Smart shelf: white wine from an intelligent shelf

No more empty shelves; no more long checkout lines. In the Industry 4.0 supermarket, customers can check in with their smartphone and the shelves automatically detect which products are removed. Payment is then made automatically via an app. It's a nice new world for shopping, right? Absolutely.

“Hello Thomas” – the wine shelf welcomes regular customers

It's Friday afternoon and the weekend shopping needs to be done: As you enter the supermarket, your smartphone automatically logs in to the store’s Wi-Fi hotspot. You immediately receive a special offer for your favourite wine on your mobile phone. You go to the wine shelf, where you hold your customer card up to the scanner, and are greeted on the shelf display: “Hello Thomas, nice to see you again.” You select the wine you want from the shelf, and receive additional information on the product – and an exclusive special offer: buy six bottles of wine, get another bottle for free. As soon as the wine bottles are placed in your shopping cart, the digital shopping cart records your purchase sum. Then you leave the market through the entrance barriers – without queuing, without counting coins or making a card payment – because the store books your purchase directly from your account.

HDE: Online share in the food sector at 1%

The US online retailer Amazon has proven what the supermarket of the future can look like today with “Amazon Go”. Sensors and cameras register what customers take off the shelf. The checkout is regulated by an app. According to a forecast by the German Trade Association (HDE), the online share in the food sector accounts for just 1%; but the trend is rising rapidly. Experts accordingly believe in the future of the so-called “omni-channel” and the fact that customers want to enjoy the benefits of online shopping while also continuing to shop at the store.

Online mail-order companies are currently benefiting from the fact that every click that is made or not made in their webshop can now be evaluated. The question for chain stores is how they can counter this. The smart shelf or connected shelf might be the answer.

Smart shelf: Conversion tracking on the wine shelf

Smart or connected shelves are supermarket shelves equipped with IoT technology (Internet of Things). For the first time ever, stationary retailers can analyse the behaviour of their customers and receive evaluation options that were previously only available to classic webshops.

For example, suppose that you, as a retailer, have an advertising campaign that runs on a digital (digital signage) shelf display. With an IoT shelf, you can see exactly how many customers are approaching the shelf and how many customers are acting the way you would predict. Retailers can find out if female customers in their mid-30s tends to take the wine from the shelf at the bottom right or top left. Additional content about the products can also be displayed via the digital signage. This allows retailers to track the conversion of product information in combination with product selection.

Early detection of out-of-stocks

In the event that the wine on sale becomes a bestseller: The smart shelf recognises early on when it is running out of bottles. Retailers can then react in a timely manner and restock the wine bottles. The novelty of this is that the detection and forecasting of out-of-stocks is not based on scanner data from the checkout systems, but already starts with the stock on the shelf. Product counters and scales installed on the supermarket shelf monitor the product removal and replenishment processes in real time.

Monitoring of customer frequency thanks to sensor technology

Standardised sensors are currently installed in IoT shelves. That means that everything on the market today can be integrated with each other. One of the sensors is a motion sensor that is installed at the bottom of the shelf. It allows retailers to monitor the customer frequency at the shelf and determine whether a customer is approaching the shelf or whether they are avoiding the shelf. This is crucial, for example, to test the likelihood of success of advertising campaigns that are displayed on the digital signage.

Data on customer behaviour at the PoS available for the first time

Precision scales can also be integrated into the shelves. They measure whether a product has been taken off the shelf or returned to it. A standard barcode scanner can also be integrated so that customised content can be displayed. All of this means the chain store can receive data on customer behaviour at the point of sale (PoS) for the first time. And that means they can answer questions such as: Is the placement of the products ideal? How do the customers react to advertising campaigns being played on the shelf? How do the customers react to product information being displayed on the shelf? The retailer can then create a connection between what the customer takes off the shelf and what product information is shown on the shelf. They can also understand whether the customer is actually buying or returning the product, for example because the product information was not appropriate.

When the cloud analyses buying behaviour

All data collected can be stored either on-premises or in the cloud. As a result, the Internet of Things provides retailers with information about the buying habits of their customers, which only online shops were previously able to access, and can also draw attention to special offers for regular customers or promotions on the shelves in addition to providing product information.

New potential for long tail in retail

Another possibility for interaction via the shelf display is product advising. If Thomas, a wine lover, taps the advising button on the display, an employee receives a notification on their wearable and can advise Thomas accordingly. And by linking the shelf display to the online shop, Thomas can have all types of wine from the shelf and other items delivered to his home. Experts calls this the “long tail” of retail because additional products are displayed on the shelf. One application possibility: The cloud operating in the background recognises that there will be great weather on the weekend so it displays grill products that can be delivered to Thomas easily by same-day delivery.

Conclusion: According to the most recent figures from the Federal Association of E-Commerce and Mail Order Germany e.V. (bevh), online food sales in the first quarter of 2018 amounted to € 234 million, one-sixth higher than the previous year's level. However, the online share of total consumable goods sales remains well below 2%. Ordering food online (still) remains a niche. So grocery retailers should take advantage of digitisation opportunities and introduce additional services in stores. The smart shelf could be the first such solution.