Smart tags lead retail revolution

Radio frequency identification (RFID) is perhaps the most talked-about technology in the retail world today.

But it is only one of the potential developments that promises to change the way retailers operate - and how we shop - in the future.

Metro, Germany's biggest retailer, is the latest company to require most of its suppliers to start using RFID tags.

From November, 100 of its suppliers will start tagging pallets of goods to better manage the enormous volume of products flowing through Metro's supply chain, while reducing inventory and labour costs.

The move follows last year's RFID rollout announcements from Tesco and Wal-Mart, and is a further sign that the technology is ready to move into primetime across the globe.

But Metro also has an eye on how the smart tagging system will help its customers.

The decision to implement RFID came after an extensive trial in the company's Future Store Initiative project in Rheinberg, Germany, which serves as a testing ground for introducing and evaluating the latest retail technologies.

'An important aspect of our philosophy is to use technology to provide better service to the consumer and at the same time simplify our own processes, making them more efficient and less costly,' said Metro chief information officer Zygmunt Mierdorf.

With RFID tags attached to a range of items, Metro's concept store tracks goods as they move from the storeroom to shop shelves and into customer's shopping carts, alerting employees to restock items as they diminish.

The supermarket features an array of gadgets that will potentially become par for the course in grocery shops in years to come, just as barcodes, self-service check-outs and loyalty cards have been introduced in the past.

'It's a big opportunity to explore new ways of shopping and working in the future. As we identify technology that works it will be introduced into other stores,' said Metro Group IT divisional manager Gert Wolfram.

In the concept store, long-established items like shopping carts and weighing scales have been replaced by the latest digital kit, changing the way that customers experience the store.

Carts are fitted with a personal shopping assistant (PSA) - a pen and tablet computer that allows customers to scan products and pay via an automated checkout, removing the need to pack and then unpack from the trolley.

In the fruit and vegetable section, an intelligent scale with a built-in digital camera tells customers the weight and price of produce, automatically printing out a price label for ease of use.

'The aim is to offer an intensive service approach where every feature of the store is dedicated to improving the customer experience,' said Wolfram.

Aside from ease of use, a lot of work has gone into making product promotions more appealing and more relevant to shoppers.

Nineteen-inch plasma screens have replaced traditional poster advertising in the store, allowing product promotions to be changed instantly.

The plasma screens and the PSAs on customers' carts are updated via a Cisco wireless network and content delivery system, allowing Metro to change content in real time, giving the ability to generate promotions on the back of sudden weather changes or time of day.

Using the same network infrastructure, staff can chat using IP-based voice communications, while managers can deliver elearning material to staff on in-store kiosks or handheld devices.

Metro obviously has revenue growth at the forefront of its thinking, but some of the technologies risk being seen as invasive of customer's privacy, such as sensors that monitor how many people enter and exit the shop and how they move around the store.

Of course, loyalty cards are widely accepted by consumers, with most aware that their purchasing patterns are being carefully tracked by revenue-hungry corporate giants.

And results from the store since its opening last year are promising: 80 per cent of customers have tried out the new gadgets, with more than 90 per cent of those giving a thumbs-up.

The results for Metro have also been impressive - since the store's introduction, the number of shoppers has increased by 25 per cent, with a 15 per cent increase in overall revenues.

'We can achieve our aims by positioning our business units as superior brands. This is driven by marketing and business concepts. We have the concept, but it all depends on execution of the technology to drive the communications and the changes,' said Mierdorf.

Technologies employed at Metro's concept store

Metro has worked with a variety of vendors, including Cisco, IBM, Intel, SAP and Microsoft, on its Future Store Initiative. Some of the new concepts on show include:

* Personal shopping assistants and intelligent scales

* RFID tagging for stock picking, goods received and backroom storage

* Smart shelves and electronic shelf labelling

* Self-service checkouts and vending machines

* Information kiosks and advertisement displays

* Customer counting and tracking

* Voice-over-IP in-store communications and wireless networks

* Employee portal