Shopping in 2024 and Beyond: IoT’s Role in Transforming the Future of Retail

Bricks-and-mortar retail is no longer just a process of stocking shelves and waiting for customers to arrive. Technology has helped retail evolve into a sophisticated blend of high-tech and personalized services – all in hopes of boosting in-person sales and consumer loyalty. Specifically, the role of the Internet of Things (IoT) in retail is transforming industries and driving widespread innovation. It has changed everything, from how retailers manage store operations and interact with consumers, to how mall operators manage their spaces.  

Understanding IoT applications in retail can be complex and raise concerns. This is true especially if one does not have a high-tech background. Well, don’t worry, though—we’re not going to bombard you with terms that are foreign to you. However, the plan for today is to have a basic discussion on how IoT can be used in the retail industry. We’ll emphasize how it’ll enable smarter, more efficient and more profitable operations in 2025.

What Exactly is IoT in Retail?

IoT is described as a vast array of physical objects equipped with sensors and software that enable them to interact with little human intervention. In real-time, these systems collect and exchange data via a network. In retail, the potential applications of this technology are tremendous, enabling smarter, data-driven decision-making. It can be used to restock products at the right time and change the layout of your store based on the movement of customers. It can even be applied to send special offers directly to customers’ phones while they are browsing your store.

Gartner has forecasted that at least 80% of retailers worldwide will be confident about incorporating IoT to improve customer experience by the end of 2024. But let us emphasize – it’s not as simple as creating technology for the sole purpose of creating more technology. Organizations using IoT in retail operations have experienced sales growth of 10-15% and reduced inventory expenses by 20-30%, Statista reports.

Here are five ways IoT can impact your retail business – and your bottom line:

1. Personalizing the Shopping Experience: Goodbye to “One Size Fits All”

Let us start with what is most important to you – your customers. They do not want the same boring and repetitive shopping experience. What they want is something that seems to be exclusive and personalized. With IoT applications in retail, that’s exactly what you can give them.

And the numbers do not lie. A survey reveals that 70% of consumers would want to shop at places that offer them the personalized retail experiences that IoT solutions can create. For you, this means more engaged shoppers, higher loyalty and ultimately, bigger sales.

2. Navigating the Store: No More Frustration

To be honest, no one enjoys walking around aimlessly in search of what they are looking for. This can be inconvenient for the customers, especially in more extensive stores. This is where the future of IoT in retail comes into play. With indoor navigation systems, customers can instantly use their phones to get store directions and find specific products.

Imagine it to be like a map you rely on for getting around your town but for your store. Technology leaders like Mapsted provide indoor location tracking and wayfinding technology that reduce customer dissatisfaction by making shopping seamless. Your customers locate what they are looking for quicker, are more satisfied and likely to return.

3. Smarter Shelves: Never Miss a Sale

One of the worst things that can happen to a retailer is to be out of products, or products placed in the wrong locations. IoT in retail solves this problem by making your shelves smart to keep track of the inventory and the low or misplaced quantities.

This means that you no longer need to physically count your stock or try to figure out when to restock. IoT technology arranges that for you automatically. Inventory management ensures products are in stock and that reordering is automated before you run out of stock. It is a game-changer when it comes to avoiding out-of-stock situations.

4. Heat Mapping: Get Inside Your Customers’ Heads (Without Being Creepy)

Ever wondered why certain products are hardly sold despite being placed in strategic positions? This might be because they are not where customers would normally gravitate to. Well, that is where IoT heat mapping in retail comes into the picture. It is like having a view of the skeletal structure of your store layout.

Heat maps are useful because they tell you where customers are spending their time and where they are not. It also provides you with a better understanding of where to place products and how to design store layouts. This helps relocate high-margin products to frequently visited spots or redesign the traffic pattern to facilitate better product perusal.

Mapsted heat mapping is not guesswork, it is pure data that enhances the shopping experience and ultimately increases sales.

5. Saving Energy (and Money)

Running a retail store is expensive. Particularly in terms of energy, especially if the store is large or the products are perishable. IoT in retail can assist you in reducing those costs through tracking and managing energy consumption.

What makes IoT applications in retail a powerful tool is that the lighting, heating and cooling systems can be controlled based on real-time data. For example, if a particular segment is not active, IoT sensors can reduce the brightness and decrease the temperature, thus conserving energy. It not only preserves the environment but also leads to less expenditure on monthly utility bills.

Energy management is emerging as a critical issue as many companies seek ways to reduce overheads and adopt sustainable practices. More retail organizations will be adopting IoT in retail by 2025 to address challenges like environmental impact and energy costs.

Practical Examples of IoT in Retail

Well, now that we’ve got the basics out of the way, it’s time to get into some examples. The reality is that IoT applications in retail are not just a concept, they are already present in stores today.

• Amazon Go: This is probably the most famous example of the future of IoT in retail. You enter an Amazon Go store, take what you want and then you are out. There are no queues for checkouts and there is no scanning of items at the till. Internet-connected sensors monitor what you grab and you are billed through the Amazon application. It is an integrated and efficient process that, in the near future, will be the new reality.

Challenges of Implementing IoT in Retail

Despite the tremendous potential that IoT in retail has to offer, it also comes with its problems. Implementing IoT applications in retail involves a gradual process and some challenges are worth considering.

• Security and Data Privacy: When many devices connect to the internet, security emerges as a major issue. Customers leave trails of data at the retail stores and given the increase in cybercrime, the data must be protected. If someone attacks your IoT systems, you may face data leaks. This may undermine customers’ trust and result in significant penalties in case of non-compliance with privacy laws. Encryption, secure networks and continual monitoring are crucial for retailers to safeguard personal information.
• Cost of Implementation: It costs a lot to set up IoT infrastructure. You have to buy sensors, smart shelves and a strong network to interconnect all these devices. However, for smaller retailers, this is a rather steep initial investment. This is where Mapsted’s hardware-less technology can help to do wonders without need of any hardware. The benefits of investing in Mapsted’s hardware-less technology can certainly offer better ROI in the long run, like less damage to inventories, lower energy consumption and loyal clientele. Integrating with Legacy Systems. If you have established a retail business, you will find that you are still using old systems that do not have IoT compatibility. There is no doubt that adopting IoT in retail in the context of legacy software can be problematic. It is often necessary to develop specific code to ensure that everything runs smoothly. Interlinking these systems significantly boosts productivity.
• Training Employees: While IoT in retail can automate many processes, it is still crucial for employees to understand how to work with it. To achieve the best results, you must train your staff to operate the IoT systems. This includes familiarizing themselves with the smart inventory dashboard and auto-checkout system. It is a change, but when one looks at the big picture, it is for the better.

Final Thoughts: IoT is Here and It’s the Future of Retail

So, what does the future hold for IoT in retail? If you are among those who think that IoT is at its peak, then think again. This is just the start of the changes that the retail world is yet to experience.

By 2025, IoT in retail will be more prevalent than it is today. With the use of technologies such as indoor navigation, heatmaps and automated checkout, retail will change completely. Whether you’re a single shop owner or a large chain, IoT in retail is now all about competing and providing the best customer experience.

And if you want to start, Mapsted can help. We focus on indoor location tracking and other IoT applications in retail. We assist retailers in making use of IoT technology to transform their businesses. If you found this blog helpful, don’t miss our blog post on How to Build a Smarter Future with IoT in Warehousing or watch our video on Mapsted Location Technology for Malls to learn more.