As online shopping intensifies competition with bricks-and-mortar retail, technologies like smart shelves are helping retailers to replicate the convenience and benefits of e-commerce with a richer in-store experience.
This richer experience comes from how the shelves will enable retailers to gain an insight into customer behaviour to improve the quality of service, such as by ensuring popular items are always in stock. In this way, smart shelves benefit retailers both in the customer-facing side of their business, and in the background, delivering efficiency gains by ensuring smoother movement of stock between the warehouse and the shop floor.
Trialed in the early 2000’s by a large multinational retailer, the latest generation of smart shelves combine RFID tags, IoT sensors and wireless communication. This technology is set to become a feature in growing numbers of shops; according to Acumen Research, the market for smart retail is growing at more than 24% per year. The technology is already common place in parts of Asia, for example some of China’s leading retailers have embraced smart technologies in a bid to “usher in the next generation of shopping experience”.
Today, the RFID tags are embedded either in the products or on the smart shelf itself, and they communicate with a server, cross-referencing customers via their smartphones and linking data to the store’s EPOS system. In addition sensors or cameras help retailers to recognise customers once they arrive in store, and to ‘know’ what product they have taken from the shelf and in what quantity. The system can automatically tally all of the goods the customer has loaded into their shopping basket, to ease their journey through the store. The customer can pay and leave the shop without needing to queue at the checkout till.
Gaining intelligence about customer behaviour
Working together with location beacons or in-store Wi-Fi, smart shelves will also allow retailers to spot customer behaviour such as how long they spend in a particular part of the store – what’s known as ‘dwell time’. The shelf can tell if the customer picks up a product and then puts it back, indicating that they’ve decided not to buy it.
By adding digital labels to the smart shelf, retailers can add another layer of personalisation to their customer service. Suppose a pharmacy or a clothes shop wants to reward a returning customer; if it spots a long ‘dwell time’, it knows the customer is potentially interested in a certain product. It could then dynamically change that product’s price on a smart shelf label, flash up an advert related to that product, or show a unique discount offer on a nearby digital display.
Aggregating the data about footfall from the smart shelves can also be very powerful. Analysing this information could uncover previously unknown trends about how customers move around the store. Retailers could then decide to move products to a different aisle and judge the impact on sales figures. They can also use this intelligence to stock more of a product that sells quickly, while reducing stock of less popular items.
Improving inventory management
As well as creating new marketing opportunities for retailers to build closer connections with customers at the front of the store, smart shelves also help them to manage their inventory more effectively. Through their ability to communicate automatically with the warehouse and EPOS system in real time, smart shelves ensure that fresh supplies of fast-moving stock are summoned to the shop floor. According to estimates from WiseShelf, in one third of ‘out of stock’ situations, the product is in the store but not on the shelf. This means retailers with smart shelf technology are minimising the risk of lost sales due to customers not finding the item they’re looking for.
Retailers with smart shelf technology are minimising the risk of lost sales due to customers not finding the item they're looking for
It also creates additional resource savings for retailers as they don’t need to have staff walking around the store, carrying out time-consuming manual checks on paper. This frees up staff to spend more time interacting with customers and delivering a better in-store experience. Smart shelves have a wide range of possible use cases in retail; any fast-moving consumer goods are an obvious example (provided they have packaging to hold the tag). Similarly in clothes stores, the racks should ideally have all possible sizes for customers to try on at all times.
Points to consider
One of the challenges facing retailers is compliance with data protection regulations. Whatever solution they choose must comply with the regulation, to protect customer privacy. For stores that rely heavily on repeat business, that’s of utmost importance, and so the technology can’t be invasive or act in a way that damages the customer experience.
Before investing in smart shelves, retailers should first think about their objective, whether that might be increasing customer loyalty, giving buyers more value through special offers, or increasing efficiency in the stock room. This approach will guide them to the most suitable technology to use. The level of investment will also depend on whether the retailer already has some technology solutions in place, or if it’s starting from zero.
With many technologies like smart shelves, it is possible to start small and build in a modular way. Retailers should also consider the IT staff resources at their disposal, who can work with the technology on an ongoing basis. They should also look to identify a suitably knowledgeable partner, with experience of retail industry trends, who can help them to deploy technologies like smart shelves to best effect.
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