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Improving the Customer Shopping Experience with RFID

2

Objectives of this document

Share the elements that may affect the customer shopping experience in a

physical store, and may reduce sales

Illustrate the advantages of RFID for improving the customer experience at

retail stores …

… as well as for improving retailers’ results

3

Retailers are increasingly focusing on providing customers with an enriching shopping experience

Customer loyalty and customer experience are key for increasing

sales at retail stores

This requires:

Providing customers with greater perceived value

Responding fast to customer preferences and buying patterns

Minimizing annoying experiences, such as stock-outs or queues

Helping customers finding products

...

As a result, retailers are adopting new technologies

RFID

Real time location systems (RTLS)

Computer vision

Augmented reality

Interactive displays

Interaction through smart phones

NFC

…

4

However, in a traditional store, before entering the store, the customer needs to pass between the loss prevention gates

These gates reduce the visibility of the shop interior from the outside, have

usually poor aesthetics and act as a subliminal barrier to entrance

5

If there are many people queuing, the customer may decide to leave the store, or lose interest in buying a product

Check outs are usually located near the entrance, and customers

entering the store immediately see if queues are long

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The customer then wanders or searches for a specific product, which may take time, and may not find the product

Product, color, size, …

7

Stock-outs may occur or items may be misplaced, which may generate dissatisfaction in the customer

According to different market studies, stock-outs reduce sales between 2% and 4%

Sources: Daniel Corsten, Thomas Gruen, “Stock-Outs Cause Walkouts”, Harvard Business Review, May

2004, “RFID’s Impact on Out of Stocks: A Sales Velocity Analysis”, Information Technology Research Institute,

June 2006

8

The infrastructure of the store is inert. It does not act as a seller but as a mere physical support for the products

30% of Amazon sales come from recommendations to customers about other products.

However, in physical retail stores, cross-selling through recommendations is almost inexistent.

9

When the customer finds the product, he/she usually tries to find out how he/she will look like

The customer may also require additional information on a

product, but no way of obtaining it (unattended customers)

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After entering into a fitting room, the customer may want another size or color, and may decide to abandon the buying process

67% of customers who try on items buy them.

Only 10% of customers make a purchase that they haven’t tried on

Source: Laurel Tielis, Retail Reporter

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Finally, if the customer has decided to buy, but the queue is too long, it may generate dissatisfaction, or worse, leave without buying

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The shopping experience at retail stores will become personalized and contextualized, and RFID will be a major driver of this change

Shoppers

Products

Physical spaces (stores)

Virtual space (e-commerce)

Retail

platform

Music

Video content

Scents

Videocameras

RFID systems

Near Field

Communication (NFC)

People identifier

Real Time Location

Systems

Augmented reality

Retailer’s ERP

Loudspeakers

Screens

Scent dispensers

Lighting

Smart phones

On-line shopping

PDAs for employees

Payment

Robots

Administration

Decision support

systems

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With RFID, the store access is clear from obstacles, since loss prevention antennas are hanging or embedded in a carpet

Traditional EAS RFID-based EAS system

Overhead RFID EAS

system

RFID floor mat

Also, information can be recorded about stolen products,

readjusting the inventory information to avoid stock-outs

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Queues are minimized, since several items are read and “disalarmed” simultaneously

Payment is much faster than with bar codes Several products can be identified simultaneously and without direct line of sight

At the same time, the products’ alarm is disabled

Customer may return a defective product: Without having to bring the ticket

Without having to prove that the product is still under warranty

To any store, even if it is not the store where the product was sold

The improvement in the customer experience leads to more customer visits and higher sales

Payment queues are reduced, which avoids that customers leave when they see long payment queues

Benefits for retailers

Improvement in

the customer

experience

Revenue

increase

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Retailers can obtain real time inventory by using overhead RFID systems and/or smart shelves

Overhead

antennas

Smart

shelves

Handheld

reader

Inventory

frequency

Inventory

precision

Product

location

Interaction with

customers

Every few

days

High

Real time High – Very high

Real time Very high

High location

accuracy

RFID Robot Every day High

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With an overhead real time inventory system, customers and employees can quickly locate the product they are looking for

The overhead antennas identify in real time

the products located under their coverage

area

Overhead antennas are placed above the

false ceiling, or hanging from the ceiling, in

specific areas of the store

Customers and employees can easily and

quickly locate any product

Real time inventory allows recommending products to customers,

knowing that these products are in the store at that instant

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Smart shelves provide real time inventory and real time location information

Benefits for

shoppers

Faster location of products

Minimization of out-of-stocks

Recommendations

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Customers can also find products very fast with smart shelves, either by introducing or selecting a product …

The customer searches for a

product through a touch screen

1

The smart shelf

detects where the

item is located

2

The screen shows the location

of the product, ...

... and suggests similar or

complementary products for

cross-selling

3

Customers can also obtain rich information about

products, and receive recommendations (cross-selling)

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… or by browsing through shelves with filtering conditions (synthetic vision)

The user/shopper browses

the shelves with the mouse

The products located where the mouse

is pointing are shown

These products are really placed on

that shelf location at that same instant

(real-time inventory and location)

1

2

http://youtu.be/ILLI8QFc9yI Watch video:

Customers can select a set of products and browse them through shelves., e.g.: • Trousers of a specific size

• Romantic novels whose price is below 15 €

• Food apt for celiac

• …

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By means of real-time inventory and location, stock outs and misplaced items can be detected and resolved

21

Interactive shelves detect when customers pick a product, and show information and/or images of the product in a nearby screen

http://youtu.be/BQLN1KpqNtc Watch video:

This increases the purchase ratio and generates cross-selling

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The customer selects

some products

The customer leaves the products on a

RFID-enabled display or shelf fixture

The products are automatically

identified

The customer sees himself/herself on a

screen beside the shelf with the products on

If the customer moves, the clothes move with

him/her

Customers may “feel” how an item suits them through an advanced mirror, increasing sales

1

2

3

The customer can select another of the

products left on the shelf fixture, and

repeat step 3

Products can overlap

4

The customer can share a

picture with his/her friends

5

http://youtu.be/81pxFBli6Ns Watch video:

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When in a fitting room, customers can easily ask for other sizes and colors without leaving the fitting room

Interactive fitting rooms increase sales, and also deter theft

Overhead antennas above the ceiling

Touchpad screen

The employee receives the customer request

of another size or colour in a tablet PC, and

takes the product to the fitting room

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After choosing products, the customer pays at the POS much faster and with shorter queues

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