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The Gist
- Tech transformation. IoT is revolutionizing retail operations and consumer shopping habits.
- Growth driver. Cost-effective IoT sensors and rising demand for seamless shopping are driving IoT adoption.
- Innovation wave. Smart carts and connected vending machines are redefining shopping experiences.
As technology continues to reshape the retail landscape, the Internet of Things (IoT) is emerging as a game-changing factor, dramatically influencing how businesses operate and consumers shop.
According to a Grand View Research report, the global Internet of Things (IoT) in market size in retail is expected to reach $297.4 billion by 2030 and grow at a 28.4 percent compound annual growth rate.
The research report cites connected technologies’ adoption and implementation as key to the growth, while IoT sensors and hardware have become less expensive, leading to a demand for a seamless shopping experience that’s expected to fuel IoT adoption in the retail market.
Additionally smart payments continue to be more acceptable in the retail sector — a major factor that will drive the industry’s growth over the forecast period, according to the research firm.
Below are some of the more recent developments in the use of IoT in retail.
IoT Powers the Rise of Self-Checkout
Perhaps the most ubiquitous use of IoT in retail are the scanners that not only cashiers use, but are increasingly replacing live cashiers in favor of self-checkout lines at grocery stores and at many major retailers, including Walmart, Sam’s Club, Target and many others.
According to a report from Catalina, the number of self-checkout lanes has increased 10% in the US in the past five years. Grocery stores are leading the way, with 38% of all lanes now for self-checkout.
The research also found that though the grocery self-checkout lanes accounted for 38% of transactions, they resulted in only 24% of sales, which the research firm attributed to some bulk purchases being made online and some high-end items not being eligible for the self-checkout lanes.
Those in the 19-to-24 age group were the heaviest users of self-checkout, while those in the baby boom generation were the least likely.
Ultimately, the rise of self-checkout systems showcases the transformative power of IoT in reshaping the retail landscape and customer shopping habits.
Related Article: Why Ignoring IoT-Enabled Customer Experiences Could Cost You
Redefining Retail with Smart Carts
Going a step further than self-checkout lanes, some retailers have started using smart carts.
Though still in its embryonic stages in the US, smart carts, which enable the user to scan and pay for items on the cart itself, is showing significant growth in Israel and other parts of the world. According to a ResearchAndMarkets report, the global smart shopping cart market is estimated to be $1.82 billion by the end of this year and will grow at a compound annual rate of 25.52%, reaching $5.67 billion by the end of 2028.
Veeve now offers smart carts that include attached tablets with connected screens that retailers can use to make personalized offers and promotions, as well as the ability to pay on the cart. By analyzing customers’ purchase history and shopping behavior in real-time, retailers can provide targeted offers and promotions that meet customers’ specific needs and interests. According to Veeve, this can help increase customer engagement with the retailer’s loyalty program and lead to more sales and repeat business.
According to Shopic, Wegman’s is piloting smart carts at two of its New York locations. Two thousand of the company’s smart carts are being deployed in Israel.
The adoption of smart carts, promising personalization and convenience, signals the next innovative step in retail, set to redefine shopping experiences globally.
Related Article: From Data Collection to Action: IoT Drives Customer-Centric Innovation
IoT-Driven Smart Vending Machines: Redefining Retail Efficiency
Another way to ease the crunch at the manual checkout line is to enable shoppers to buy products from connected vending machines inside the store.
Farmer’s Fridge recently started delivering its smart refrigerated vending machines offering salads and wraps in jars and bowls to retail locations including Costco, Hudson News, Target and Jewel-Osco, an Albertson’s company.
Walmart and some other retailers also have smart vending machines to make house and simple (none with chips) car keys.
Thus, by implementing connected vending machines inside stores, retail giants are not only streamlining the shopping experience, but also actively addressing the longstanding issue of checkout congestion, paving the way for a more efficient, customer-centric retail industry.
Using IoT to Battle Retail Theft
Dollar Tree and Target recently reported lower-than-expected earnings, with both citing theft (“shrinkage” in retail parlance) as a primary factor. IoT is seen as a way to help address the problem.
“At self-service kiosks, we see both computer vision and RFID sensors used together to help prevent losses,” said Michael Maxey, ZEDEDA vice president of business development. “For example, a camera can tell the difference between a T-shirt and a stereo, but likely not the difference between a $100 white designer T-shirt and a run-of-the-mill $5 undershirt. Here’s where sensors like RFID can come into play. AI models that coordinate computer vision, RFID and point-of-sale transaction logs will help detect tampering at the register such as switching out price tags.”
However, implementing IoT in the retail sector does come with its own set of challenges, Maxey cautioned. “Retailers must address concerns related to managing distributed environments spanning multiple locations, integrating legacy systems with new-edge native applications, establishing robust security for distributed networks and devices, and streamlining application management across diverse environments.”
IoT-Powered Digital Screens Transforming In-Store Advertising
National grocery chain Kroger will be adding digital smart screens that uses IoT advertising and analytics from Cooler Screens, bringing the total number of the devices across its stores to 500, the companies announced in late May. The expansion follows a three-year pilot.
The smart screens will replace traditional refrigerator and freezer doors in supported stores. The screens will place a digital overlay in front of the physical products, providing shoppers with information related to different diets, health needs, budgets and more. The screens will also show contextual ads.
“We’re excited about this continued collaboration as it extends our vision for the future of retail media, offering brands another powerful marketing lever inside the store,” Cara Pratt, Kroger Precision Marketing senior vice president, said in a prepared statement.
This substantial expansion of IoT-driven digital smart screens provides brands with a potent marketing tool within the store, promising a future where technology and retail are more intertwined than ever before.
Final Thoughts on IoT in Retail
Other IoT devices in retail are used for indoor mapping to help consumers navigate physical stores to find the item(s) they are seeking and for doorstep pickups of returns, just to name a few. The growth of smart carts and other ways to help retailers enable quicker, more efficient shopping experiences at physical locations will continue to drive growth of IoT in retail.
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