Brick and mortar retailers are battling back against e-commerce platforms by tapping into the Internet of Things.
According to a recent report by Grand View Research, the global Internet of Things (IoT) retail market size checked in at $13.5 billion in 2015, but -- thanks to the blending of digital services and applications with in-store operations -- it's projected to hit $94.4 billion by 2025.
Retailers are seeking to gain a competitive advantage by installing "smart shelves" and RFID (radio frequency identification) sensors that can detect low inventory and track products throughout the supply chain. The use of RFID tags is reducing product loss by increasing inventory accuracy, which leads to improved margins for the retailers. The market for RFID tags was valued at more than $3 billion in 2015.
Beacons, which focus on data collection for internal analytics, are expected to grow at a CAGR of more than 24%, according to the report. With RFID tags and beacons, retailers can match merchandise availability with consumer preferences while also increasing the appeal of products in stock via better placements.
Retail IoT software is projected to be the fastest-growing segment due to the increased adoption of analytics. Retailers have started to combine smart technology with in-store solutions, such as video analytics, beacons, Bluetooth Low Energy (BLE) and wearables, to capture customer data. IoT also lets them connect with cloud infrastructures and software to access real-time data analytics.
Retailers are installing IoT-related devices and applications for premise monitoring, producing monitoring, supply chain monitoring and customer monitoring in order to monetize, analyze and improve their processes while making incremental investments in their capital equipment, according to the report.
Service providers are looking to cash in on the IoT retail opportunities by offering them software-as-a-service (SaaS) and payment-as-a-service (PaaS) solutions. Managed services had a revenue share of more than 40% in 2015, according to the report, as retailers sought to offload areas of IoT that were beyond their core competencies. By using managed services, retailers can reduce their IT costs while improving their in-store operations.
— Mike Robuck, Editor, Telco Transformation