IoT in Retail Industry: Real Applications, Trends, and Costs for Implementing IoT in Your Business

Key takeaways

• • IoT is a cutting-edge technology in the retail industry, and it has been adopted by major companies like Walmart and Amazon.
  • It can be used to streamline internal operations or enhance the customer experience.
  • By 2025, the number of IoT connections is expected to reach 20.1 billion.
  • The benefits of IoT in retail include reducing labor and energy costs, improving customer engagement, and enhancing data management.
  • The cost of designing and developing custom IoT software starts at $55,000.

What is IoT in retail?

The Internet of Things is a network of connected objects that communicate with each other and with remote control devices. This technology is applied across various sectors involving physical objects, from the automotive industry to the fintech sector.

In the retail sector, IoT is widely used to reduce manual work, improve data analysis, and enhance customer experience. Common IoT devices in retail include RFID tags, beacons, cameras, smart thermostats, and NFC chips.

The five components of the Internet of Things are IoT devices, router/gateway, internet network, remote control, and data storage. Here’s how they are connected:

1. IoT devices track data and transfer it to each other or to a remote control device.
2. A router or gateway delivers the IoT data to the internet network.
3. The internet network processes the information.
4. The remote control enables users to make commands and handle the IoT device.
5. Data storage keeps information for further analysis. For instance, it can store customer preferences or inventory levels.

How IoT is used in retail industry

To understand better what IoT in retail is and what its real applications are, let’s see some scenarios where IoT can be useful.

Automated stock counting

The growth of delivery services has highlighted the need for accurate stock tracking. This helps prevent situations where items that go out of stock but still appear available in delivery apps. For this purpose, retailers use RFID tags — transponders connected to a reading device, typically scanners at checkouts or warehouse terminals.

When people knock out the goods on the cashier’s check, data from the RFID tag automatically transfers to the smart inventory management system. Stock levels are updated immediately, so customers always see accurate stock on hand.

Stock counting is also important for internal operations. It helps businesses to regulate supply chains and replenish stocks based on demand.

🌟 Our experience   Purrweb’s team implemented automatic stock counting in the Wrstband event app. We developed an application for terminals and integrated it with IoT-enabled control bracelets. Event attendees are supposed to link their bracelets to their payment cards. If they want to purchase food or drinks, they can pay using their bracelet. Event organizers can quickly monitor inventory levels thanks to RFID tags attached to products.

Contactless payments

Contactless payments became standard in retail. Customers can purchase goods with a smartphone, payment sticker, smartwatch, or even accessories like rings and bracelets.

Contactless payment is possible due to NFC chips. If the NFC-enabled IoT device gets closer to the reading device, the NFC exchange happens. The reading device transfers data about the transaction to a bank. If there is no internet connection on the spot, the data is stored locally, until it can be processed later.

Vending machines

The main problem with vending machines is timely refilling and maintenance. If a machine is empty, it means potential losses for the owners.

IoT-enabled vending machines use weight sensors and sometimes RFID tags to monitor stock levels inside the device. Due to data transmission modules, these sensors send stock information for IoT data analysis. This helps keep machines full all the time.

The same principle applies to predictive maintenance. If vending machines are equipped with sensors, technicians can detect defects in advance before some waking and hungry customer has to call a tipline. 🙂

No-cashier shops

The concept of shops without salespeople is now a viable reality. The predecessors of no-cashier shops are basic self-checkout stations where customers have to scan each item manually. However, the process has evolved, and now the retail market offers something even more introverted.

For example, automated checkout systems are implemented in several large stores across the UK. This system lets customers use a mobile app to scan items as they shop. Once they’re done, they can head straight to the exit. All scanned items will be purchased automatically in the app. This speeds up the customer experience — there is no need to wait in line at all.

Delivery services

In the food delivery industry, GPS trackers and IoT modules record the couriers’ exact location. IoT-based data analytics help allocate orders so that delivery guys can pick them up along the way.

Customer traffic management

In large retail chains, video analytics systems are used to monitor cashier load. Cameras and sensors collect data on customer flow. Staff can see real-time information about the current state of cashier zones on a central dashboard or through a mobile application. This helps prevent long queues and enhances the customer experience.

Customer pattern analysis

Cameras with sensors can be placed in aisles to track where customers spend the most time. This helps identify optimal locations for products and where additional signage may be needed. It also measures customer engagement through gaze tracking and consumer-shopping behavior. The data is then displayed as a heatmap of areas of high and low activity.

Temperature control for perishable items

IoT HVAC systems continuously monitor the temperature in refrigerators and display cases. If the temperature deviates from the standards, the system sends alerts to staff or automatically adjusts conditions, reducing the number of expired products.

Advantages of IoT in retail

Implementing IoT in retail is a significant investment, but it pays off in the long run. Here are some benefits of integrating IoT into your retail business model:

Reduces workload

Implementing IoT in the retail industry reduces the workload on employees. At all levels, fewer workers are needed. Managing a single IoT device is more efficient than staffing up.

Energy usage economy

IoT in retail enables the automation of tasks that are generally hard to control and not directly the responsibility of staff.

For example, IoT cameras can optimize energy consumption by dimming lights during low visitor traffic and increasing them when visitors are present. In areas with alcoholic beverages, lighting can be automatically dimmed during hours when sales are prohibited. This can save on lighting expenses and free up resources.

Reduced waste

Smart shelves equipped with IoT automated inventory management systems can eliminate the risk of human error. They also help reduce waste, which is beneficial for both the environment and your business — you can adjust the supply chain to lower the percentage of spoiled items.

Enhanced customer experience

People prefer stores where they can quickly pick up their items. This is especially important in high-traffic areas, like downtown, where people often grab something for lunch and have tight schedules. IoT in the retail industry reduces the time spent shopping and attracts more customers.

Key problems for IoT implementation in retail

When integrating the retail IoT solution, issues can arise midway. If addressed from the start, they won’t bring much trouble later. Here are some of the challenges you need to be aware of:

Discrepancy of different IoT technologies

IoT is diverse, and it brings extra challenges. Manufacturers often use proprietary architectures, making the software development and connecting IoT technologies harder. Language barriers add to the complexity, as IoT software developers frequently encounter documentation in unknown languages. The time spent deciphering such materials slows progress.

This issue should be addressed from the start when planning the work scope. Adopting standardized protocols can help mitigate technology discrepancies. Also, it’s better to integrate IoT solutions with scalability in mind so as not to face interoperability problems later.

🌟 Our experience   There can also be external factors that hinder the integration process. This problem was with the Plonq app. We had to develop an app for tracking puffs from an electronic POD system. Smoke-promoting apps are prohibited from publishing in Google Play and the App Store — so we had to develop a PWA app, connect it to the IoT POD system, and then integrate it with the device. For iOS, it was an ultra-complex mission because you can’t integrate Bluetooth APIs into Safari. Other iOS browsers didn’t suit us either — they are all Safari in disguise. 🙂 We decided to develop a custom browser and connect it to the POD system with the BLE protocol. This was a non-standard approach, as no similar experiences were described online. But we nailed it — check our case study to read the details about the Plonq app development.

Security

This problem results directly from the previous one. Security issues often happen when systems aren’t unified, which increases the risk of data breaches. Without standardized safeguards, vulnerabilities become easier to exploit.

Physical security is another concern. Malware can compromise retail IoT systems physically, such as through a malicious flash drive. For this reason, security risks should be addressed early, from hardware procurement to software architecture design.

🌟 Our experience   Purrweb developed three apps for EnerGO, a powerbank renting service. To enhance security, we had to build a special user flow for opening and closing the charging station’s cell. It can only be opened with a smartphone to ensure no one damages the equipment or uses it incorrectly.

The practicality of implementing IoT technologies

Implementing IoT is costly, as you need to purchase hardware and then develop software to control it. The big challenge is ensuring the investment is worth it.

To avoid wasting money, it’s crucial to conduct a discovery phase to determine if IoT is needed in your retail business. During this phase, you can study your target audience and evaluate the expected demand.

Unlike research conducted before the actual software development, the discovery phase focuses on the “whys” rather than the “hows”

🌟 Our experience   We conduct discovery phases for our clients. For example, we ran one for a client planning an AI dating service. The client’s hypothesis was that many users face issues in online dating and can, therefore, benefit from an AI assistant. We conducted in-depth interviews with potential users, made quantitative research, and calculated unit economics for different monetization models of an AI-dating service. The discovery phase revealed that people don’t need an AI-based dating service. Most of the respondents noted that rejection is a natural part of dating. If communication doesn’t work from the start, it’s just not meant to be, and AI can’t patch things up. Due to the discovery phase, the client saved money they would have wasted on a non-prospective idea.

The cost of IoT implementation in retail

IoT pricing involves both hardware and software, as well as the integration between them. The costs for IoT hardware vary depending on requirements and whether you develop it in-house or source it from third-party manufacturers. So, the price range for hardware is hard to predict.

Pricing for IoT-connected software is more measurable. Here’s a rough estimate of software project costs based on complexity:

Project complexity level	Description	IoT software costs
Low	– Control of 1–2 devices via a mobile application – A small set of functions (e.g., turning devices on and off) –Connection to the device through a local network (Wi-Fi or Bluetooth) – A simple, single-level system without complex computations – Interaction with hardware is based on standardized protocols	$55,000 – $85,000
Medium	– Control of multiple devices with customizable scenarios (e.g., turning off lights at a specific time) – Connection to devices via the cloud – Implementation of basic analytics and notifications (e.g., energy consumption monitoring) – Support for multiple protocols and compatibility with popular ecosystems – Secure connection setup with encryption and authorization	$85,000 – $120,000
High	– Handling large volumes of data (e.g., monitoring production lines) – Advanced algorithms and machine learning – Integration with external systems like ERP – Supporting multiple connection types – Scalability to add thousands of devices to the system	$120,000+

If we break it down into separate development stages, the prices will be the following:

1. Research phase

🚩 Average cost — $2,100

During the research phase, system analysts take a broad look at the entire project. They combine client requirements, business specifics, design elements, and technical implementation into a cohesive system.

Based on this information, the BPMN diagrams are created — visual workflows that outline business processes.

This stage helps us understand which direction to take, prioritize what’s important, and outline the necessary user flows and IoT technologies.

🌟 Our experience   Sometimes, bottlenecks can arise even in the smallest details, so it’s important to understand the users’ knowledge level or what may not be clear to them. The SOAK company came to us with a ready-made design, which we were supposed to finalize. However, the process turned out to be a redesign, as we had to address many user flow issues. The significant problem with the original design was the missing screens. Users often couldn’t tell if their actions were completed successfully or not. We improved the flow and removed points of confusion. This finalization took two weeks and resulted in unplanned expenses for the client, which could have been avoided with better initial planning. For example, we added a success screen. Without it, users may assume the app isn’t functioning properly. Check out the SOAK case study and view more before/after screens.

2. UI/UX design

🚩 Average cost — $5,950

The next stage is developing prototypes and interface design. The design process typically begins with wireframes — black-and-white layouts that outline the main flow. After creating wireframes, the focus shifts to detailed interface design.

Designers work on each screen and compile a UI kit for developers, which ensures the design consistency of all elements.

3. Development

🚩 Average cost — $60,000

At this stage, backend and frontend development takes place.

Everything you see in the software interface is the responsibility of the frontend developer. The frontend captures user commands, which are then sent to the backend for processing.

The backend manages tasks like validating commands and communicating with the IoT device.

4. Q/A testing

🚩 Average cost — $15,000

Testing involves evaluating the application’s performance across different devices, as well as fixing bugs. It typically runs in parallel with development but is also done afterward, as some hidden bugs may appear after the software is ready.

5. Project management

🚩 Average cost — $12,600

Project management refers to organizing the workflow and communicating with the client. It includes:

• • Developing and agreeing upon the project plan
  • Distributing tasks among the team
  • Monitoring deadlines and work quality
  • Holding regular meetings and providing progress reports to the client
  • Conducting a final review of the project before delivery

Bonus: a spreadsheet for IoT software cost calculation

If you want to keep your budget in check and avoid unnecessary spending, use our spreadsheet template. It can help you calculate your budget, break it down by categories, and ensure nothing is overlooked during the planning stage. Simply copy the template, enter your data, and use the built-in formulas to calculate expenses and revenue.

👉 Open the budget spreadsheet template in Google Tables.

Case studies of successful IoT implementations in retail

IoT is widely adopted in retail, and there are quite a few examples to follow. Below are some examples of real retail companies actively implementing IoT in their processes:

Vendify

Vendify is a service for smart fridges — consider it a micro market in a vending format. Customers can physically inspect products before purchasing without interacting with anyone. The service includes an app for conveniently browsing products, reading ingredient lists, and more.

The user flow in Vendify looks like this:

1. A customer scans a QR code on the fridge.
2. They see the fridge’s contents and unlock it by pressing a button.
3. The fridge door opens.
4. The customer takes the products they want.
5. After closing the door, the fridge sends data about the selected items to the app.
6. The payment is automatically deducted from the linked card.

This model is secure for retail businesses. Every product has an RFID tag. The backend tracks what is in the fridge and what the user takes. Every time the door is closed, the backend calculates the stock and charges the user if something is missing.

A 300-second timer is implemented to handle situations where the door is accidentally left open. If no purchase is made within this time, the session automatically closes, and the backend calculates the missing goods, even with the door open.

Purrweb handled the design and frontend development for Vendify. You can find detailed insights about IoT technologies used here in our case study.

Amazon

Amazon has worked on several store concepts that incorporate IoT in retail stores.

For example, Amazon Go is a staff-free store and a pioneer in using IoT technologies in retail. Here, Amazon made a big bet on its Just Walk Out Technology, which eliminates the need for traditional checkouts.

The idea is that Amazon’s smart shelves and computer vision cameras on the ceiling track what customers grab. Customers receive a new level of customer experience. They can simply leave the store, and payment is processed automatically.

However, the system is now being suspended. Human intervention is still required for 700 out of 1,000 purchases. According to The Information, the company is removing the Just Walk Out system from all major Amazon stores and shifting its focus to the Amazon Fresh retail model.

In Amazon Fresh stores, Amazon Dash Cart technology has been adopted. These smart shopping carts have cameras and displays. Customers can grab the items they need, weigh products, and see their running total on the cart screen. When finished, customers can exit through the Dash Cart lane.

Walmart

Walmart is another leader in IoT in retail. The company actively implements new IoT technologies in its brick-and-mortar stores.

For example, the VUSION IoT technology uses digital shelf labels to update prices directly on the shelves. Updates are made via a mobile app, eliminating the need for manual tag changes. This IoT technology reduces the carbon footprint and workload on staff. Walmart plans to roll out digital shelf labels in 2,300 retail stores by 2026.

Walmart also patents innovative ideas. For instance, the company patented “quality carts.” These carts are equipped with IoT sensors that collect data on the time spent in specific sections and which products shoppers inspect or select. All collected data is stored on a server, where a map of customer interactions with the store forms.

A final note

IoT technologies are adaptable, so they can be applied in retail in many different ways. The Internet of Things is a great opportunity to connect the physical world with the digital one and improve business processes.

Purrweb has experience in IoT. We worked on many projects where we developed IoT software and integrated it with hardware. We can help you with IoT application development, from creating custom retail IoT solutions for your work processes to building white-label apps you can sell to others.

In our portfolio, you can check out more details about our experience in IoT — we describe each project in detail to give you an idea of how we work.

➡️ If you need software for your IoT project, fill out the form. We’ll listen to your request and provide a project estimation for your needs, including timeline, resources, and budget.