Last time we left off at how technology has revolutionised the overall retail experience for the user.  As promised, in this issue we discuss the other side of the table, the evolution of technology made for the retailer.

The main aim of the retailer, as noted in my previous blog, is to increase the average basket size, defined as ”average number of units moving in one single bill. It is calculated as Total units sold/ No of invoices”.  Maintaining a focus on increasing their bottom line, the retailer strives to not only provide a convenient shopping experience to its customers but also entices them to visit again.  In doing so, retailers have realised that whilst profits are boosted by increasing sales the same end can be achieved by reducing costs.  This is where technology plays a dual role, not only in enhancing overall shopper experience but also providing retailers with that attractive positive bottom line.

The advent of the automatic cash register in 1879 by James Ritty, a local salon owner, simplified life for retailers. The guy who was paid most to work the last shift, since he tallied the accounts, was now free to go because the need for rigorous tallying of each bill with account books and cash in hand had been eliminated.

The role of other devices such as the wireless radio, which helps in communication between two shop floor employees, and security cameras, both of which have become ubiquitous and necessities with growing retailer sizes, cannot be diminished.  Sadly, these security devices are no deterrents to shoplifters. According to the Guardian, in 2010 alone, retailers in UK lost about 12 million pounds each day to shoplifting. Still, most experts believe, this number is not easy to quantify and shoplifting is a serious hit to the bottom line. It is not surprising then that, despite the cost, RFID (Radio Frequency Identification) has received tremendous attention and is thought to be a solution to shoplifting.

Two types of RFID are commonly used – passive and active. Passive RFID is a small inexpensive tag or sticker containing a unique identifier. It does not contain a battery and must be energized using a RFID reader. These are used to track inventory and prevent shoplifting.  Active RFID contains a battery and has active electronics. These are bulky and have limited application in retail stores and are basically used in warehousing and for larger loads.

Management of in-store inventory is another area of major expense for retailers. Shop managers must have real-time inventory information. A study commissioned by the Grocery Manufacturers of America (GMA) Direct Store Delivery committee showed that shoppers cannot find the product they are seeking 7.4% of the time, with 40% of them  postponing their purchase or going to another store. Therefore, reducing out of stock has an impact on the bottom line and wireless technology is seen as the solution. This includes:

1.   Handheld barcode scanners
2.   Entry terminals linked to back-end systems over WLAN.
3.   DEX/UCS (Direct Exchange/Uniform Communication Standard)
4.   Wireless printers that can help perform instant price up gradation.

The future:

•   The PayPal system that is turning your mobile device into a wallet is a huge leap for online retailers.
•   The automatic trial rooms, as discussed in my last blog, will help curb shoplifting.
•   Portable scanners which can scan the RFID tags in products you want and collect them from the billing carts counter where they will be ready for you to take away. This is expected to reduce investments in shopping and increase the basket size.
•   Delivery drivers could be equipped with a wireless DEX that would securely connect to the retailer’s system leading to better inventory management.

Retailers benefit in a major way from data collected through these multiple sources and this helps them design better stores with efficient product placement.

Next time, we discuss how researchers collect data and bring research back to the floor using technology.

References:

William J. Regan
Journal of Marketing , Vol. 25, No. 4 (Apr., 1961), pp. 15-21
Published by: American Marketing Association
Article Stable URL: http://www.jstor.org/stable/1248986
The Challenges of Scanner Data
Steve Baron and Andrew Lock
The Journal of the Operational Research Society

Vol. 46, No. 1 (Jan., 1995), pp. 50-61
Published by: Palgrave Macmillan Journals on behalf of the Operational Research Society
Stable URL: http://www.jstor.org/stable/2583835