PLATFORM FOR DESIGNING, BUILDING, AND RUNNING SMART-TECH AND IOT
When you think about the retail industry, you may picture items on store shelves, shopping carts, and cash registers. But, behind the scenes, a complex and intricate supply chain connects manufacturers, distributors, retailers, and consumers.
The rise of IoT can transform this supply chain and revolutionize how retailers manage their inventory, logistics, and customer experience.
Let's take a closer look at the impact of IoT on retail supply chain management in 2025.
Customer behavior and expectations have changed in recent years. Customers want products delivered faster, with more transparency and sustainable practices. The retail industry has already adapted to these trends.
Fast delivery has become the norm in the retail industry, with customers expecting their orders to arrive within days if not hours. To meet these demands, retailers have invested in technology and partnerships to improve the speed and efficiency of their supply chains.
Demand for same-day delivery, once considered a luxury, increased by 20% in 2024, and customers expect it as the standard. Customers also expect reliable and accurate delivery, with real-time tracking updates and the ability to change delivery locations or times.
As more retailers adopt this focus on fast and reliable delivery, those who don't may fall behind in customer satisfaction and loyalty.
In 2024, customers expect more transparency from retailers throughout the supply chain process. This includes knowing where their products come from and how they are sourced and produced. Customers also want to know the environmental and ethical impact of their purchases.
With social media and the internet, customers can quickly share information and hold retailers accountable for their practices. As a result, retailers are investing in supply chain transparency to build trust and loyalty with their customers. One example is using QR codes that allow customers to trace their product's journey from production to delivery.
According to Kenny Kline, 94% of consumers are more likely to be loyal to a brand that offers transparency. Therefore, transparency will be a top priority for retailers in 2025 and beyond.
Sustainability has become a hot topic in the retail industry in recent years. Customers are increasingly aware of the environmental impact of their purchases and want to support retailers that prioritize sustainability.
Retailers have started implementing sustainable practices in their supply chains, such as using eco-friendly packaging and reducing carbon emissions. They also partner with suppliers who have similar sustainability goals.
Logistic Software vendor Sifted surveyed 500 consumers in March 2023 and found that 79.6% would be willing to wait an extra day for their online order if it meant it was shipped more sustainably. This shows that customers are eager to make small sacrifices for the greater good, and retailers are taking note.
In 2025, sustainability will continue to be a priority for retailers as they work towards building more eco-friendly and ethical supply chains.
Artificial intelligence (AI) has already made its mark in the retail industry. In 2024, retailers began using AI to optimize inventory management, improve forecasting accuracy, and personalize the customer experience.
The industry has utilized chatbots and virtual assistants to handle customer inquiries, freeing time for human employees to focus on more complex tasks. Resource planning systems have also integrated AI to automate and optimize supply chain processes.
The use of AI in retail supply chain management is only expected to grow in 2025 and beyond, with the potential for even more advanced applications.
In 2024, retailers faced a significant shift towards omnichannel strategies. Consumers no longer shop solely in-store or online; they expect a seamless experience across all retail channels.
The buy-online-pickup-in-store (BOPIS) and ship-from-store (SFS) models gained popularity. Retailers who successfully integrated these strategies into their supply chain operations saw increased customer satisfaction and sales.
Another trend is dark stores and retail locations that function solely as fulfillment centers for online orders. This ensures faster delivery and reduces strain on traditional store operations.
As demand for fast and reliable delivery increases, many retailers have outsourced supply chain operations. Third-party logistics (3PL) providers handle warehousing, fulfillment, and transportation for retailers, allowing them to focus on their core business.
Outsourcing also provides retailers access to specialized equipment and technology, cost savings, and flexibility in managing fluctuations in demand. In 2025, we can expect more retailers to outsource their supply chain operations as they seek efficiency and cost savings.
The Internet of Things (IoT) refers to connecting everyday objects to the internet. With the help of sensors and other technologies, these objects can collect and exchange data, making them "smart" devices.
IoT applications in retail supply chain management have become increasingly prevalent. In 2023, the global retail IoT market was valued at $464.45 billion and is expected to reach $1175.77 billion by 2025, growing at a CAGR of 20.8%.
2025 is just around the corner, and the retail industry is on the brink of a significant transformation. With the rise of IoT, retail supply chain management is set to undergo substantial changes that will shape how businesses operate.
Here are some ways IoT will revolutionize how retailers manage their supply chains.
IoT sensors placed in warehouses, distribution centers, and stores can give retailers real-time visibility of their inventory levels. This data can help retailers optimize inventory management, reduce stockouts and overstocking, and improve demand forecasting. IoT in inventory management can also save retailers time and costs associated with manual data collection. In 2025, retailers will have complete control over their inventory levels with the help of IoT.
Smart devices can collect and analyze data on customer preferences, buying patterns, and other external factors that may affect demand. Retailers can use this information to make more accurate forecasts, plan for promotions and discounts, and optimize inventory levels.
For example, a retailer can use IoT data to predict an increase in demand for cold-weather clothing and stock up on those items before the season begins. More accurate demand planning will lead to better inventory management and reduced waste in 2025.
IoT sensors can track orders from the warehouse to the customer's doorstep, providing real-time updates on delivery status. Retailers can also use IoT data to optimize their fulfillment processes, such as route planning for deliveries, reducing shipping costs, and improving delivery times. Automating order fulfillment and delivery processes will save retailers time and labor costs while ensuring a smooth customer experience.
With IoT sensors tracking every supply chain step, retailers have complete visibility into their operations. They can identify bottlenecks, inefficiencies, and areas for improvement. The data collected can also be shared with suppliers and partners, promoting transparency and collaboration across the supply chain. Interconnected systems will allow retailers to make data-driven decisions and improve supply chain performance in 2025.
IoT can help retailers save costs and increase efficiency in various areas. Cost is the biggest concern in the supply chain, and IoT can help retailers cut costs associated with inventory management, transportation, and labor. By automating processes and optimizing operations, retailers can reduce waste and improve overall efficiency.
IoT applications enable retailers to collect and analyze vast customer data, such as purchase history, browsing behavior, and preferences. This data can personalize the shopping experience and deliver targeted marketing campaigns. For example, a retailer can use IoT data to send personalized promotions to customers based on their past purchases or location. The result is a better customer experience and increased loyalty in 2025.
IoT promotes real-time communication between different entities in the supply chain, allowing for better collaboration and decision-making. For example, if a shipment is delayed, retailers can quickly notify customers and make alternate arrangements. With IoT-enabled communication, retailers can also respond promptly to changes in demand or supply.
Bekonix offers to build custom enterprise-grade IoT solutions that can be easily integrated with existing systems and infrastructure. With no-code, drag-and-drop simplicity, retailers can quickly create and deploy IoT technology without requiring highly specialized engineers. Creating smart tech equipped with real-time tracking help in several areas including:
Contact Bekonix to learn how our IoT solutions can benefit your retail supply chain management processes, including logistics, monitoring, forecasting, compliance, etc.
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