Retailers turn to technology

Around the world, retailers are faced with the threat of online retailing and other pressures. They are trying to win back market share by making customers' shopping experience more theatrical, with emphasis on the sensuous elements of an in-store shopping trip.

This is according to a new report by independent market analyst Datamonitor. It says the next step in the battle to retain customers is to streamline the buying experience, bringing it more in line with Internet shopping in terms of ease and speed of transaction.

The report, "Shop X: Where's the store heading?", examines technologies that are helping retailers achieve this goal.

Alex Kwiatkowsky, lead analyst in Datamonitor's vertical market technology team, says a combination of pressures, including rising energy costs and the encroachment of cut price and multi-channel retailers, are squeezing profit margins.

"More recently, the collapse of the US sub-prime mortgage market has spread financial contagion throughout the world, stemming the flood of finance available to retailers and hitting consumers' pockets. Private equity growth also threatens underperforming retailers. Difficult market conditions are forcing retailers to turn to technology."

In retail, digital signage is employed mainly in shelf edge labelling to display prices and as an advertising vehicle.

Kwiatkowsky says the technology allows advertisements to be tailored to the most appropriate audience, through the use of add-ons. These enable digital signage screens to determine the sex and approximate age range of viewers, as well as differentiate between individuals and groups.

He says, in future, screens will be able to log when people point at a particular product on a shelf and then stream adverts relating to it to the nearest screens.

"As well as including ever-more sophisticated display functions, proximity sensors enable the systems to determine when someone is nearby."

The technology can also be incorporated with highly precise sound streams, which target the message to a specific area of the store, lessening sound pollution and irritation levels for customers.

In retailing, near field communication is another application of RFID technology, used to facilitate contactless payments. "As this form of payment requires neither PIN input nor a signature, it is way quicker than using cash or cards."

Kwiatkowsky adds that this type of payment increases average spend per transaction, improves the shopping experience for customers by slashing queue times, and is a safer medium for retailers, as it eliminates shrinkage issues.

This also means the mobile phone is set to be an important tool for retailers due to its capability as a fast and relatively secure payment device, he notes.

He says retailers must also be aware that it can become a means of direct marketing to consumers, via Bluetooth technology.

Self-service tills can save costs on labour, with fewer cashier errors, while the presence of CCTV and sensitive weighting technologies reduces theft.

The point-of-sale (POS) is important to retailers as it offers a last chance to increase sales, advertise to what is effectively a captive audience and reinforce brand values. He says within the POS industry, self-checkout is one of the technologies earning a lot of interest. This is mainly due to its ability to cut checkout time, with one attendant capable of overseeing up to six checkout terminals. The report also showed it is popular with customers.

In conclusion, Kwiatkowsky says meeting the demands of today's retail environment requires clever application of key technologies.

These technologies in turn challenge vendors and retailers alike - in terms of integration and standardisation, and also in terms of achieving the maximum return on investment.