Will Walmart's Massive IoT Push Change the Retail Inventory Accuracy Standard?

In its latest bit of headline-grabbing news, Walmart made waves by signaling the introduction of a large-scale inventory operation, one involving the deployment of a massive number of internet of things (IoT) devices throughout its entire supply chain.

According to CNBC, Walmart will be deploying millions of ambient, battery-free IoT sensors at all touchpoints of its U.S. supply chain, aiming to reach 4,600 total locations as 2026 draws to a close.

"Walmart will know in real time exactly where merchandise is located across Walmart Supercenters, Neighborhood Markets, more than 40 distribution centers, and covering an estimated 90 million pallets of inventory when at full scale," Bob Violino wrote for CNBC.

The project was further described by Walmart's tech vendor, Wiliot, as the largest-ever deployment of IoT devices in the broader retail sector.

The ambient nature of the devices means that they're powered by harvesting "ambient energy from radio waves, light, motion, heat, or other viable ambient energy sources," Violino highlighted, noting that this rollout represented an evolutionary step forward versus legacy IoT and RFID tech, one which promised significantly lower costs and improved scalability.

These particular sensors capture an array of data concerning temperature, location, humidity, and dwell time. More importantly, each sensor is tied into Walmart's AI infrastructure, greatly enhancing the company's ability to track pallets, and even smaller product inventories, immediately.

“This data provides proof of delivery, improves replenishment decisions, and lets us know where our items are in real time,” said Greg Cathey, SVP of transformation and innovation at Walmart. "By combining continuous sensing with AI, we’re moving from probabilistic predictions to precision decision-making.”

Walmart's IoT Move and the Importance of Inventory Accuracy in the Spotlight

While RFID may have been the original solution to many supply chain problems, at least on paper, the technology -- the cost of the tags in particular -- presented problems, per Bill Ray, distinguished vice president, analyst and chief of research at research firm Gartner.

“We have been here before; Walmart was an early adopter of RFID back in 2004 when it was supposed to provide much the same functionality. However, this time the cost of the tags is much lower, and that will be a tipping point," Ray said.

And the necessity of inventory accuracy has been the subject of much discussion of late. According to a September Path to Purchase Institute report, the retail industry is bleeding $1.73 trillion each year due to inventory distortion (the cost of out-of-stocks and overstocks), despite massive investment ($172 billion) in AI-powered updates to inventory controls -- creating a huge performance gap between retailers embracing new tech and those relying on traditional, manually-demanding processes.

P2PI quoted Greg Buzek, president of IHL Group, on the matter.

"We're witnessing a fundamental transformation in how successful retailers manage inventory. The data shows a clear bifurcation emerging: retailers deploying AI and machine learning are achieving sales growth 2.3 times higher and profit growth 2.5 times higher than competitors. It's becoming an existential issue — evolve or get left behind," Buzed stated.

Finally, in an Expert Viewpoints piece provided to Chain Store Age, Christian Floerkemeier of Scandit pulled a variety of data points to make a similar case. Floerkemeier noted that messy inventory leading to empty shelves or phantom inventory woes eroded customer trust, triggered frustration, and created other costly negative outcomes. Concerning the divide between inventory showing and on-shelf availability, Floerkemeier dug deeper, showing the math concisely.

"Research shows just how wide the gap can be. Gartner estimates store-level inventory accuracy can fall as low as 60%. IHL Group reports more than half of retailers admit their stock data is under 80% accurate. Phantom inventory—products that appear in the system but aren’t on shelves—is widespread," he wrote.

"The consequences are real. Numerator finds nearly 30% of shoppers will switch stores when they can’t find what they want, and Adobe reports more than 70% will switch brands. Each missed sale seems small, but globally the cost of inventory distortion reached $1.7 trillion in 2024, according to IHL. For chain stores with thin margins, that’s crushing," he added.