RFID: bridging the gap between online tools and bricks-and-mortar retailing.
You walk into a clothing store. You
notice a display of new arrivals on your left and a screen that
shows complimentary outfits. Your smart phone buzzes with an SMS
inviting you to click and engage with your virtual shopping
This scenario may seem like science fiction, but we have the
tools to make it happen right now. And it's about time. The way
that retail shops engage customers hasn't changed significantly in
over 100 years. Before the rise of department stores in the early
20th Century, mail order retailers such as Sears Roebuck ruled the
day. At that time, most shops kept their goods behind the counter:
you had to ask to see them. Then the department store came along
set the modern retail model in motion: walk through, touch and feel
what's for sale. Try it on. Exciting!
This new shopping experience helped us to equate shopping with
pleasure, changing it from necessity to pastime. In over 100 years
shopping hasn't changed all that much. In fact we've come full
circle from mail order to retail to (e)mail order. The only
significant difference is that we're using the Internet instead of
A flawed model
The online customer experience keeps improving, but the
experience in-store remains essentially the same. The great
advantage that in-store retailing has over online is that you can
touch, feel, try on and otherwise experience goods, especially
clothing. But for all that, we're doing many things more poorly in
the real world than in the virtual one. Some are even worse now
than they were a century ago.
"A century ago there were far fewer SKUs," notes Pekka Riippi,
CEO at Nordic ID, a Finnish developer of barcode and RFID readers
as well as software solutions for fashion and specialty retailers.
"That made it easier to keep items on shelves. And of course back
then shops had plenty of people working in them. If you couldn't
find something, help was always at hand."
Shopping in person can be lots of fun. Especially when you find
what you're looking for in the right size and colour. But it can be
frustrating, too. It depends on how much time you have, how much
you like shopping, and the experience you encounter in-store. Ramir
De Porrata-Doria of Keonn Technologies, a Barcelona-based
manufacturer of RFID systems for retail stores, notes that each
obstacle to in-store shopping shaves off a percentage of sales.
"Online stores care very much about minimising obstacles in the
buying process. That desire is the same in physical stores, but
there's been no significant change in many, many years."
Here is a short list of in-store issues facing the consumer
- Security systems Security gates have been
shown to create anxiety, discouraging people from crossing the
threshold into a store.
- Finding products Finding what you're looking
for often means asking. If there's no one around, you might decide
to leave. Staffing at most stores is lighter than it was a century
- Not the right size You find the right product
but not the right size. A recent study indicates that this results
in a loss in sales of between 2% and 4%.
- Fitting rooms Even when there's no queue to
use a fitting room, repeatedly getting dressed and undressed in
order to find the right item or the right size can cause people to
abandon the buying process.
- Payment See a queue and you're tempted to come
back another time. A recent study shows that after a wait of 5
minutes, 30% of people leave.
These are the top reasons that sales are lost, but there are
more! Each shaves a few percentage points off a store's sales
potential. Wouldn't it make sense to tackle these issues head-on
instead of simply accepting them?
Web tools, meet Bricks and Mortar
Bringing online techniques into the real world is one solution.
Take recommendations, for example. "70% of Amazon's home page
consists of recommendations," says De Porrata-Doria. "And they are
responsible for 35% of Amazon's sales." Even the most conservative
studies show an increase in online sales of between 5% and 15% due
The best example of a 'recommendation' in fashion retail today
is when you are presented with a 'look', typically a manikin
wearing a complete outfit. But until recently, assembling all of
those components in your size has been difficult: you have to
search the store to find them. Compare that to walking into a
McDonald's and the contrast is striking: a featured menu item is
always front and centre. You place your order and up it comes.
That's the level of service that retail technology enablers are
hoping to provide retailers over the next few years…albeit without
going back to the old behind-the-counter style of retailing.
"Improving the experience hinges on contextualised item
recognition," asserts Riippi of Nordic ID. "In this context, that's
what RFID delivers: the ability to recognize what a customer has in
their hand, including size, colour, version and any other relevant
data. The same granular information that has had such a profound
effect on back-room logistics-vastly improving the tracking and
moving of goods between manufacturer, DC and store-is now being
used to improve and facilitate the shopping experience."
We now have the technology to transform the in-person shopping
experience, and we're just starting to fit the pieces together by
bringing online technologies into physical stores, transforming the
way that physical spaces interact with consumers.
From store-centric to consumer-centric
Retailers that can eliminate just one of the barriers to a sale
can create an incredible uptick in sales. One proven way to do this
is by means of a retail platform. Whether it's via the customer's
smart phone, kiosks, interactive fitting rooms, smart mirrors, or
shop attendants' PDAs, integrated retail platforms change the
in-store consumer experience.
Let's continue the scenario that we started with:
…with a voice command, you tell your
virtual shopping assistant what you are looking for. She directs
you to a colour-coded section of the store. You pick up a pair of
pants and the nearest mirror shows you virtually wearing them.
Move, and the garment moves with you. The mirror shows you what
sizes are currently available, and along one side are similar
options in a variety of colours. Along the other, you find
complementary shirt suggestions. You press one option, which brings
up a diagram of where the item is in the store.
Taking a clothing combination to a
dressing room, you decide that the colour of pants you have chosen
is not quite right. You engage with your virtual shopping assistant
to request an alternate colour. A staff member uses his PDA to let
you know that he will bring your selected colour shortly. When you
try on a football team jersey, you hear the roar of the crowd and
the team's anthem starts to play. Try on a spring skirt, and you
detect the delicate smell of tulips.
Leaving the fitting room, you tell
your virtual shopping assistant that you're ready to pay. She
directs you to a kiosk where you can pay by credit card or bank
debit via your smart phone. A shop assistant wraps your purchases
up for you and you're on your way, across the pressure-sensitive
carpet near the store entrance. An RFID-enabled electronic article
surveillance system checks the item tags in your possession against
Ok, sounds wonderful. So how does this all work?
A camera, gesture recognition software (think Nintendo Wii) and
augmented reality work together to enable virtual try-ons in the
mirror. SMS or a similar technology sends messages to a live
assistant. Nearfield communication (NFC) enables payment via smart
phone. RFID does the rest.
It's not rocket science, and according to Riippi of Nordic ID,
the payback potential is big. "Every time you eliminate a barrier
to shopping in-store, you realise an uptick in sales of several
points," he says. "Tear down those barriers," continues Riippi,
"and the shopper doesn't get scared off by anti-theft gates,
frustrated from searching, worn out by the dressing room shuffle,
or ticked off at a long queue. The whole experience is
satisfying-it's really what's missing in bricks-and-mortar
It all boils down to two main ways of improving the customer
experience through in-store technology:
- Your shopper acts on recommendations, creating a sale where
there might not have been one
- She doesn't abandon her purchase at any point
It's really that simple. RFID-enabled pilots of the kind
described above have proven to increase sales. RFID systems will,
of course, also facilitate a high level of inventory accuracy. With
mobile RFID computers, employees can inventory the entire store in
minutes, enabling cycle counts daily or even more often. Employees
can also use the devices as Geiger counters to find items. Overhead
antenna RFID systems can deliver real time stock data, creating the
distinct possibility of never having an item out of stock or
unaccounted for, ever.
Scenarios like the one above leverage aspects of transforming
the shopping experience:
- Personalisation The store quickly engages you
as an individual
- Contextualisation The store learns what you'd
like to buy and makes suggestions
- Interaction You interact with the store
itself, not just with employees
Central to transforming the shopping experience is RFID. "It's
the technology that acts as a bridge," observes De Porrata-Doria.
"Once an item is detected in a certain context, it crosses over
into virtual space. There, you can do pretty much anything with it
that you can do on a website: create recommendations, show
different colours, sizes and styles…you name it."
Modern retail experiences have the potential to be even better
than online ones because you can experience the excitement of
shopping, of finding what you truly want, on your terms and with a
minimum of hassle. It won't be long before today's pilots turn into
a full-fledged retail platform.
[Left] Pekka Riippi is CEO of Nordic
ID, a leading manufacturer and provider of efficient store
operations management with RFID for apparel and specialty
[Right] Ramir De Porrata-Doria is
CEO of Keonn Technologies, a manufacturer of RFID products and
systems mainly for the retail and healthcare sectors.
Impact of checkout time on customer service perception
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