Internet of Things Technology’s Impact on Retail Market

In this paper, a methodology to assess the Internet of Things (IoT) impact on retail market is developed and implemented. While examining key performance indicators (KPIs) that are leading to IoT rise in the retail industry, a qualitative and quantitative research framework is designed. It is expected that the approach can help senior managers control the risks associated with their investments in IoT as well as to assist in roadmapping. To formulate the basis, STEEPV-based trends are analyzed and existing IoT products and critical technologies are mapped. In order to develop an impact indicator, retail value map and retail KPIs are examined as well as investigation of existing barriers for the IoT deployment is held. The qualitative techniques include 2x2 scenario analysis, Porter’s five forces analysis influencing changes in retail industry competition and case studies. The case of Russia is delivered in details to look at IoT spread at the national level. Market size was chosen for estimation of the IoT impact on retail industry. The paper implements technology substitution model to assess market size in the next few decades. For calculation, mutually exclusive collectively exhausted traffic channels were used: human-to-human (H2H), human-to-machine (H2M) and machine-to-machine (M2M). To analyze IoT spread, business-to-consumer (B2C) and business-to-business (B2B) sectors were compared. Worldwide and Russian markets were chosen for evaluation in the research. In total, the research analyzed six feasible scenarios. As an outcome, several implications can be summarized: 1) in the next few decades Internet retail traffic will be prevalent by machines’ data transmission 2) B2B sector will be the first to face with the overwhelming M2M traffic and increasing number of devices in comparison with B2C sector 3) the growth of the IoT market size in retail boosts e-retail that becomes a preparatory phase for most countries.