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Retail & Consumer Products

IoT at the Supermarket: the intelligent and connected shelf

Empty shelves, a shop filled with customers and no resupply in sight: Every retailer's nightmare.
The solution? Connected shelf, an intelligent, fully-networked shelf.

Scenario

Empty shelves, a shop filled with customers and no resupply in sight: Every retailer's nightmare. Empty shelves frustrate shoppers and lead to sales losses for manufacturers and retailers, which amount to roughly one billion Euro a year according to current studies. Customers show little tolerance for these so-called "out-of-stock situations" as they are able to purchase their products through other channels, including online and at other stores, or choose alternative products. In order to make empty shelves a thing of the past, 4brands Reply – the Reply Group's company specialising in the optimisation of business processes between companies in the consumer goods industry and retailers – is developing the "connected shelf" – an intelligent, fully-networked shelf. In addition to reducing the number of empty shelves, the connected shelf allows stationary retailers to target shoppers and generate new insights about buyers, much in the same way that online retail does.

Advantages

  • Intelligent monitoring tools used to prevent stock shortages
  • Database composed of real-time inventory rather than POS scanner data
  • Reliable inventory prognoses with predictive analytics tools
  • Cross-and upselling potential, new shopper insights

New Consumer Experience

Connected shelf for a new consumer experience in stationary retail

4brands Reply has developed a solution for a connected shelf: the use of IoT technologies enables the early detection of depleting inventories, thus permitting early preventative action to be taken – provided that items are available in-house – to restock shelves before they are emptied. What is new is that the detection and prediction of low stocks are not based on scanner data from the POS system but from actual stocks on shelves. Product counters installed in supermarket shelves monitor products in real-time as they are stocked and removed.

4brands Reply uses IoT technologies on the shelves and, with the help of the SAP Cloud Platform, has developed a cockpit which allows the store director to view current and impending shortages. The data is updated in real-time – including when customers return an item to the shelf. Store directors are thus given a constant overview of shelf stocks and informed of critical out-of-stock situations. With the help of predictive analytics, reliable forecasts are made for impending stock shortages. This solution helps store directors to efficiently manage the process of stocked items being removed from shelves. These measures help to prevent shopper frustration when items aren't available and prevent sales losses. What's special about this technology is that it allows out-of-shelves situations to be detected at the root – on the shelves themselves.

Recommendations for buyers

Cross-and upselling: Recommendations for buyers

The data captured in real-time at the shelves can also be used for cross-and upselling activities that are self-evident in online retail. Shoppers not using smart phones can be targeted via the display when removing items from shelves. In the competitive market, retailers can distinguish themselves positively from their competitors by offering their customers a unique purchasing experience that is already standard in online sales: The use of screens that display useful additional information or inform customers of promotions as they remove items from the shelves. Customers removing products are shown recommendations for complimentary products or current promotions ("3 for the price of 2", 10% discount for purchases of 3 items from the XY brand") via a permanently installed display. An additional opportunity: Customers receive suggestions for recipes when picking out food items and are thus encouraged to purchase additional items. The display is targeted at consumers interested in a specific product.

Shopper Insights

Shopper Insights: Data as a basis for decision-making

Data collected on the behaviour of shoppers when removing items from shelves provides store directors with a good basis for creating a more attractive shopping experience. If items are frequently being returned to the shelves, for example, is it because customers require more accurate information? Is a product more likely to sell if it's in a special location? The combination of scanner data with items removed from shelves provides information on the success of special locations: If, for example, 60 products are removed from a shelf in one day and a total of 100 products are scanned at checkout, that means that 40 products were removed from the promotional area. These shopper insights are valuable for manufacturers as well as retailers. An analysis of shopper interaction with regard to theft is also conceivable: If a large quantity of the same product is removed in rapid succession, a warning is triggered via the dashboard or a text message is sent to the store detective to warn of possible theft.

Simplified ordering process

SAP Cloud Platform: Simplified ordering process

The dashboard solution uses the SAP Cloud Platform, the platform-as-a-service for processing data, as is typical for IoT scenarios. It processes mass data in real-time – in this case information on products stocked on and removed from shelves. Available predictive methods allow for reliable prognoses to be made from shelf shortages as they occur. The platform is fast, easily integrated with the back-end system and is run by SAP in secure data centres; it should, however, not be immediately integrated with the merchandise management system in order to optimise the replenishment process.

The functional solution of the connected shelf designed for the store director gives stationary retail the advantages of online shopping. The shopping experience occurs across all channels; consumers are targeted directly at the shelves in the appropriate context as they remove items. The omnichannel business can be improved and inventories optimised.

4brands Reply is the Reply Group company specialising in optimising business processes between companies in the consumer goods industry and retailers according to the Efficient Consumer Response (ECR) philosophy. All of these processes start with the consumer, who serves here as the point of departure. Information on consumers and shoppers as well as their behavioural patterns is either derived from the consumer service, from internet forums and via loyalty programmes, or from external services such as market research and scanner data.