Internet Of Things In Retail Market Size, Share & Trends Analysis Report By Solution, By Hardware (Beacons, RFID Tags, Sensors, Wearables), By Service, By Technology, And Segment Forecasts, 2021 - 2028

Report Overview

The global internet of things in retail market size was valued at USD 31.99 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 26.0% from 2021 to 2028. The growth can be attributed to the inclusion of digital and in-store operations in the retail sector. IoT is expected to revamp the retail industry, transforming traditional brick and mortar shops into advanced digital stores. The technology provides a competitive edge to the retailers with the help of smart shelves and RFID tags, which detect low inventory and track the movement of the respective goods. The adoption of IoT technology helps retailers to effectively manage in-store operations and provide an improved shopping experience to their customers.

Factors such as effective store premise monitoring, inventory management, supply chain management, and customer behavior observation are driving the demand for internet of things (IoT)  in retail market. Optimizing and automating the supply chain is one of the prime factors for the adoption of IoT among retailers. Connecting technologies, including digital signage, on-shelf displays, beacons, and price tickers, provide opportunities for a brand to gain access to a high amount of data on customer activity during in-store shopping.

The retail landscape has experienced a seismic shift with the evolution of Artificial Intelligence (AI) and Augmented Reality (AR) in retail stores. Retailers use AI to understand the buying patterns of old customers, identify the target audience, and offer customized product ads to their customers. Moreover, AI has offered its conventional capability for conversational commerce, as retailers are incorporating chatbots with messaging applications, allowing users to interact with their brands.

IoT in retail has enabled retailers to set up an automated checkout system using IoT devices. The automated checkout systems contribute to high customer satisfaction, resulting in higher footfalls, especially during a time crunch. For instance, Nayasale Retail Pvt Ltd., an Indian start-up, is a fully AI-powered autonomous retail store in Kerala (India), which features an automated checkout system, eliminating the need for any cashiers or salespersons. The retail store concept is in line with Amazon Go, which facilitates customers to pick their choice of items and use the automated checkout system. The Amazon Go store relies on weight sensors to understand the items picked by the shoppers.

COVID-19 Impact

The pandemic has profoundly impacted worldwide IoT spending, including that of the retail industry. Several new projects have been put on hold by the retailers as their primary focus was on the continuation of business operations during the economic crisis. Moreover, the technology roadmap for IoT has been delayed by the companies due to remote working limitations. As a result, the IoT in retail market has witnessed a decline in revenue in 2020 compared to 2019. However, the adoption of IoT in retail is expected to gradually increase in late 2021. Retailers are already implementing mobile payment systems, autonomous cleaning robots, and contactless checkout kiosks to reduce human interference and curb the spread of the coronavirus. Post the pandemic, AI technology, cloud services, and automation are expected to power the retail industry for years to come.  

Solution Insights

The hardware segment accounted for the highest revenue share of over 60% in 2020. The surge in the number of interconnected devices in retail outlets and the decreasing prices of IoT sensors are expected to propel the segment growth. The government's support and need to adopt IoT technology to enhance productivity, increase stock efficiencies, and automate supply chains are encouraging retailers to install hardware components. Retailers' commitment to IoT innovation is contributing to the growth of connected devices, including both RFID tags and beacons.

The increasing adoption of retail analytics is expected to augment the software segment growth over the next seven years. The proliferation of smartphones and the use of mobile applications are driving the retail software segment growth. The emerging app-driven hardware and the focus of retailers on providing integrated solutions are expected to positively impact the segment growth. Additionally, the introduction of smart connected software by key players such as PTC Inc. and SAP SE is driving the adoption of retail IoT software.

Hardware Insights

Sensors and RFID tags are the prominent hardware types used by retailers. The RFID tags segment accounted for a significant market share of over 39% in 2020. The adoption of RFID tags is increasing inventory accounting accuracy and margin growth by reducing product loss. RFID enables real-time visibility of inventory for automating replenishment for consistency and satisfying consumer demands. The maturing RFID ecosystems, along with price reduction, enable item-level merchandise tracking, thereby optimizing inventory operations.

The implementation of analytics software in retail and hardware equipment further boosts the demand for hardware, including RFID and sensors. The major players in the retail industry, such as Walmart and Amazon, have started using RFID-equipped cameras for video analytics, providing insights on the product demand and changing customer requirements. Wearables are gaining popularity among retailers for improving the customer experience. The potential of these devices has opened a spectrum of applications, resulting in a hands-free shopping experience.

Service Insights

The professional services segment accounted for the highest market share of over 55% in 2020. Professional services include consulting, application management, and infrastructure management services. The high adoption of IoT in the retail sector has increased the demand for infrastructure and application management services. IoT solution and product providers are also offering professional services related to installation and deployment, repair and maintenance, and training and helpdesk support as their key services. Moreover, retailers require customized solutions to boost their efficiency and productivity. The need for such customization is propelling the demand for consulting services.

The managed services segment is expected to witness strong growth over the forecast period. This growth can be attributed to the increasing adoption of these services to reduce IT costs. Retailers are outsourcing services to reduce the risks and focus on core competencies. The payment-as-a-service solution offers retailers with terminal management services and gateway solutions that enable efficient routing of transactions, multichannel acceptance and processing, and payment value-added services such as mobile banking, POS terminals, and payment gateway.

Technology Insights

The near field communication (NFC) segment accounted for a prominent market share of 30% in 2020. An NFC combines contactless smart card technology with mobile devices and allows streamlined payment transactions compared to traditional cash and card payment methods. Device manufacturers and mobile operators are undertaking several projects to increase the coverage of NFC-based transactions. The emergence of mobile wallets has transformed the payment methods in the retail sector, providing a boost to NFC adoption. Moreover, to manage the rush in the pandemic, medical stores and supermarket owners have deployed NFC technology to accelerate the check-out processes.

Initially, Bluetooth Low Energy (BLE) gained notable traction as it allowed the designing of single-mode chips, which can be used in low-cost battery-powered devices. The technology can affect several aspects of the retail customer experience. Furthermore, with regards to payments, the technology makes store check-in and intelligent interaction much easier to implement. Retail giants such as Urban Outfitters, Target, and Macy's have already deployed Bluetooth beacons at their stores.

Regional Insights

North America accounted for a revenue share of over 30% in 2020. The e-commerce growth in the region has challenged the departmental stores in terms of excelling their business operations. Moreover, the regional growth can be attributed to the strong research and development capabilities of leading players such as IBM Corporation, Google LLC, Microsoft Corporation, Intel Corporation, and PTC Inc. In 2018, Google launched a pilot project named Project Beacon and started sending free beacons to physical stores. 

The Asia Pacific region is expected to emerge as the prominent region, with China being the largest adopter of IoT. India offers a huge potential for growth owing to the increasing investments in the retail sector. The increasing adoption of real-time systems and location-based services is expected to contribute to regional market growth. The increase in the number of government initiatives to boost digitization is expected to positively impact the growth of the regional retail sector. The convergence of technologies such as cloud, analytics, mobility, and big data and the declining sensor prices are instrumental in driving IoT adoption in the region.

Key Companies & Market Share Insights

The market is fragmented with the presence and operation of many regional and international players. IBM Corporation; Impinj Inc.; Google LLC; Microsoft Corporation; and PTC Inc. are some of the leading players in the global IoT in the retail space. These companies are actively working on developing new solutions for the retail industry. Recently, in October 2020, Losant IoT partnered with Vanteon Wireless Solutions to develop an edge-to-cloud solution for multiple connected devices. In 2018, IBM Corporation announced the expansion of its Watson IoT business in Europe, providing IoT solutions for European clients such as Cooperativa Sole, an Italy-based agriculture product company. Some of the prominent players operating in the internet of things in retail market are:

• Arm Limited

• Cisco Systems Inc.

• Google LLC

• IBM Corporation

• Impinj, Inc.

• Intel Corporation

• Losant IoT

• Microsoft Corporation

• NXP Semiconductors

• PTC Inc.

• RetailNext, Inc.

• SAP SE

• Softweb Solutions Inc.

• Verizon Communications Inc.

• Zebra Technologies Corporation

Internet Of Things In Retail Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For this study, Grand View Research has segmented the global Internet of Things (IoT) in retail market report based on solution, service, technology, and region:

• Solution Outlook (Revenue, USD Billion, 2017 - 2028)

  • Hardware

    • Beacons

    • RFID tags

    • Sensors

    • Wearables

  • Software

• Service Outlook (Revenue, USD Billion, 2017 - 2028)

  • Professional Services

  • Managed Services

• Technology Outlook (Revenue, USD Billion, 2017 - 2028)

  • Bluetooth low energy

  • Near field communication

  • ZigBee

  • Others

• Regional Outlook (Revenue, USD Billion, 2017 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • U.K.

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa