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, 2018 - 2025

Report Overview

The global Internet of Things (IoT) in retail market size was estimated at USD 16.36 billion in 2016 and is expected to develop at a CAGR of 21.5% over the forecast period. IoT offers retailers opportunities for the development of an ecosystem that connects the physical and digital world. The retail industry has witnessed a wide utilization of connected products by adopting an integrated platform.

Increasing penetration of e-commerce platforms has enabled traditional retailers to become proficient at using connected technologies. Implementation of IoT in retail stores has allowed retailers to determine customers’ profiles and their buying history by orchestrating with wearable devices. The proliferation of connected devices and the adoption of collective standards are contributing to the growth of IoT-enabled competencies across the retail industry.

The emergence of digital sensors is enabling Machine to Machine (M2M) communication for sending product information, coupons, and discount codes. Retailers have combined smart technologies with in-store solutions, such as wearables, beacons, video analytics, and Bluetooth Low Energy (BLE) to collect a vast amount of data from customers.

However, inconsistent IoT standards are expected to hamper industry growth and product development. Several devices from different manufacturers that perform same the functions may have fundamentally different data formats and potentially different touch-points, such as frequencies of generating that data, which further leads to a lack of interoperability. Rising security and privacy concerns are also expected to challenge the market growth over the next few years.

Solution Insights

The hardware segment captured a market share of over 60.0% in 2016. The proliferation of connected devices is offering a significant opportunity to manufacturers. Reduction in the total cost of ownership and improved return on investments offered by IoT-based hardware devices are expected to increase their adoption over the coming years. The low cost associated with these devices, along with quick transactions, help in meeting targeted sales and improving labor efficiency, which in turn is expected to fuel market growth.

Furthermore, the development of smart technologies such as beacons and Radio Frequency Identification (RFID) tags is expected to fuel segment growth. Rising demand for enhanced in-stock product positioning and suitable product assortments is expected to drive demand for interconnected devices over the forecast period.

Hardware Insights

The market for RFID tags was valued at over USD 3.5 billion in 2016. The decline in the cost of RFID tags is expected to propel demand over the forecast period. Moreover, demand for these tags is increasing as retailers realize the benefits of RFID in applications such as monitoring customer behavior, inventory management, and loss prevention.

Demand for wearables in the retail industry is maturing at a fast pace with several new entrants entering the sector. Moreover, retailers are increasingly incorporating wearable devices in their stores and aligning their customer experience strategy to meet the demands of quickly evolving customer expectations. One of the key changes compelled by these devices is an enhancement in the in-store shopping experience, opening a new spectrum of applications and thereby boosting retail sales.

Technology Insights

The Near Field Communication (NFC) segment accounted for a revenue share of over 25.0% in the IoT in the retail market in 2016. NFC is gaining prominence as it combines contactless smart card technology with the convenience of smartphones. NFC-based devices are widely used in retail applications including mobile ticketing, mobile payment, easy pairing with other devices, and data transfer. The drug store and supermarket owners are increasingly deploying NFC-based applications to accelerate check-out processes.

Bluetooth Low Energy (BLE) is evolving at a faster pace as it facilitates the design of single-mode chips that can be integrated into cheaper battery-powered devices. The technology has the ability to affect several aspects of retail customer experience. Similarly, with regard to payments, technology enables store check-in and intelligent interaction, which is simpler to execute.

Services Insights

Managed services captured a revenue share of over 40.0% in 2016. Increasing adoption of these services to reduce IT costs is expected to augment industry growth. Retailers have been embracing Payment-as-a-Service (PaaS) solutions, which offer them terminal management services and gateway solutions. The solution allows value-added payment services such as payment gateway, mobile banking, and POS terminals and effective routing of transactions.

Furthermore, changing retail scenario towards connected technology has fueled demand for managed services. Adoption and implementation of managed services are expected to help retailers in the reduction of IT costs, to enhance in-store efficiency and operations.

Regional Insights

North America is envisioned to emerge as a leading regional market with a share of over 35.0% in 2016. Increased spending on product monitoring and supply chain monitoring are expected to open new growth avenues over the next few years in the region. High e-commerce penetration in the region has put departmental stores under pressure for improving the in-store customer shopping experience and increasing average footfall.

The European region contributed to global industry growth significantly in 2016. Increasing adoption of beacons in economies such as France and the U.K. are contributing to regional growth. For instance, Les Terrasses du Port, a prominent shopping center in France, has deployed one of the largest networks of BLE beacons in the region, allowing retailers such as H&M and Zara to deliver promotional offers and information to customers’ smartphones. Moreover, regional beacon manufactures are providing content management systems used by retailers to deliver offers and mobile apps for enhancing their efficiency.

Key Companies & Market Share Insights 

Key players in the industry include IBM Corporation; Impinj Inc.; Allerin Tech Pvt Ltd.; and RetailNext Inc. The industry has witnessed several joint ventures and partnerships to combine IoT expertise within retail stores. Service and network providers are entering into partnerships with component manufacturers to penetrate IoT in retail space. In May 2016, Microsoft Corporation announced the acquisition of Solair, to deliver complete IoT offerings for enterprises.

Retailers and service providers are capitalizing on the growing connected market as several vendors are offering IoT ecosystems that provide retailers with a wide array of devices through a single platform. Furthermore, as solution providers are gradually gaining stability and becoming capable of providing a steady stream of products, several new players are focusing on software solutions, leaving infrastructure and hardware to a relatively small group of companies.

Internet of Things in Retail Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2014 to 2025. For the purpose of this study, Grand View Research has segmented the global Internet of Things in a retail market report on the basis of solution, hardware, service, technology, and region:

• Solution Outlook (Revenue, USD Billion, 2014 - 2025)

  • Hardware

  • Software

• Hardware Outlook (Revenue, USD Billion, 2014 - 2025)

  • Beacons

  • RFID tags

  • Sensors

  • Wearables

• Service Outlook (Revenue, USD Billion, 2014 - 2025)

  • Professional services

  • Managed services

• Technology Outlook (Revenue, USD Billion, 2014 - 2025)

  • Bluetooth low energy

  • Near field communication

  • ZigBee

  • Others

• Regional Outlook (Revenue, USD Billion, 2014 - 2025)

  • North America

    • The U.S.

    • Canada

  • Europe

    • Germany

    • The U.K.

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • MEA