to start with the minor application methods, including using IoT to monitor air conditioning and energy consumption.

Once you’ve got the hang of the small, less crucial IoT tech, you and your staff will be able to invest and use more advanced tech in your stores. This way, you’ll be able to get a more immediate result.

Technological adoption

Another setback a retail business might face with introducing IoT in their system is the possibility of low adoption by customers. Customers and staff that will use this new tech may not be open and trusting enough to use the technology initially. It might take weeks, months, or years and several maintenance rounds before the target market can fully accept these devices and use them efficiently.

What businesses can do is target and educate staff and customers differently. Before or after you install these devices, train your staff, particularly the store clerks that interact with customers. Let the clerks and store assistants know how to use the devices and what benefits the store and the customers stand to gain.

For customers, put out campaigns and how-to posters around the stores and beside those devices to explain what they are, how to use them, and the benefit to the customers and their shopping experience. If the customers require assistance, they’ll ask the already-trained store clerk for help and ultimately make a purchase.


Internet of Things is gaining dominance in several industries, including the retail industry. This network of interconnected cloud-enabled devices can help businesses thrive, reduce operational costs, and increase sales.

To do this, retail businesses can implement IoT in their operations through more efficient customer service, increased security against shoplifting with geofencing, enhanced logistics, and many more. While these are great, investing in IoT comes with security concerns, infrastructural setbacks, and insufficient data management staff.

Retail businesses can get ahead of these challenges by investing in smaller IoT tech, such as sensors for air conditioning units, setting aside some money for hiring a data manager, and working with a programmer to safeguard against security threats. Before making big IoT decisions, consult an IoT specialist who can assess your situation and inform you of the best IoT devices and applications for your retail business.

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