The internet of things (IoT), an interconnected ecosystem of internet-enabled objects—devices, sensors, microprocessors, data hubs, networks, artificial intelligence software and analytics programs—is already being used across the retail industry. Whether it’s monitoring the supply chain, tracking and managing inventory, delivering personalized promotions, or enabling ecommerce from new environments, the retail IoT is ushering in an era in which “smart” things can seamlessly collect, share and analyze real-time data, states eMarketer.
Mobile devices, beacons and real-time data are helping merchants
As explored in a new eMarketer report, “The Internet of Retail Things: What Marketers Need to Know,” the IoT is delivering many new opportunities for retailers. According to an August 2015 study by Retail Systems Research (RSR), the majority (54%) of retailers worldwide with above-average sales growth said they believed the IoT is poised to dramatically change the way companies do business in the next three years.
Studies that have assessed the market size and growth potential for the retail IoT agree that retailers are already making substantial investments, especially in the areas of supply chain monitoring, inventory management, asset tracking, and payments processing. While adoption is still in its early stages, it will continue to increase as technology becomes less expensive and more reliable.
In a July 2015 report, Juniper Research predicts that by 2020 retailers worldwide would spend $2.5 billion in IoT-related hardware—including beacons, RFID tags and other types of sensors—and installation costs. This represents a nearly fourfold increase from the $670 million expected in 2015.
The same month, a MarketsandMarkets report estimated that the global market size of the retail IoT—including hardware, software and services—would increase from $14.28 billion in 2015 to $35.64 billion in 2020, representing a 20.07% compound annual growth rate (CAGR).
Under constant pressure to drive sales, increase margins and cultivate repeat business, retailers have been early movers with the IoT, at least by some accounts. An August 2015 International Data Corporation (IDC) survey found that global decision-makers in the retail industry, when compared with those in other sectors, were most familiar with the IoT.