Tomorrow’s retail world sees devices and smart tagging systems

29.10.2013

VisionID’s ‘store of the future’ showcase put retailers in consumers’ shoes and took them through a shop floor equipped with personal shopping devices, smart tagging systems and e-ink employee badges capable of communicating using Voice over Internet Protocol (VoIP).

The showcase took place at Citywest Hotel in Co Dublin recently, and VisionID, a Tipperary-headquartered company, specialises in providing technological solutions for the retail and manufacturing sector. These days, in competing with online sales, retailers need more than just an everyday barcode scanner.

‘Showrooming’ is a chief concern of modern-day retailers. “The bricks-and-mortar retailers, if you want to call them that, have done all the hard work. They’ve done the validation of the product with you, but then you’re going off and buying it somewhere else because it’s cheaper,” said Robert Jones, managing director of VisionID.

Among customers in US stores during the 2012 holiday shopping season, 64pc of Generation Y shoppers and 52pc of Generation X shoppers used their mobile phones to comparison shop, according to a Motorola Solutions survey. In Ireland, a study conducted earlier this year by Accenture and UCD Smurfit School revealed that 82pc of Irish consumers use the internet to comparison shop.

‘Scan and scram’

Retailers have become despondent in the face of this level of competition, with 83pc surveyed by Motorola Solutions in 2011 saying they believed customers can easily find better deals elsewhere.

To counter this ‘scan and scram’ shopping habit, Jones suggested that retailers open up guest Wi-Fi in-store. While this will increase customers’ opportunity to research products online, it also gives retailers the chance to encourage an in-store transaction by offering a discount or money-off coupon to customers who log on.

“At the end of the day, you have to make it compelling for somebody not to go on to Amazon,” said Jones.

Offering free internet access to customers who can then search for cheaper deals on products online requires a certain level of trust from retailers. So does self-scan technology, which has been adopted by Superquinn. Working with VisionID, Jones said the Irish supermarket chain is one of the first companies in Europe to roll out this personal shopping solution, and have upgraded to the next generation of handheld scanners since. This technology has also been deployed on a pilot basis in the Ballincollig, Co Cork, store of Superquinn owners Musgrave Group.

“Giving a loyal shopper their own handheld to scan as they shop gives the shopper a lot of control, which they like,” said Jones. Surprisingly, Jones said shoppers who can see their total spend as they go are likely to spend more than those who have to wait until they get to the till to find out.

“If people know what they’re spending they’ll actually spend more because they’re in control of it,” he said.

Not only does self-scanning technology drive bigger basket sizes, it also makes the shopping experience more efficient. Customers don’t have to queue at the check-out to receive their bill, and items can be bagged as they make their way through the store. At the end of their shop, all they have to do is hand over the (personal shopping device), pay, and leave. “It’s a very progressive, easy transaction,” said Jones.

Mobile point-of-sale option

Another option for faster in-store transactions is mobile point-of-sale, which allows staff to scan products and take payment on the shop floor, using contactless card payments in some cases. Jones calls this ‘the Apple Store effect’ as it is a technique seen in action in the iconic brand’s stores. “It’s very engaging,” he said. “You’re not stuck in a queue, you just transact with the person, they process your order there and then and you walk out the door. It’s compelling enough, from a shopper point of view,” he added.

And that’s not where comparisons to the Cupertino, California, tech giant ends for Jones. In discussing radio-frequency identification (RFID) technology, he predicted a boom in popularity similar to one key iconic product. “There wasn’t much going on in MP3 players until Apple came out with the iPod and then the market just exploded. I think the same is going to happen to RFID,” he said.

RFID uses radio-frequency electromagnetic fields for the wireless and contactless transfer of data. Tags as small as a grain of rice can be embedded in products and, unlike barcodes, don’t have to be visible to be read.

Dr Pat Doody champions this technology as chair of RFID in Europe, a not-for-profit organisation that evolved from a European Commission-funded project. This organisation brings together all of the stakeholders in RFID from across Europe to promote the technology and develop public policy around it.

For Doody, who also lectures in IT Tralee and has a PhD in mathematics, it was the numbers that aroused his interest in RFID. Using RFID to tag and track items allows retailers to conduct inventory checks in as little as 30 minutes, allowing for closer, more efficient monitoring of stock levels and also more granular detail on where items can be found and what items are performing well, sales-wise. Basically, there are opportunities here for a deeper level of analytics often reserved for online business.

Knowing what’s in stock and being readily able to assist customers can reap financial benefits. Motorola Solutions’ survey found that, during the 2011 holiday shopping season, one-third of US store visits ended with on average $125 unspent each time due to missed opportunities, driven by stock shortages, lack of assistance and inefficient payment approaches.

RFID is already quite common in our daily lives – access fobs, card keys and pet micro-chips often contain RFID tags. It has been deployed in contactless payments technology, but the key growth area for RFID, according to Jones, is asset tracking. Be it a crate in the warehouse, a high-value item on the shop floor, or a blouse on the rail, RFID tags can be used to track it.

Marks & Spencer’s use of RFID tags

One household name, in particular, is making great use of RFID tags. “Marks & Spencer are tagging everything,” said Doody. RFID in Europe has spoken at length with the supermarket chain and label-maker Avery Dennison about the benefits of implementing this tagging system store-wide. Doody said Marks & Spencer’s decision to roll out RFID throughout its supply chain is a testament to the advantages outweighing the initial cost.

By EU law, retailers that use RFID tags for consumer goods must make this clear with a sign informing customers in-store. The challenge for someone like Marks & Spencer is, they don’t want the consumer coming in, seeing this, and being in any way intimidated by it, said Doody.

In an effort to dispel any myths surrounding RFID, Marks & Spencer and Avery Dennison funded the development of RFID&U, a website controlled by RFID in Europe that, Doody said, has been created “to get what is the true message of RFID across, without scaremongering.”

Doody said there is no reason for customers to be concerned about how RFID tagging and tracking could impinge on their right to privacy. Under EU recommendation, a privacy impact assessment (PIA) has to be carried out before this technology can be implemented to ensure it will not impact on customers’ privacy.

“If you buy something with an RFID tag in it, you have to ensure that there’s no way that anyone outside the store can read that tag with information that can be linked to that person, their purchase or anything like that,” said Doody. He added that while the unique number on a tag may be readable to others outside the retail environment, this information is meaningless without the correlated data from the store’s filing system.

“The link between the tag and someone’s personal information is just not there. There’s nothing to fear,” he said.

The implementation of RFID in the retail environment brings with it many opportunities, and it can also drive further development in other areas. For example, if retailers are more aware of stock levels, they may increase the frequency at which they place orders with suppliers, and this can highlight issues in the supply chain. “RFID is a disruptive technology – when you put it in, sometimes you find out more than you bargained for, in a good and a bad way,” said Doody.

NFC payment image via Shutterstock

Marketing Perspectives

Thursday, October 31, 2013