Shelf Stable

By John Morell

According to some predictions, convenience stores should have been filled with “smart shelves” by now. These digital price tags reduce the need for staff, help manage inventory and allow customers to experience a retail environment virtually free from interaction with store personnel. A 2003 article in the tech publication CNET stated that widespread adoption of smart shelving “could take until 2010.” But if the smart shelving revolution is indeed still coming, it’s a slow rollout.

In the past year, however, several retailers and vendors, including some in the c-store space, have been experimenting with smart shelves. As cloud computing and analytics have become more integral to retail operations, receiving even a minute amount of data about sales of a slow-moving product can be critical. “It’s all about making every square inch of the store productive,” says Ran Margalit, CEO of ShelfX in Boulder, Colorado.

“The technology is changing so fast I think the general sense in the retail industry has been to wait and see how smart shelving works out,” says Don Taylor, marketing executive with NeWave Sensor Solutions, based in Columbus, Ohio. “But now we’re at the tipping point. We’re at a moment where the need is meeting the technology.”

The big advantage of smart shelves is their production of usable data. “I like to divide what they do into fast data and summary data,” says Michelle Tinsley, director of mobility payment and security for Intel. “The summary data is sent to company headquarters to monitor product sales in a particular area. Fast data alerts personnel that stock may be short on some item, or that there could be a possible shrinkage event in progress.”

The Choices
The most common retail smart shelves come in three forms: the weight-sensor shelf, the sensor-embedded peg rack and the sensor-embedded pusher rack. All are designed to unobtrusively manage inventory using some type of RFID.

Weight sensors can be installed as part of a new fixture, or they can be rolled onto a “dumb” shelf. “These are a little like a giant mouse pad that covers the shelf bottom,” Tinsley says. “The foam material is about 1/4-inch thick, and sensors embedded inside will register weight to a central monitoring system, indicating how much stock is on display.”

Weight-sensor shelves work as soon as a customer picks up an item—say, a bottle of shampoo. The sensor recognizes the reduction in shelf stress and transmits this bit of info through Wi-Fi to a central computer, which then can feed it into a cloud program. “If the customer then puts the bottle back on the shelf, that’s recorded as well,” Tinsley says.

“This provides useful information to both the store and brand, showing them which products customers are considering enough so that they pick up the item. A product that is consistently picked up and replaced may need changes in packaging or store placement.”

For store management, this type of shelving is invaluable in maintaining a tight control over inventory. Misplacing of items by customers or personnel can be greatly reduced. “I started my retail career stocking shelves and I was always amazed at the ‘goodies’ you’d find people had misplaced, even in a location with a small footprint like a convenience store,” Tinsley says. “I know what it’s like to see on the inventory [that] you’re missing 10 units of a particular product, but good luck finding them.”

The sensor recognizes the weight of the item, so a shampoo bottle dropped on a shelf with two-liter soda bottles is going to notify the manager that there’s a misplaced item in this location. “This keeps products in the right place in front of customers,” Tinsley says.

The peg-based smart system uses a chip, often the Intel Quark microprocessor which is designed for small, low-power applications, embedded into the back of the peg where it sits against the wall. A conductive ink on the packaging communicates to the chip that it’s in place on the shelf. When an item is picked up, that action is transmitted to the central system.

“The great thing about smart shelves is they can be taught to recognize anomalies,” Tinsley says. “It knows that a customer who pulls one razor from a peg board is normal. If five are taken at once, store personnel are notified that something unusual may be occurring on that aisle.” Smart pushers, which move product from back to front on the rack, notify the central computer when an item is removed and also continually monitors stock level.

The cost of smart shelving is also a consideration, as retailers deliberate over whether they’re worth the cost, even as technology prices have fallen. “Leasing them is becoming the main choice for most retailers, since that saves you money on an expensive upgrade,” says Tristan Louis, CEO of T+ink, a New York City supplier of smart shelf products. “Figure on a monthly lease of $3 to $5 per month per unit for smart shelving.”

In-Store Experience
NeWave is currently assisting a large Canadian convenience store chain with a smart shelf rollout. “We can’t reveal the name right now, but they’re a major company in the industry,” says Kevin Schiissler, NeWave’s managing partner based in Montreal.

“We’ve started with a small number of stores and the intent is to expand them throughout the chain over the next year,” Schiissler says. “It’s not changing out all of the shelves, it’s more to monitor particular categories, those that might need more replenishing and which might be more valuable.”

Kroger has also been experimenting with a form of smart shelving that it says could expand into its 800-plus convenience store division. The Kroger project is more focused on marketing than inventory control, and involves digital price tags along the shelf on a video strip, with monitors watching what’s picked up.

Pricing is changed automatically in the office, which saves labor changing tags, and the video strip displays attention-getting animation that can make sales suggestions. For instance, the chain has noticed more diaper wipes sales after a video suggestion when customers pick up a diaper package.

“We continue to test the Digital Shelf Edge pilot in one location outside of Cincinnati,” says Kroger spokesman Keith Dailey. “Digital Edge can display high-resolution shelf tags and rich media content right at the point of purchase. It is still too soon to say what’s next. We view this as foundational technology, and while we still have a lot of work to do to prove it is scalable, we are excited about the possibilities for connecting with mobile devices and offering tailored content.”

What’s just around the corner with smart shelves? Some retailers are experimenting with facial recognition software on the shelves to promote particular items it believes a shopper may be interested in buying. Others are looking at how to crunch the data they provide even faster so that information on each pick-up of a candy bar goes instantly to the merchandiser and manufacturer. “Every bit of information is part of what will help the retailer make his next sale,” Taylor says. “And as your competition makes this a priority, you’ll have to keep up.”

John Morell is a Los Angeles-based business writer who specializes in the retail and tech industries.