The global internet of things in retail market was valued at USD 35.63 billion in 2020 and is expected to reach USD 67.60 billion by 2026 witnessing a CAGR of 11.3% over the forecast period (2021 - 2026). The retail industry has witnessed significant impact from IoT, in terms of boosting profitability and offering the enhanced, omni-channel experience to retailers.
- IoT has been enabling retailers to connect with both businesses and people. This enables retailers to gain insights about product performance and new ways of customer engagement with both new and existing customers. Several companies, like Kroger, Zara, Walmart, Tesco, etc., have launched smart devices, to improve customer experience.
- With an existing network infrastructure likely to be used for 'connected things', the investments and expenditures on analytics are projected to be high, as companies are striving to find new ways to analyze the significant volumes of smart device-generated data.
- Additionally, the use of e-commerce platforms is rapidly increasing owing to the ease of shopping and smartphone penetration in the market, which is likely to boost the market. The increasing need for data analysis and integration of analytics is expected to propel the utilization of the Internet of Things market over the forecast period.
- For instance, Amazon's first store in Seattle, the United States, is incorporated with self-checkout service and mobile payment methods, which are available on both Android and iOS systems. The store is equipped with cameras, sensors, and/or RFID readers, to identify shoppers and products, and use computer vision, deep learning algorithms, and the 'sensor fusion'.
Key Market Trends
Software Component Expected to Hold Significant Share
- The major growth of internet shopping can be attributed to higher transaction values and increased order frequency. IoT can optimize supply chain management, reduce inventory error, and decrease labor costs. Ultimately, IoT can help your traditional brick-and-mortar shop compete with today's online-first shopping world, by exponentially improving customer experience and decreasing unnecessary expenses.
- There are different kinds of software solutions that IoT provide for the betterment of retail sector: Qliktag, Evrythng, ThinFilm NC solutions, Gimble, Kaa Projects, Wise Shelf, Swirl, Memomi, Authentic or Not, Queuehop.
- NFC-enabled technology creates noninvasive opportunities for retailers to inform and persuade shoppers. For instance, national supermarket chain Kroger Co. piloted smart shelf tags to display product information.
- NFC provides significant functionalities to IoT by solving the challenges of unpowered objects lacking network access, providing the simplest, most intuitive way to indicate a user's interest to take an action, connecting devices easy and intuitive. Hence, an increase in the usage of NFC solution is penetrating the retail market.
North America to Hold Largest Share
- The growth of network-connected devices, systems, and services that use IoT creates considerable opportunities and benefits. Moreover, US consumers are increasingly using IoT devices, for various applications.
- According to the US Census Bureau, retail sales hit a record of USD 5.7 trillion in 2017, with a y-o-y rise of 4.5%, and a 42% increase from 2009's record low of USD 4.06 trillion. The major shift in US retail can be attributed to two significant shifts, i.e., technology and changes in consumer behavior.
- The advent of e-commerce technologies and incorporation of the best in-store experience have been the major factors responsible for the paradigm shift in US retailing. Retailers are prioritizing their spending toward the provision of omnichannel retailing, by moving from purely online store to brick-and-mortar store, and vice-versa.
- The IoT is also being used by retailers to provide a personalized experience, to their customers. For example, Walmart uses IoT in its the United States, to gain insights about the products that are popular on social media.
The internet of things in the retail market is fragmented. Increasing number of consumers embracing the smart home environment, temperature sensors deployment in warehouses, the advent of e-commerce technologies, provides lucrative opportunities in the internet of things in retail market. Overall, the competitive rivalry among existing competitors is high. The product innovation and expansion is penetrating the growth of the industry in an effective way.
- January 2019 - Amazon Web Services, Inc. announced AWS Backup, a fully-managed, centralized backup service that makes it faster and simpler for customers to back up their data across AWS services and on-premises, helping customers more easily meet their business and regulatory backup compliance requirements.
- July 2018 - IBM Watson IoT accelerated business transformation in Europe, as European clients are increasingly opting for Watson IoT. The examples of the company's commitment to improving operations are - its contracts with a Spanish electricity grid operator (Red Electrica de Espana), an Italian elderly care provider (Cooperativa Sole), a Dutch telecommunications operator (Tele2), and an Israeli manufacturer of smart air conditioning (Electra Group), with the power of Artificial Intelligence (AI)-enabled and IBM's cloud-based Internet of Things technologies.
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