The Impact of IoT on the Retail Industry

Retail industry can reduce their overall inventory financing costs, reduce dependency on human labor and increases efficiency.

Ashok Pandey
New Update
Retail Industry Automation (IoT)

By Ankur Mittal, Senior Director, Digital Technology, Target India


The advent of the Internet of Things (IoT) or connected devices has had an impact on every business. The retail industry has seen the rules of customer engagement and back-end management undergo big changes. These changes have helped increase speed and efficiency in the retail business, with a positive effect on profits. The impact of IoT on retail will increase in the coming years with the rise in the number of connected devices. As per a forecast from Gartner Inc., 8.4 billion connected things will be used worldwide in 2017, up 31% from 2016.

Ankur Mittal, Senior Director, Digital Technology, Target India Ankur Mittal, Senior Director, Digital Technology, Target India

There is a lot of evidence already pointing to the benefits of IoT in retail. Data gathered from smartphones, wearables and other devices provide new insights for retailers. IoT is being used by them to simplify various aspects of the business in multiple ways. These include:


Supply chain – Many retailers now use robotics, smart conveyors, sensors and smart vehicles to move products either within warehouses or from one location to the other. This enables them to move products faster and with a high rate of accuracy. It facilitates space optimization and allows more products to be stored in the same space. They also give retailers greater visibility to their products and helps them identify where they are in the supply chain. This allows them to make better decisions and reduces out-of-stock instances.

These new technologies powered by connected devices provide clear-cut business benefits for retailers. They reduce their overall inventory financing costs, reduce dependency on human labor and increases efficiency. Smart vehicles and warehousing increase the shelf-life of products. They also open up channels for the mass fulfillment of perishable products.

Customer engagement – IoT allows retailers to connect with customers better and understand their choices. It enables them to give customers all the information that they need to make a decision, when they want it and how they want it. They also have the opportunity to provide customized offers or information based on where customers are in the store (using location services).


Smart Stores – This is an emerging trend, where retailers use technology such as smart shelves or smart carts to deliver their services via the web or smartphones. They use technologies such as in-store traffic analysis to better understand the customer’s shopping journey, exit points, and interest points. This data can be used to optimize store layouts and personalize digital marketing efforts.

Retailers are using IoT to created smart checkout counters that can make the experience smooth for customers. There is also a focus on eliminating the need for checkout lanes altogether to enable customers to checkout items anywhere in the store

Embracing change


To truly embrace IoT, there are several basic challenges that retailers need to overcome. This involves a significant change in the way traditional retailers are running businesses. These challenges include:

Business process and organization change management: For businesses to adapt to the new era of IoT there needs to be a significant amount of change in organizational structure, thinking and culture. Manual processes and decision-making have to make way for automation by using data captured by IoT devices.

Data collection & analysis: In the era of IoT, a retailer is only as good as the data that he/she has and how he/she uses this data. Understanding data and identifying actionable and relevant information out of a huge dataset is critical to success. Organizations need to prioritize what, when and how to collect data. They need to be nimble with respect to data analysis and ready to change their strategy when they are not getting desired results.


Lack of talent: Professionals who can understand and work with technologies such as IoT, robotics or data science and analytics talent are often hard to find. Organizations need to focus on hiring and retaining talent. They also should find ways to cross train employees, who could bring innovation and execution together to implement enterprise scale systems.

Investment in research and implementation: The implementation of IoT requires investment in terms of research and implementation. For small and medium scale enterprises this is tough. Organizations will need to establish connections with startups for innovation and access to affordable yet scalable SaaS IoT products.

IoT as a trend is gaining pace and is changing the way customers shop online and offline. Early movers will be better positioned to use it in ways that increase their revenues, reduces costs and sets them apart from the competition. Leading retailers are already strategizing to optimize the supply chain, enhance customer experience and design smart stores using IoT. Embracing the trend and tackling the looming challenges it brings, is the best way for retailers to maximize benefits derived from it.

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