Smart Shelves Will Help Stock Supermarkets Of The Future

Joerg Koesters

Goods turn over rapidly in many retail businesses, but especially in supermarkets and discount stores. So it is no surprise that most of the companies exploring smart-shelf technology since 2003 have been in those parts of the retail sector.

Smart shelves are also known as “intelligent shelves.” Radio frequency ID (RFID) sensors applied to or built into the shelves gather data, such as the number of items on a shelf. The shelves’ sensors gather information from sensor-embedded tags or packaging attached to the merchandise on the shelves, which generates shelf data.

Stay with us, because we are on a road trip of sorts.

Road trip to replenishment

The shelf-sensor information joins a vast stream of data that we will call the Big Data Highway. This flow of traffic includes information from all the sensor-tagged objects in the store. These objects are part of the Internet of Things (IoT), which are connected via the Internet.

Before arriving at its various destinations, such as the store’s warehouse, each bit of shelf data gets cleaned up. This happens during a super-fast stop at a powerful database platform. The platform supports software that sorts and analyzes the mixed stream of data. The stream includes information generated by all the sensor-tagged items in the store.

This process of directing the data traffic gives the shelf data order and meaning. The retailer would not want it to travel in the wrong direction and become stuck – thus useless – on the highway.

You might say that the shelf data takes many highway exits to reach all the people and administrative systems that need it. Some of the most important exits take the shelf data to the company’s warehouse, managers, and officers. Another exit may lead to sensor-embedded objects enabled to make inventory decisions. This is machine-to-machine communication. “Talking” with another sensor-tagged object may initiate automatic replenishment when merchandise runs low.

But arranging for replenishment is only one of the many tasks a smart shelf can perform.

Smart-shelf capabilities

Suppose the smart shelves sending data out onto Big Data Highway are in a brick-and-mortar store or the fulfillment warehouse of an online retailer. Aside from arranging for restocking, sensor-embedded shelves have other abilities. First, they can identify and track misplaced merchandise.

Second, smart shelves can improve price labeling and connect to touch screens offering product information.

Third, smart shelves can collect information about how many customers pick up merchandise versus how many sales occur. This helps in identifying what goods appeal to people, and this information can be used optimize the assortment of merchandise. In time, smart-shelf systems may become so sophisticated that retailers can personalize offers to consumers as they consider then reject merchandise.

Finally, RFID shelf technology may help stores minimize inventory shrinkage by identifying locations where goods disappear.

Consumer privacy concerns

One roadblock to adoption of smart-shelf technology has been concern about consumer privacy. In 2003, Walmart canceled testing for an RFID shelf inventory control system before it was installed.

CNET reported that Walmart had partnered with Gillette to test smart-shelf technology by tracking data embedded in that Gillette’s product packaging. The goal, CNET noted, was to alert store managers, by computer, of stock shortfalls and potential theft.

Consumer privacy groups opposed the system due to concerns about “potential abuses if product-tracking tags are allowed to follow people from stores into their homes.”

The Associated Press reported in January 2017 that Walmart also did not succeed with an app that let customers scan items as they removed them from shelves.

Also according to the AP story, American supermarket giant Kroger began testing smart shelves in 2015. As of early 2017, the company was only using the technology to display video images of price tags and to provide consumers with product information. The larger than normal price tags are changeable with a few computer keystrokes. This frees up supermarket staff to spend more time focusing on customer needs.

Adweek reported that Coca-Cola is testing a smart-shelf marketing device using facial recognition via artificial intelligence tools. A digital screen that wraps around shelves displays digital ads. It also contains optical sensors to record facial expressions and “let retailers see traffic patterns and consumer demographics.”

Driving toward the supermarket of the future

Adoption of smart-shelf technology may continue to be a slow, bumpy ride on the Big Data Highway. But it appears promising as long as retailers keep customer personalization and trust in mind.

Italy’s largest grocery chain, Coop Italia began using some smart-shelf features in December 2016 when it opened its “supermarket of the future” near Milan. Supermarket News reports that this includes touch screens near goods, which shoppers use to access in-depth information about products.

According to a report by Supply Management magazine in June 2017, “there are signs of UK retailers following suit.”

No doubt IoT solution software will help make the ride to supermarkets of the future smoother.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Retail. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?

About Joerg Koesters

Joerg Koesters is the head of Retail Marketing and Communication at SAP. He is a technology marketing executive with 20 years of experience in marketing, sales, and consulting, Joerg has deep knowledge in retail and consumer products, having worked both in the industry and in the technology sector.