The global IoT in retail market is expected to reach $182bn by 2028, registering a CAGR of 26.0%, according to market watcher Grand View Research.

The growth can be attributed to the adoption of connected technologies by retailers against ecommerce sites. The reducing cost of hardware and IoT sensors, demand for a seamless shopping experience, and growing acceptance of smart payment are the factors expected to further fuel the growth of the IoT in retail market.

The software segment is expected to register the fastest CAGR of over 27% from 2021 to 2028. The growing emphasis on analytics software such as video analytics is expected to propel the growth of the segment.

Beacons are gaining significant traction owing to their high adoption by retailers to increase customer engagement, thereby increasing loyalty and sales. As a result, the beacons segment is projected to register a strong growth rate over the forecast period.

The growing demand for payment-as-a-service (PaaS) and cloud-based technology for PoS terminals is expected to provide high growth opportunities for managed services.

Due to the growing importance of omnichannel retailing to survive the intense competition, several retailers from the Asia-Pacific region are focusing on strengthening and adding value to their digital platforms to serve the needs of local customers.

The tectonic shift in optimising retail operations is triggering IoT adoption. Retailers are experimenting with IoT, which allows them to determine the purchase history and customer’s profile by synchronising with wearable devices. The adoption of common standards and the proliferation of connected devices are augmenting the growth of IoT-enabled capabilities across the retail industry. Moreover, the technology provides capabilities and improvements in the sector and enables retailers to explore customer behaviour, optimise productivity and create new business models.

IoT devices also help in the back-end operations of retailers, such as planning effective logistics operations. IoT-connected sensors, GPS trackers and RFID tags track the movement of goods in real time, providing seamless supply chain management. This also helps prevent spoilage, damage or loss of goods during transportation, mainly beneficial for perishable food items.

The real-time information of weather, traffic conditions and speed of vehicles enable intelligent logistics operation. Moreover, factors such as effective inventory management, reduced human errors, reduced overstocking and shortage of products, and control over storage conditions are driving the demand for IoT devices in retail warehousing.

IoT offers retailers an opportunity to develop an improved ecosystem that connects the digital and physical worlds. Retailers are using the advantage of the wide range of connected products by adopting an integration platform. Moreover, smart devices reduce the buying time of customers and provide a seamless shopping experience. Retailers are slowly evolving to explore ways to connect with smart devices such as smartphones and smartwatches for enhancing the in-store experience.

Europe is the third-largest adopter of IoT, followed by North America and the Asia-Pacific. Germany, UK, France and Italy are at the forefront of the adoption of retail technologies. The presence of multinational retail brands such as H&M and Zara has further fuelled the demand for IoT in retail stores. These companies are investing in digital technologies to meet the continuously changing customer demand. Recently, H&M announced that the RFID technology would be implemented in more stores in the coming years. The company has already implemented the Azure IoT platform in its flagship stores.

Key players in the market include Arm, Cisco, Google, IBM, Impinj, Intel, Losant, Microsoft, NXP, PTC, RetailNext, SAP, Softweb, Verizon and Zebra Technologies.