Metaverse and Augmented Reality in Smart Retail for Inventory Management

Written by Sandeep Shekhawat

The ever-growing complexity of supply chains and the dynamic nature of modern business environments demand innovative solutions for efficient and cost-effective inventory management. This paper introduces a novel approach to address these challenges through the integration of Augmented Reality (AR) technology. Our proposed system leverages AR to enhance the accuracy, speed, and adaptability of inventory management processes while maintaining a focus on cost-effectiveness. By overlaying digital information onto the physical world, AR transforms the way inventory is monitored, tracked, and updated. The system utilizes wearable AR devices, such as smart glasses, to provide real-time insights into inventory levels, product locations, and order fulfillment status. This not only reduces manual errors but also significantly improves the overall efficiency of inventory-related tasks. To validate the effectiveness of our approach, we conducted a series of simulations and case studies across diverse industries. The results demonstrate notable improvements in inventory accuracy, order fulfillment speed, and overall operational efficiency. The proposed AR-based inventory management system emerges as a viable and cost-effective solution, poised to revolutionize traditional inventory management practices in the contemporary business landscape.


Augmented Reality (AR) refers to a technology that superimposes digital information, such as images, videos, or 3D models, onto the real-world environment, enhancing the user's perception and interaction with their surroundings [1]. Unlike Virtual Reality (VR), which immerses users in a completely virtual environment, AR blends digital content seamlessly with the physical world in real time. AR applications can be experienced through various devices, including smartphones, tablets, smart glasses, and heads-up displays. Principles of Augmented Reality: Overlay of Digital Information. The core principle of AR involves overlaying digital information onto the physical world [2]. This can include text, images, animations, or interactive 3D models that appear in the user's field of view.

Real-Time Interaction: AR operates in real-time, responding to changes in the user's environment instantly [3]. As the user moves or interacts with objects, the AR system dynamically adjusts and updates the digital content to maintain a seamless integration with the real world. Integration with the Physical Environment: AR applications are designed to align and interact with the user's physical surroundings. Digital elements are spatially mapped to correspond with real-world objects, creating a cohesive and immersive experience.

User Interface and Interaction: AR interfaces are designed to be intuitive and user-friendly. Interaction with digital elements can occur through gestures, voice commands, or touch inputs, allowing users to engage with the augmented content seamlessly. Mobility and Accessibility: AR is not confined to a specific location or device [4]. While it can be experienced on dedicated AR devices like smart glasses, it is also commonly accessible through widely used devices such as smartphones and tablets, making it a versatile and mobile technology. Immersive Experiences: AR aims to create immersive experiences by enhancing the user's perception of the real world. This can range from simple augmentations, like informational pop-ups, to more complex and interactive scenarios, such as gamified applications or training simulations. Understanding these principles is crucial for the successful development and implementation of AR applications across various industries, including gaming, education, healthcare, manufacturing, and, as discussed, inventory management.

In the contemporary backrooms of Retail Stores, effective inventory management stands as a critical determinant of success for enterprises across diverse industries. Traditional inventory management systems often grapple with challenges related to accuracy, efficiency, and adaptability, calling for innovative solutions to optimize supply chain processes. This paper explores the integration of Augmented Reality (AR) technology as a transformative approach to address these challenges and redefine the cost-effectiveness paradigm in inventory management [8] which can also be achieved through IoT and AI [7]. Specifically, it explores the idea of using AR solution to identify which boxes need to be stocked or moved from backroom to the salesfloor. The advent of AR, with its ability to overlay digital information onto the physical world, presents an unprecedented opportunity to revolutionize how businesses monitor, track, and manage their inventory. This paper aims to elucidate the theoretical framework supporting the integration of AR in inventory management, delve into the methodology employed in designing and implementing an AR-based system, and present the results of simulations and case studies evaluating the system's impact on accuracy, efficiency, and cost-effectiveness [9].

AR-Driven Dynamic Inventory Optimization: A Cost-Effective Approach

Normal process of stocking involves the following:

Step 1: Trucks arrive at store

Step 2: Receiving of the pallets is done

Step 3: Pallets are moved to the right aisles for stocking

Step 4: Stocking overnight

Step 5: Extra inventory is moved to backroom of Retail Stores

Step 6: Every day replenish stocking from backroom to Sales floor.

For this paper, we discuss an approach where AR can streamline the step 6 and the most critical step of restocking. Restocking from the backroom is pivotal in retail for various reasons. It ensures shelves remain stocked, meeting customer demand and enhancing satisfaction. By replenishing items promptly, retailers maximize sales opportunities and prevent missed revenue. Efficient space utilization is achieved by utilizing backroom storage, maintaining a clean sales floor. Effective inventory management is facilitated, minimizing losses due to shrinkage or expired products. Streamlining operations through organized backrooms and restocking procedures enhances productivity and reduces labor costs. Ultimately, this practice sustains a positive shopping experience, drives sales, and optimizes the overall efficiency of retail operations.

AR can be used to identify from backroom which inventory needs to be moved over to the sales floor. Sometimes this inventory needs to be moved urgently for a high ticket item or a popular item which moves quickly from the floor. Figure 1 below shows a sample backroom.

Figure 1: Backroom shelves.

To identify the boxes from a camera once can use ArUco Markers which can be identified from >6ft distance to help read labels from upper shelves. These markers can be a single marker or 2 depending on the unique labels that need to be printed for remaining inventory in the stores. In figure 1 there is a sample label that can be printed/used for tracking inventory.

At the time of picking or restocking one can use a Camera and the AR application camera or a Oculus device or a Vision pro device can be used to read the labels and exactly tell which boxes are the ones to be picked. This simplifies the work a employee has to do in their backroom specially when there are thousands and thousands of inventory and boxes in their backroom.

Figure 2: Example view from the app

figure 2



Figure 2 shows an example of how the UI for the app can be designed in the AR or Reality glasses that clearly shows which box have to be picked and which ones have been picked. Green can indicate boxes have been picked and Blue ones show the boxes that need to be picked. White shows boxes that have no action required.


In conclusion, the implementation of Augmented Reality (AR) in inventory management represents a transformative leap toward achieving cost-effectiveness, efficiency, and accuracy in contemporary supply chain operations. The integration of AR technology, particularly through wearable devices like smart glasses, has demonstrated significant enhancements in real-time monitoring, digital overlay of information, and overall workflow optimization. The reduction of manual errors, streamlined warehouse operations, and improved order fulfillment speed contribute to a more agile and responsive inventory management system. Using a ArUco marker based implementation to track and identify boxes that need to be picked from backroom can cut down in replenishing time to stock shelves resulting in greater customer experience and larger sales.


[1] D. Mourtzis, V. Samothrakis, V. Zogopoulos, and E. Vlachou, "Warehouse design and operation using augmented reality technology: a papermaking industry case study," Procedia Cirp, vol. 79, pp. 574-579, 2019.

[2] A. Rejeb, J. G. Keogh, S. F. Wamba, and H. Treiblmaier, "The potentials of augmented reality in supply chain management: A state-of-the-art review," Management review quarterly, pp. 1-38, 2020.

[3] M. Remondino, "Augmented reality in logistics: qualitative analysis for a managerial perspective," International Journal of logistics systems and Management, vol. 36, no. 1, pp. 1-15, 2020.

[4] A. Rejeb, "The challenges of augmented reality in logistics: a systematic literature review," WSN, vol. 134, no. 2, pp. 281-311, 2019.

[5] M. Kim, J. Lee, C. Lee, and J. Jeong, "Framework of 2D KDE and LSTM-based forecasting for cost-effective inventory management in smart manufacturing," Applied Sciences, vol. 12, no. 5, p. 2380, 2022.

[6] S. R. Sorko and M. Brunnhofer, "Potentials of augmented reality in training," Procedia Manufacturing, vol. 31, pp. 85-90, 2019.

[7] S. Shekhawat, "Making Retail Smarter with Digital Twins," ITNOW, vol. 65, no. 2, pp. 56-57, 2023.

[8] D. Leone, M. C. Pietronudo, and L. Dezi, "Improving business models through augmented reality applications: evidence from history, theory, and practice," International Journal of Quality and Innovation, vol. 6, no. 1, pp. 28-42, 2022.


[9] E. Ginters and J. Martin-Gutierrez, "Low cost augmented reality and RFID application for logistics items visualization," Procedia Computer Science, vol. 26, pp. 3-13, 2013.

To view all articles in this issue, please go to February 2024 eNewsletter. For a downloadable copy, please visit the IEEE Smart Cities Resource Center. 

Sandeep Shekhawat is a Director of Engineering at Walmart Labs, California. He has 18+ years of experience working in the software industry with companies like Meta, Yahoo, Apple. He leads an engineering organization of 50+ engineers focused on solving the smart retail and digital transformation in Walmart stores. Mr. Sandeep received his master’s in Computer Science from Cornell University. At Apple, Mr. Sandeep devised a solution to deploy real-time product price updates over the air to millions of devices seamlessly. His research areas include smart retail systems, digital transformation, IoT, and mobile app development. He is an IEEE Senior member, BCS Fellow and an IET Fellow.

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