Besides from traditional ways like analyzing buying history, customer feedback and customer loyalty card data, RFID has provided retailers with new revolutionary tools for observing customer behavior. We have already mentioned RFID based displays in fitting rooms, "smart mirrors" and RFID gates at cash desks that scan a whole shopping cart in seconds. This time we'll take a look at the shelf of the future - "smart shelves".

So, what is a "smart shelf"?

A smart shelf is a shelf in a store that has been equipped with an RFID reader. The RFID reader can be built-in the shelf itself or be installed behind/under/above normal shelves. By continuously scanning the RFID tagged items on the shelf, the RFID reader consistently notifies the back-end system about the existing items and their movement. It will also identify items that do not belong on a certain shelf as "misplaced items". By tracking items, their movements and whereabouts, the system provides retailers with information that can be analyzed and translated into customer preferences. Thereby RFID-equipped smart shelves provide retailers with various ways of improving their customer service and increasing sales.

Added value by adopting smart shelves

1. Automatic replenishment alert

Automatic replenishment alert is one of the most potential uses of smart shelves in the retail business area. The smart shelf notices when it's running out of an item and sends an alert to the back-end system. Depending on the system application of the store, the alert is either sent to the backroom or to a mobile RFID computer, so that sales personnel can replenish the shelf or make an order for more items. The system can also be designed to send automated orders directly to central warehouses or manufacturers. It's nothing new, but just not common yet.

2. Misplaced item alert

Retailers often encounter "false" out-of-stocks, that is, the item is nowhere to be found, at least not by the customer. It is simply misplaced. With RFID smart shelves the sales personnel will immediately know when an item is in the wrong place. This is especially important when it comes to merchandise that has to be stored in certain conditions, like food.

3. Item position transparency - where last scanned?

After adopting RFID retailers have reported that shrinkage has decreased with an average of 70 %. With smart shelves retailers will know where the remaining 30 % has disappeared. Was the item last scanned at the cash desk gate when a thief ran out with it under his/her shirt? Or did somebody rip off the tag at the shelf or perhaps in the fitting room? This information helps retailers spot the problems where they are and take precautions for decreasing shrinkage even further.

4. Expired date notification

Besides from notifying when products are running out, missing or misplaced, a smart shelf controls the expiring dates of products and sends alerts to the shop personnel when products are about to expire. This way sales personnel save a significant amount of time by not having to run around the shop looking for expiring dates.

5. Customer interest notification

Smart shelves register movements of products and can therefore notify the retailer about: what products cause what customer picking behavior. For instance, a Spanish retailer uses smart shelves for tracking the popularity of selected items in their stores. Every time an item is picked from the shelf, the back-end system registers it as an event. It also registers what happens to the item after this. Is it put back on the shelf? Is it purchased? Is it exchanged for another product? The answers to these questions provide retailers with a new source of customer feedback based on behavior rather than words. This information can be used for strategic product display and placement as well as deciding what campaign offers should consist of next month. What products get picked a lot but never purchased? Are they placed too close to a remarkably cheaper alternative? Should they be moved or simply removed from the product range?

6. Added product information for customers

"Super smart shelves" could be the word for a shelf that besides from an RFID reader is equipped with an information display. When a customer picks up an item, the display attached to the shelf gives added information about the product lifted off the shelf. Typical information could be country of origin, time of production, transportation method, product contents and materials, warnings and other product features. This application is best suited for shelves that contain only a small amount of different items. If many customers are grabbing several different products simultaneously, it might get messy.

Brand-customized smart shelves

Many brands, especially the ones dealing with cosmetic products, prefer having their own shelves in department stores for product displays. The benefit of having their own shelves is primarily of course the fact that all the products of different shapes and categories have their own solid place on the shelf, the collection looks attractive to customers and every color is easy to find, keep in order and pick up. Moreover, the physical appearance of the shelf is not the only reason why brand owners decide to go with their own shelves. Having an own brand specific system facilitates adding features. As long as the system is compatible with the systems of multi-brand selling retailers, they might be willing to accept customized solutions as a complement to their own. As long as a system increases sales and customer satisfaction - both brand owners and retailers are happy.

What does the future hold?

Companies have an excellent opportunity to distinguish themselves from their competitors by implementing interactive smart shelves. It is expected that most future stores will be equipped with RFID and smart shelves. In fact, experts are pretty certain of it. It is also expected that they will boost sales, increase efficiency, improve customer service, decrease shrinkage and help personnel with manual inventory and replenishment labor. Is this in the near future or will it take some time? Nobody knows. But one thing is for sure. The perks of adopting smart shelves with RFID readers are tempting to customers, retailers as well as brand owners. Each of these groups benefit from specified product information, automated replenishment alerts and data related to customer interests. And, in time, each of these groups can help tailor the smart shelves to perfection and everybody's convenience. We have fun times ahead of us. I can hardly wait to see how it turns out!

References:

RFID Journal: RFID tracks Spanish Shoppers' Interest in Shoes, Books