Faced with the threat of online retailing and other pressures, retailers globally are seeking to win back market share by making the customers shopping ‘experience’ more theatrical, with emphasis placed on the sensuous elements of an in-store shopping trip.

According to a new report by independent market analyst Datamonitor, 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 the most pertinent technologies helping retailers achieve this, with advice to both retailers and technology venders for development and application.
“A combination of pressures including rising energy costs and the encroachment of cut price and multi-channel retailers are squeezing profit margins,” says Alex Kwiatkowski, lead analyst within Datamonitor’s Vertical Market Technology team and author of the study.

“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. Growth of private equity threatens underperforming retailers. Given the difficult market conditions retailers are turning to technology to ameliorate their situation.”
Though expensive, digital signage is the fastest growing advertising medium. Within the retail environment, digital signage is employed for two distinct purposes: in shelf edge labeling to display prices and as a dynamic advertising vehicle.

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

In the next stage of development, 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 incorporating increasingly sophisticated display functions, proximity sensors enable the systems to determine when someone is nearby. When the system receives notification of a person within a certain parameter, the sound increases; when s/he leaves, the sound level is decreased. Furthermore, the technology can be incorporated with highly precise sound streams which target the message to a specific area of the store, thereby minimising sound pollution and irritation levels for customers.
Tests carried out on in-store digital signage systems bear it out to be an effective method of advertising, leading to increased spend and elevated brand awareness. Although the cost of installing and maintaining a digital signage system is significant, Datamonitor believes that the benefits, which can accrue from deployment make it worth investing in for larger retailers.
“Given the average person is targeted with approximately 3000 commercials per day, retailers are seeking to differentiate products by means of a more engaging medium than static signposting and traditional TV, which digital signage offers retailers a means of doing,” says Kwiatkowski.
Near field communication (NFC) is another application of radio frequency identification (RFID) technology, thereby avoiding the need for touch. In retailing, NFC technologies are used to facilitate ‘contactless’ payments. As this form of payment requires neither signature nor pin input, it is considerably faster than paying with cash or credit/debit cards.
Payment by NFC increases average spend per transaction, improves the shopping experience for customers by slashing queue times and is a safer medium for retailers to conduct business in than cash, as it eliminates shrinkage issues.
NFC means that the mobile phone is set to be an important tool for retailers due to its capability as a fast and relatively secure payment device. It can also become a means of direct marketing to consumers via Bluetooth technology. If consumers are encouraged to use their mobile devices for NFC payments, retailers will also have the opportunity to establish more of a personal relationship with consumers, if they use a consumer’s mobile device to target focused advertising and promotions, and interact with the consumer directly.
“Major retailers who do not implement the technology face being left behind as customers demand ever faster transactions, a trend exacerbated by the ease and speed of online retailing,” he says.
For retailers self service tills translate to savings on labour, reduction of shrinkage¯the presence of CCTV and sensitive weighting technologies reduces theft, and fewer cashier errors.
The point of sale (POS) is an important arena for retailers, as a last chance to increase sales, advertise to what is effectively a captive audience and reinforce brand values. Within the POS industry, self check out is one of the technologies currently garnering most interest.

The technology is popular due to its ability to cut checkout time with one attendant capable of overseeing up to six checkout terminals; it also appears to enjoy favor with consumers. In a study conducted in Woolworths Big W store’s in France last year, 25 per cent of customers chose the self service option. Other grocery stores who have conducted tests are reporting between 20 and 50 per cent of their daily transactions processed via the self service checkout.

“Meeting the demands of today’s retail environment requires clever application of key technologies. In a saturated market new technologies such as NFC play an important role by offering retailers innovative means of engaging with consumers and helping them to retain market share. These technologies bring with them a variety of challenges, both for the vendors and retailers alike – in terms of integration and standardization and also in terms of achieving the maximum return on investment,” concludes Kwiatkowski.