Technology has had a transformative impact on virtually every sector of our economy as well as our culture and society at large. Relative to many other industries, retail has been slow to adopt new technology. However, in today’s guest post written by freelance writer Nina McKee, that is starting to change and may ultimately impact the role and contribution of point of purchase displays.
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RFID (Radio Frequency Identification) is revolutionizing retail. The cutting-edge technology, which uses radio waves to instantly identify and track tags attached to objects, has the “power to unlock up to 5% top-line growth from better stockout management and shrinkage reduction as well as to achieve a 10–15% reduction in inventory-related labor hours”, McKinsey & Company reveals. When it comes to point of purchase displays, RFID can play a key role in influencing purchasing decisions and driving sales.
RFID technology and digital transformation
71% of retailers believe digital transformation now plays a key role in retail technology, while 69% say the main reasons for embracing digital transformation are to improve efficiency and reduce costs (in addition to improved competitiveness (70%), stronger customer relationships (69%), and higher profits (67%)). Digital transformation – defined as implementing technology into business processes in order to improve efficiency, productivity, and customer service – is essential for business success. Retailers can particularly benefit from digital transformation with RFID technology to improve efficiency and customer experience. For instance, tagging items with RFID labels and using RFID readers at the point of sale can create a seamless check-out experience. This allows shoppers to scan all their items at the same time – there’s no need to scan everything individually. As a result, customers can enjoy a faster checkout experience free from user error.
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The rise of smart fitting rooms
RFID technology can play a key role in point of purchase displays in a variety of different ways. For instance, some retailers now have smart fitting rooms, featuring mirrors containing RFID tech. The mirrors recognize each item brought into the fitting room and can provide customers with tailored information about stock levels other colors and sizes available. Customers can also get tips on how to style clothing, as well as relevant item recommendations that can finish the look, therefore encouraging further sales. Chanel’s smart fitting rooms, for example, use RFID technology to “take the shopper on a digital journey of new styles, product details, and the Chanel lifestyle all without leaving the room”, McKinsey & Company notes. Customers can also request items without having to exit the fitting room. And, retailers, in turn, can use this technology to collect valuable customer data, such as, which items customers try on, conversion rates, and abandon rates filtered by product.
Additionally, H&M recently opened a new store in Williamsburg Brooklyn that showcases the latest in cutting-edge retail technology in order to enhance the shopping experience for customers. Specifically, the store features RFID technology that provides complete “visibility of the store’s inventory and size options in real time”, H&M explains. Mobile payments are also possible at anytime and anywhere in the store, thereby improving customer convenience and ease of purchase. Additionally, the fitting rooms will also be outfitted with smart mirrors that note the sizes and colors of items while providing customers with fashion recommendations. With data privacy a growing concern among customers and retailers alike, the mirrors are programmed to only gather product data.
Co-op’s electronic shelf edge labels
Over in the UK, Co-op recently announced they’re replacing paper labels with electronic shelf edge labels in all stores. As a result, the food retailer expects to generate savings of £220,000 ($283,690 USD) in paper and printing annually. In addition to eliminating paper usage, electronic shelf edge labels also improve accuracy and minimize the chance of human error. The shelf edge is a prime sales influencer, so accuracy is essential at this vital point of purchase. Electronic shelf edge labels can also improve the customer shopping experience thanks to barcode scanners and QR codes. For instance, electronic shelf edge labels can facilitate easy ordering via QR codes, display stock levels, and display product reviews. “It’s a big investment but it’s worth it as our stores will have increased efficiency, assured pricing and product information, reduced paper wastage and an enhanced store team morale,” Co-op retail transformation project lead Mark Barnett says. RFID technology is undoubtedly revolutionizing the retail landscape in general while promising to transform point of purchase displays in particular. By incorporating RFID technology into their operations, retailers can successfully improve customer experience, while also boosting sales, reducing stockouts, and improving profitability.
Jim Hollen is the owner and President of RICH LTD. (www.richltd.com), a 35+ year-old California-based point-of-purchase display, retail store fixture, and merchandising solutions firm which has been named among the Top 50 U.S. POP display companies for 9 consecutive years. A former management consultant with McKinsey & Co. and graduate of Stanford Business School, Jim Hollen has served more than 3000 brands and retailers over more than 20 years and has authored nearly 500 blogs and e-Books on a wide range of topics related to POP displays, store fixtures, and retail merchandising.
Jim has been to China more than 50 times and has worked directly with more than 30 factories in Asia across a broad range of material categories, including metal, wood, acrylic, injection molded and vacuum formed plastic, corrugated, glass, LED lighting, digital media player, and more. Jim Hollen also oversees RICH LTD.’s domestic manufacturing operation and has experience manufacturing, sourcing, and importing from numerous Asian countries as well as Vietnam and Mexico.
His experience working with brands and retailers spans more than 25 industries such as food and beverage, apparel, consumer electronics, cosmetics/beauty, sporting goods, automotive, pet, gifts and souvenirs, toys, wine and spirits, home improvement, jewelry, eyewear, footwear, consumer products, mass market retail, specialty retail, convenience stores, and numerous other product/retailer categories.