Unlock Value-Driven IoT Use Cases to Transform Your Retail Operations
Implement IoT in retail.
- Determining the viability of implementing and integrating Internet of Things (IoT) technology in your organization is difficult.
- You want to understand technology options that go beyond the latest overhyped disruptive innovation but don't know where to start.
- You want to leverage IoT technology and are interested in what industry leaders are implementing to enhance the customer experience while reducing long-term costs.
Our Advice
Critical Insight
Business as usual is not enough to stay competitive. Top-performing organization are being intentional about where and how they spend their IT budgets on IoT technologies by thoroughly understanding IoT technologies and strategically implementing solutions that provide sustained, long-term ROI and an enhanced customer experience.
Impact and Result
- Gain a high-level understanding of IoT and IoT architecture in the retail industry.
- Build a comprehensive understanding of the IoT applications most suited for your organization.
- Get an overview of emerging IoT technologies impacting IoT in the retail industry.
Unlock Value-Driven IoT Use Cases to Transform Your Retail Operations
Implement IoT in retail.
Analyst perspective
IoT has many applications for the retail and wholesale industry, including enhanced operational efficiency, optimized resource allocation, and improved decision making.
The connected technology that has enabled the Internet of Things (IoT) has deep roots. Starting in the 1990s with the release of the internet into the public domain and continuing with public Wi-Fi, Wi-Fi routers, cloud computing, beacon technology, and cheap, massive storage capabilities, decades of technology advances have laid the groundwork for today’s emerging technologies. IoT itself is not new and has been around since 1999, but it is a growing technology with massive value for retailers.
CIOs today are looking for ways to balance innovation with operational efficiency and modernize legacy systems on reduced budgets. There are cost-effective opportunities for retailers to implement IoT that can provide substantial and sustainable return on investment (ROI) around data, optimizations, and cost savings.
Donnafay MacDonald
Research Director
Retail Industry
Info-Tech Research Group
Executive summary
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Your Challenge |
Common Obstacles |
Info-Tech’s Approach |
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Determining the viability of implementing and integrating Internet of Things (IoT) technology in your organization is difficult. You want to understand technology options that go beyond the latest overhyped disruptive innovation but don't know where to start. You want to leverage IoT technology and are interested in what industry leaders are implementing to enhance the customer experience while reducing long-term costs. |
At this stage of your exploration of IoT:
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This research piece will provide the following insight and support:
After reading this deck, you will possess a comprehensive understanding of the IoT applications most suited for your organization. |
Info-Tech Insight
Business as usual is not enough to stay competitive. Top-performing organization are being intentional about where and how they spend their IT budgets on IoT technologies by thoroughly understanding IoT technologies and strategically implementing solutions that provide sustained, long-term ROI and an enhanced customer experience.
The power of IoT is data
The Internet of Things is a network of interconnected devices that collect and exchange data. IoT architecture is a framework that consists of a number of technologies that sit across four layers (perception, network, middleware, application). To fully implement IoT, organizations must take a holistic view of IoT architecture.
Data is the most valuable asset of any organization, and over the last decade, digital transformation has been changing how organizations leverage data. Underpinning the acceleration of transformative technologies are innovations in computing power, scalable data storage, and AI model development. As these innovations have accelerated and costs have decreased, IoT devices are poised for growth. Retailers and wholesalers should seriously reexamine these technologies to help them achieve profit goals.
Real-time data and end-to-end visibility are a tremendous advantage when IoT is implemented across operations. They provide organizations with the capacity to streamline operations, saving costs and improving accuracy through monitoring assets and operations in real time. In addition, the vast amounts of real-time data produced can be transformed into actionable insights, enabling organizations to quickly and appropriately respond to market changes by deploying personalized customer engagement initiatives.
Info-Tech Insight
IoT devices continuously collect vast amounts of data across the connected network. Organizations can increase profitability by converting the data into actionable insights and applying them across the organization, addressing a range of business concerns.
Optimizing business process through IoT will produce a significant amount of data that drives your goals and capabilities
IoT produces four main benefits:
1. Improve Strategic Business Planning: Data gathered from IoT devices can provide valuable insights into customer trends across all channels, including product performance based on a digital footprint left by customers. This information is indispensable when building out channel, marketing, operations, and financial plans.
2. Increase Supply Chain Visibility: A pain point in the retail and wholesale industry is product visibility throughout the supply chain from the point of free on board (FOB) or ex works (EXW) through to the sale of the product. With IoT, organizations can have visibility end to end from a macro or micro level depending on the IoT device.
3. Optimize Inventory Management: A key component of the supply chain is inventory management and controlling the costs of stock levels while optimizing inventory processes such as reorder and replenishment. IoT can help minimize costs by providing valuable data to order management teams.
4. Loss Prevention: Retailers are increasingly diverting more money to their loss prevention budgets. Retailers lost $94.5 billion in retail shrink in 2021 (National Retail Federation, cited in Hardware Reporting, 2022). IoT such as smart CCTV, sensors, and product tags can be employed to reduce retailer losses.
IoT is poised to be essential to retail business operations
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IoT will help organizations improve |
In response to an IoT solution implementation: ”[W]e could shine a light and show our teams how the data could help them improve.” Shibu George, Global Head Advanced Manufacturing, Apollo Tyres |
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IoT enables personalized experiences |
“Throughout 2022, we will test a new frictionless and personalised shopping experience — from the fitting room to checkout. This initiative is a natural next step in H&M Group’s long history of innovation, where we use technology to discover new ways of enjoying fashion.” Alan Boehme, Chief Technology Officer, H&M Group |
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IoT drives savings and operational efficiencies |
Regarding Walmart's refrigeration IoT tech: “We stream from edge to the cloud, and we have different pathways in the cloud based on data usage patterns. Our IoT applications can access data across the edge and cloud to solve business problems.” Sanjay Radhakrishnan, VP of Technology, Walmart |
Companies continue to implement technology, and IoT is a top priority
IoT is a cornerstone in strategic initiatives, and by integrating IoT devices into infrastructure, companies gain real-time access to intimate data across their business. Combined with edge computing, digital applications, and big data analytics, IoT enables a game-changing strategy by allowing organizations to make surgical decisions with a high return and little disruption to operations.
IoT implementation within the retail and wholesale industry is strong
Consumer adoption of IoT continues to outpace industry application. Within industry use, the retail and wholesale industry continues to adopt at a good pace with room for expansion, as evidenced by projected growth of IoT.
A strong IoT architecture will determine success
Physical device components are foundational to IoT
IoT physical devices in the perception layer can be made up of more than one component. The following outlines, top to bottom in order of requirement, components that are included in IoT devices:
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Components |
Applications |
Cost |
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Connectivity |
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Sensors |
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$ |
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Actuators |
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$ |
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Microcontrollers |
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$$ |
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Control Interfaces |
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$$$ |
Info-Tech Insight
Organizations must determine the level of complexity needed in their IoT devices to achieve business goals. This will determine the depth and breadth of their IoT implementation. As complexity and intelligence of an IoT device increase, so do the cost and security requirements, potentially equating to a smaller number of IoT devices in the IoT implementation.
Note: IoT devices can become IoT edge devices when components are combined and decisions can be made by collecting and processing data real-time at the source.
IoT devices will enhance the customer experience
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IoT Devices |
IoT and Technology Components |
How They Connect |
Business Value (non-exhaustive) |
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Beacons |
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Electronic Shelf Labels (ESL) |
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Connected Signage |
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RFID Readers |
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Smart IoT devices will help drive efficiencies
IoT Devices | IoT and Technology Components | How They Connect | Business Value (non-exhaustive) |
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Smart Temperature |
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Smart Lighting |
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Smart CCTV |
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Smart Shelves |
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RFID and NFC are critical technologies to enable IoT
Although radio frequency identification (RFID) and near-field communication devices (NFC) are not considered IoT, they are important within the IoT ecosystem. Both RFID tags and NFC chips can be read by IoT devices, providing actionable and important information within retail operations.
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Non-IoT Components |
Description and Key Features |
Applications (non-exhaustive) |
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LF RFID tags |
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HF RFID tags |
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UHF RFID tags |
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NFC chips |
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Navigate IoT considerations, challenges, and risks
The following is a starting point for internal conversations on the key factors to consider when implementing IoT.
Considerations
Business Objective: Organizations must have a well-defined business goal that IoT implementation will solve.
Cost and ROI: An upfront cost-benefit analysis needs to be completed and needs to align with the business objective to ensure servicing existing technical debt and spending on new technology are balanced.
Scalability: When choosing vendors and partners, a scalable architecture is imperative for post-implementation growth, either through adding or expanding sites or increasing the number of IoT devices across an existing floorplan.
Challenges
Interoperability and Integrations: Seamlessly connect devices, networks, databases, and applications to reduce the impact on core business operations. Connecting IoT devices into ecosystems from different vendors and eras of technology can be a challenge.
Data and Analytics: Take steps to normalize data before it is consumed by the business to remove the need for arduous data manipulation and cleansing.
User Acceptance Testing: Plan for rigorous user acceptance testing to ensure organizational readiness and prevent disruptions after implementation.
Risks
Security and Data Privacy: With cyberattacks at an all-time high and data breaches costing an average of US$9.48 million (“Average Cost of a Data Breach,” Statista, 2024), an encryption, authentication, and security audit strategy is necessary to mitigate risk.
Connectivity and Network Reliability: Technical failures including loss of connectivity in a highly autonomous IoT-driven environment can have devastating consequences, and planned redundancy is a must.
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