IoT in retail: 
10 use cases, benefits, and challenges

IoT in retail: 10 use cases, benefits, and challenges

May 4, 2023

The state of IoT in the retail market

Retail IoT technology is growing at a fast pace. Here are some notable figures and facts.

Growth rate

The IoT in retail market is estimated to reach $177.90 billion by 2031, growing at a CAGR of 20.3% from 2022 to 2031

Research and Markets

Economic value

The economic value of retail IoT environments is expected to range from $5.5 trillion to $12.6 trillion by 2030


IoT in the cloud

By deployment mode, the cloud segment is expected to register the highest CAGR of 23.1% from 2021-2031

Allied Market Research

Use cases

Self-checkout and marketing personalization are expected to generate the highest economic value among all use cases of IoT in retail from 2020 to 2030


Scheme title: Retail environments. Estimated economic value by use case, 2020–30, $ billions
Data source: — The Internet of Things: Catching up to an accelerating opportunity, 2021

Self-checkout: Billing and material handling
Real-time personalized promotions
Self-checkout: Payments
Smart customer relationship management
Human productivity: Activity monitoring
Layout optimization
Inventory shrinkage prevention
Retail store enery management
Retail: After-sales service improvements
5-year CAGR:
Note: Figures may not sum, because of rounding

Top 10 IoT use cases in retail


Checkout remains one of the most labor-intensive retail operations and a tiresome process for customers. If a store is overcrowded, shoppers often decide to leave in order not to wait in checkout lines. IoT-enabled solutions can facilitate checkout automation, allowing businesses to streamline and personalize this procedure. 

For instance, an improved checkout system can read tags on each item as customers leave and automatically charge the customer’s mobile payment app. The main advantages of self-checkout from a retail business perspective include the following:

  • Increased customer satisfaction
  • Reduced staff costs
  • Enhanced employee productivity
  • Better use of physical space

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Examples of IoT in retail

Retail solutions empowered with IoT offer actionable insights that can uncover new opportunities for retailers and increase their ROI. Here are a few examples of how IoT can capture new revenue opportunities.

An industry leader in accessible luxury handbags, accessories, footwear, and apparel, Rebecca Minkoff has installed smart mirrors in their branded domestic retail stores. Smart mirrors located in fitting rooms read RFID tags on each item of clothing and display other sizes and colors available.

Moreover, smart mirrors demonstrate how the item can be styled with different looks and suggest other items based on what a customer is trying on. Customers can try on different clothes without leaving the fitting room, while retailers receive customer preference data for personal promotions.

Top IoT technologies in retail

Depending on the project’s type and scale, a retail IoT solution can encompass the following technologies.


Radio Frequency Identification (RFID) is a technology that allows remote identification of both living and non-living objects through radio signals. A typical RFID system consists of tags that store information about a particular object, readers that can scan the tags and process the data, and software that makes it all work together.

In the simplest scenario, RFID technology can prevent theft in physical stores. In addition, it can handle the following tasks:

  • Identification of item location in warehouses
  • Inventory automation
  • Incoming and outgoing transactions accounting
  • Real-time shipping monitoring
  • Limiting access to work areas

The RFID tags market is expected to reach $14.69 billion in 2026, growing at a CAGR of 9.3%.

Most popular IoT devices

An IoT network works with the help of specific computing devices that communicate via the Internet and transmit data to other components of an IoT ecosystem. Here are examples of the most common IoT devices.


A sensor is often considered a basic unit of any IoT ecosystem. IoT sensors collect data from IoT devices and send it to a central cloud repository or a physical server for further processing and analysis. Depending on its purpose, a sensor can collect different data types to help retailers monitor products' condition and ensure the safety of the work environment. 

Here are some popular types of sensors for the retail industry.

  • Temperature sensors
  • Proximity sensors
  • Pressure sensors
  • Smoke sensors
  • Humidity sensors
  • Motion detection sensors
  • Chemical sensors

Scheme title: The global IoT sensor market is expected to reach $54.46 billion by 2029
Data source: Data Bridge Market Research — Global Internet of Things (IoT) Sensor Market - Industry Trends and Forecast to 2029

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Best IoT cloud platforms

We use the leading cloud platforms to deploy the backend of IoT apps, gather, manage and analyze data, and maintain connectivity across IoT networks.


The IoT platform provided by Amazon helps developers and enterprises securely manage IoT networks, as well as store, process, and analyze data from IoT devices.

Data services

  • AWS IoT Events for event monitoring
  • AWS IoT Analytics for data analysis
  • AWS IoT FleetWise to process vehicle data
  • AWS IoT SiteWise to process facility data
  • AWS IoT Twin Maker for building digital twins

Control services

  • AWS IoT Core for connecting IoT devices
  • AWS IoT Device Advisor for device validation
  • AWS IoT Device Defender for data security
  • AWS IoT Device Management to control IoT devices

Device services

  • AWS IoT Device SDK to connect devices to AWS
  • AWS IoT ExpressLink to maintain hardware modules
  • AWS IoT Device Tester for automated testing
  • AWS IoT Greengrass to manage edge devices

Benefits of IoT in retail

Better customer experience

IoT use cases in retail enhance the brick-and-mortar experience by gathering data and adding it to customer profiles. Using data from sensors, smart devices, and wearables, retailers can better predict consumer behavior and wishes. Customers, in turn, get relevant advertising and personalized offers.

Enhanced supply chain management

IoT use cases in retail, such as RFID tags and GPS sensors, can offer a complete picture of product movement from manufacturing to store shelves then to customers. Retailers can analyze detailed information about an item’s transit time or storage temperature in real time. IoT has proven especially useful for transporting perishable foods, allowing retailers to act fast in case of fluctuating temperatures and food spoilages and prevent substantial losses.

Improved retail automation

Another advantage of IoT in the retail sector is automation, which helps eliminate inefficiencies and reduce manual labor, leading to better service and increased competitiveness. Modern IoT devices can perform many routine tasks without human intervention - from security monitoring to inventory auditing and predictive maintenance. This, in turn, means that employees can focus on more strategic activities such as servicing and retaining customers.

Advanced analytics capabilities

With advanced connectivity provided by IoT, retailers can gather and analyze vast amounts of data related to customer behavior, physical stores, products, and inventory. This data can fuel retailers’ analytics continuously, enabling more intelligent business decisions. By fostering decision-making, IoT helps improve store performance, optimize workflows, eliminate bottlenecks, and provide more quality customer service.

Solving key IoT implementation challenges

With so many success stories and benefits IoT offers, many retailers still hesitate to invest in connected technology due to possible challenges. Here's how companies address the most common issues to completely and responsibly integrate IoT into their retail operations.






One of IoT’s critical problems is security and privacy. The security issue has been especially acute with the introduction of the General Data Protection Regulation (GDPR). While access to customer data gives retailers many opportunities, it opens up opportunities for cyberattacks.

Retailers should closely collaborate with IoT software developers to ensure that devices and sensors used in retail have robust security mechanisms: end-to-end encryption, secure passwords, regular software updates, and an IT infrastructure regularly scanned for vulnerabilities.




Most retailers need more infrastructure and network capacity to deal with vast volumes of IoT data. To complete the digital transformation of their stores, retail companies should invest significantly in robust networks, data centers, cloud computing, and customer-facing solutions like mPOS, barcode scanners, and tablets.

There’s no need to fund all the infrastructure aspects upfront while implementing a new technology. Retailers can start with minor changes, like using IoT to manage air conditioning or lighting systems. This will bring near-term ROI, after which they can implement more sophisticated IoT solutions, such as traffic analytics.

Data management



IoT data analysis can become a challenge if a retailer lacks relevant qualifications. Ecommerce employees, including marketers and sales managers, do not always possess the necessary technical skills to gain valuable insights from IoT systems.

Retail companies can manage data by hiring experts or relying on third parties with relevant IoT qualifications, training, and skills.

Building a more connected retail environment with IoT

Over the years, innovative digital technologies such as artificial intelligence or machine learning have played an increasingly important role in the retail industry. The Internet of Things is one more example of technology capable of optimizing essential aspects of the retail business, thus fostering digital transformation.

IoT can help retailers enhance marketing, HR management, logistics, procurement, and sales, leading to advanced performance and streamlined business growth. At Itransition, we believe that the IoT journey can be a profitable investment, and we are ready to give retailers this competitive advantage.