What Are Smart Shelves?

From Simple Pricing To Dynamic Content

Retail is at an inflection point where digital and physical shopping channels are harmonizing at the same time as the needs of shoppers. 87% of shoppers demand digital product content during their shopping journeys, and shoppers are demanding more to win their loyalty. Those brands and retailers that adapt and evolve will not only survive but thrive.

Physical retailers and the brands that depend on brick-and-mortar channels are investing deeply to catch up to the pace of digital innovation and new shopping habits. With more product content available than ever, greater competition for brand loyalty, and an ever-faster pace of change, new at the shelf technologies are being applied to:

• Merge the best of digital and physical shopping for better shopper experiences

• Provide brands insight into shopper behavior at the shelf, where 85% of transactions occur

• Provide retailers a more agile platform for delivering pricing and product information in real-time

In this article, we are going to walk you through the smart shelf technologies that are revolutionizing the way the retail industry delivers educational content, pricing, and in-store promotions, ratings, and reviews at the shelf.

Real World Smart Shelf Experiences

Kroger And Microsoft Smart Shelves

For example, Kroger for one is integrating EDGE, a cloud based electronic shelf label solution in partnership with Microsoft that communicates nutritional information, promotions, and real-time prices. With this technology, you can approach a multi-brand over the counter display and compare the benefits of each product on the shelf.

Beyond using smart shelves to drive sales and engagement, some IoT enabled shelves can keep track of merchandise stock and quality.

n addition, these labels are capable of doing far more than just communicating ingredients and genetic information. In some cases, shoppers who are enrolled in a company’s customer loyalty program, and have their app downloaded will be treated to a personalized experience in-store. In which a smart shelf will come to life with personalized information when you approach.

There are many different ways to incorporate intelligence into Smart Shelves, with varying degrees from weight, light or infrared sensors; and eInk media to rich, dynamic lift-and-learn platforms like Perch by Raydiant.

Why Retailers, Brands And Shoppers Use Smart Shelves

ESL And Smart Shelf Benefits For Retailers

Competition is on the rise from all sides across categories from big-box retailers, grocery chains, e-commerce, and plucky upstarts. Retailers are at risk of becoming fulfillment centers and need to adapt to higher shopper expectations in cost, convenience, experience and curation. Smart shelves provide more cost-efficient ways to update pricing, deliver rich media, harmonize online and in-store channels and explain product selection.

ESL and Smart Shelves Benefits For Brands

Brands are facing increased competition, eroding shopper loyalty, and are watching their margins get eroded by e-commerce, even as 85% of sales occur in-store, where they have little visibility into shopper behavior. Brand suppliers expect increased visibility into engagement metrics, targeted messaging, and additional insights.

ESL and Smart Shelves Benefits For Shoppers

Shoppers are at high alert with Covid, worried about how their physical engagement with a sales associate can put them at risk.

Shopper expectations are ever changing, with increased choice, and exposure to new experiences, shoppers’ preferences are leaning toward quality omnichannel shopping, fueled by customization, efficiency and transparency.

The Early Rise Of Smart Shelves - Electronic Shelf Labels (ESLs) and eInk

The need for better ways to update pricing have been endemic in grocery and big box for decades. So many products. So many specials. Weekly refreshes. Go into any standard grocer and you are likely to find paper labels and stickers proclaiming prices and promoting discounts off the products on the shelves. Someone has to not only apply those labels, but maintain them, and ensure their accuracy - a practice that “works,” but is highly inefficient and error prone.

eInk Becomes The First Generation Of Electronic Shelf Labels

Electronic shelf labels as a concept had one big problem - power.  Stores didn’t provide power to most shelves so they needed a “powerless” solution and so eInk electronic shelf labels were the first deployed.  eInk is the same technology you see in an Amazon Kindle eReader.  Have you noticed when you turn it off it still shows the last page?  That’s because it doesn’t use any power except when changing the screen.  That meant that a battery operated unit could last several years (or until a naughty shopper stole the battery from the back, which happened a lot more than you might think).  

The solution became widely popular in the mid-2000s, and now represents a significant portion of the eInk market. 

ESL Are Large Growth Category For $4.2b ePaper Market in 2022, 37.5% CAGR E

Source: Mordor Intelligence

ESL Market Growing $690m in 2019, 21% CAGR

Source: Mordor Intelligence

eInk itself has also evolved over the last decade, now enabling basic color palettes as you can see below, while still relying on battery power.   

Updates can be made using portable devices and handhelds, using low energy technologies like Bluetooth Low Energy (BLE).

The Current Power Revolution - LED Electronic Shelf Labels & Sensor Incorporation

Over the last year, many retailers have seen the writing on the wall.  The future of the shelf will be digital, intelligent and interactive.   As a result, many have invested to power their shelves, both in their new stores and in retrofitting their older stores.  This will allow newer digital formats and active sensing.  

LED shelf labels can vary in size and range across an entire length of the shelf. Since they are LED, full color can be used and more information potentially displayed including customer reviews and ads. Readability of LED labels, however, can be slightly more difficult to the eye for some.  What’s driving the pixelation is the cost of screens.  Proper HD screens in these custom dimensions are cost-prohibitive, but more cost-effective pixelated LEDs aren’t shopper friendly.

eInk vs. LED - Inside Walmart’s ESL and Smart Shelf Pilot

Walmart has been conducting pilot test of electronic shelf labels and LED strips.  Launched in 2019 at a pair of supercenters in Rogers, Arkansas, one store is experimenting with e-Ink labels, positioned one-by-one along the shelf, while the other store is piloting a radiant LED-strip model that runs continuously from one end of the shelf to the other.  Here were the learnings.

• Black and white eInk blended too much into the shelf units

• LEDs were busy, pixelated and hard to read. (Tech has improved since then, but cost is an issue)

• eInk was generally preferred in experience, but LED was more “eye-catching”

Both have since been removed, even as broader rollouts are being considered internally.

The Benefits And Challenges Of First-Generation Electronic Shelf Labels

Electronic shelf labels are an early entrant to the path to the fully digital shelf.   They have myriad benefits and challenges:

Benefits Of Early Electronic Shelf Labels

• Price changes are costing some grocers up to $10m per year and ESLs radically reduce costs

• Less difficult to manage pricing across channels, including dynamic promotions and regional price updates

According to DisplayData the payback for ESLs is high. The company reports in-store sales typically increase by 6%, with a typical margin increase of 2%-3%. Additional paywalled research is here. One of DisplayData’s customers, a major European retailer with over 800 stores, secured a payback on their investment in just 16 months, and predicts over 170% ROI in the next two years.

Challenges Of Early Electronic Shelf Labels

Changing ESLs has been more costly than expected including specialized hardware for updating pricing. NFC penetration in the industry is expected to gain momentum for multiple devices, such as POS systems and smartphones. This allows retailers to integrate with the existing handheld devices for lowering the overall installation cost of these labels, a key driver for the growth of the market.

Overall problems include, but are not limited to:

• Theft and damage - people stealing batteries, breaking them, etc.

• Managing display size and system complexity vs. effect. Costs of technologies changing.

• More dynamic products require powering the whole shelf. Short-term renovation of every aisle, long-term maintenance of electrical infrastructure

• System integration is a sizable challenge → sizable value in dynamic promotions.

When comparing your media spend across channels to determine what impacts revenue, Perch by Raydiant typically provides CPCs that are 25-50% less than Facebook, Instagram or Google, with maximal impact on sales conversion delivering the right message as customers consider your product near the point-of-sale.

The Second Generation Of Smart Shelves - Integrating Basic Sensors

Sensors are increasingly being incorporated into shelves for retail intelligence about product inventory, planogram compliance, and shopper behavior. Some of the passive sensors just collect data, while other active lift-and-learn sensor systems respond in real-time with media, messaging and applications. Here are some of the sensors being used to make smart shelves and electronic shelf labels even smarter:

Bluetooth and NFC for shopper proximity, dwell time and pushing to mobile apps:

Remember when beacons were the next big thing in retail because they could push messages to shoppers as they passed by?  Well it turns out, few shoppers want the annoyance but these sensors can be used on a permission basis to launch media and apps or for basic presence detection and dwell time measurement integrated into smart shelves.

Cameras and computer vision for demographic and product sensing

Some shelves have front-facing cameras for demographic detection to customize media.  Advanced systems like Perch by Raydiant use cameras in the shelf to detect which products are being touched and picked up to provide messaging, while cashier-less checkout systems like Standard Cognition use computer vision in the ceilings across the retail store to detect what shoppers take away to track purchasing.  Shelf-based systems can be implemented by brands or retailers, while ceiling solutions are so comprehensive they require the retailer to implement, and we haven’t seen them hooked up to media at the shelf level yet.

Weight sensors and light sensors for inventory management

Weight sensors can be used for inventory tracking and out-of-stock detection, and are the basis of Amazon Go’s cashierless checkout in combination with cameras and RFID. Weight sensors also had limited use in lift-and-learn solutions for minimal displays since the wiring is complex and problematic to maintain. Light sensors can be used for object detection, but have similar tradeoffs as weight sensors, with less specificity as object is either there or not vs. knowing the weight of the object. Read here for more on information on weight sensors vs light sensors for shelves.

RFID Sensors for inventory management and product interaction

RFID sensors tagged on products are being used mostly in apparel and accessories to detect when products are moved or present for inventory. When the sensor is in the shelf, it can be used for lift-and-learn type applications, although the radio frequency noise from lots of products and metal in shelves or walls makes it error-prone. See the advantages of RFID sensors in smart shelves here.

Intelligent Sensing Shelves - Example Vendors

In an omnichannel world, brands and retailers can’t afford of having a blindspot at the shelf. Brands and retailers are enrolling Internet of Things (IoT) Cameras to incorporate real-time engagement analytics empowering retailers to test and iterate in-store marketing content to drive engagement.

Inventory sensing shelves are being leveraged to:

• Understand how many shoppers pass by or shop

• Know how much times shoppers are spending at a shelf

• Measure how many times a product or piece if product content was engaged with

• Optimize product pricing and packaging strategies

• Compare in-store media spend and sales impact to online to justify expanded shopper marketing budgets

Coolr Group

Coolr provides real time information to brands to keep retail partners accountable, included but not limited to monitoring out of stocks, planograms, non-compliance, foreign product and pricing inaccuracies using IoT and machine learning. 

Furthermore, the Coolr platform ensures that brand’s coolers are operating optimally in the interest of sales efficacy, in search of opportunities to improve.

Retail Aware

Retail Aware implements credit card sized wireless sensors touted to be easily scalable from 1 to 1000 shelves. The wireless sensor communicates shopper audience, product engagement, and measures motion when sales associates restock.

Amazon Go

Amazon Go is synonymous with “just walk out shopping,” using RFID and IoT in their shelves allowing shoppers to purchase products without having to check-out at a register. The technology automatically detects when products are taken or returned to their respective shelves, limiting the need for sales associates at a time when their availability is sparse.

The Current Generation Of Smart Shelves - Interactive Retail Displays And Sensor Intelligent Shelves Like Perch by Raydiant

Better shelves are more “connected and contextual”, often found in the retail product engagement marketing sector/or product theatre sector. These shelves are integrated with IoT sensors, connected to the cloud and provide dynamic media and marketing applications based on shopper engagement.

Source: Tagg 2019

William Leastag’s research proves that other than large “Sale” signs and price labels, Product Theater is the most engaging shopper marketing technique available to marketers (out of 41 techniques measured).

Interestingly, the more dynamic, intelligent and product-specific the media, the more engaging it is. In retrospect, this is a readily obvious but non-trivial conclusion when it comes to implementation. If product engagement is the goal, was it really so difficult to make the connection and conclude that the media itself must be product-based?

The challenge until now has been connecting the products to their associated media without overwhelming the customer or putting the onus of product navigation on them (QR codes, downloadable apps, tapping an RFID sticker, etc.).

Perch by Raydiant - Sensor Intelligent Interactive Displays

Perch by Raydiant was founded in 2012, driven by the opportunity to merge the best of physical and digital shopping to drive 10x sales lifts, change business outcomes, and lead the sea change from static physical stores to interactive media rich stores.

Perch by Raydiant engages shoppers to interact with products by attracting customers, detecting which products shoppers touch or pick up, and responding with engaging product-level marketing and applications, and analyzing that engagement to the respective brand and retailer, providing a treasure trove of new data to optimize merchandising, pricing, packaging and content.

Perch by Raydiant can be embedded into virtually any retail display form factor and can be customized by your fabricators or our network of certified partners.

Embedding Smart Shelf Technology Into Retail Display Form Factors

Interactive Smart End Cap

Perch by Raydiant Interactive Retail End Cap Display is an interactive display that triggers dynamic experiences when you touch the product on the shelf, and is ideal for:

• Footwear and accessories

• Consumer Packaged Goods

• Electronics

• Beverages

• Home Goods

• Fragrance and Cosmetics

Perch by Raydiant End Cap has prefabricated standard sizes offered in both 24" and 32" screens and are extensible to wider end caps as well.

Interactive Smart Shelves

The Perch by Raydiant Shelf displays feature an interactive touch screen that may be in landscape or portrait form, ranging in sizes ideal for:

• Cosmetics and fragrance

• Shoes and accessories

• Electronics and wearables

• Beverages

• Pet Products

Interactive Product Grids

The Perch by Raydiant Interactive Retail Display Frames feature a grid of interactive shelves that can be fully stocked with products. These displays utilize the Perch by Raydiant Frame sensor to track shopper interaction with every product on the shelves. Perch by Raydiant Frame displays are ideal for:

• Footwear and accessories

• Consumer Packaged Goods

• Apparel (jeans, t-shirts, etc)

• Beverages

• Home Goods

Perch by Raydiant Frame displays may feature a single display product per shelf or may be fully stocked with products.

Interactive Cabinets

Perch by Raydiant Case displays feature multiple interactive shelves placed directly in front of a large digital touch screen, ranging in size from 48" to 64" diagonal. These displays are typically used to highlight featured products in high-end retail environments. Perch by Raydiant case displays are ideal for:

• Sunglasses

• Footwear & Accessories

• Prestige Fragrance and Cosmetics

• Wine and Top-Shelf Beverages

Interactive Glass Display Case And Jewelry Box

Perch by Raydiant Interactive Retail Jewelry Box is an interactive display that triggers dynamic experiences when you touch the glass above the product.  Perch by Raydiant Jewelry Box works best with a limited number of featured items and is ideal for:

• Watches

• Jewelry

• Hi-end Accessories

Perch by Raydiant can make any glass case interactive including electronics, video games, and much more.

Cloud Based Tools To Measure Shopper Behavior And Content Optimization

In addition to the product level content, Perch by Raydiant analyzes all shopper behavior at the shelf, feeding those insights to brands and retailers alike. 

Perch by Raydiant provides a treasure trove of new retail behavioral insights into what shoppers do at the shelf and what influences them.  We started with the thesis that online you can click on products to get more information, why can’t you click on them in-store?  That click is when people touch products.  Imagine if you couldn’t see what people clicked on online? How blind would you be?  Imagine now seeing what people “click” on in-store and all the insights that are now available including:

• Highest converting products from touch (consideration) to sales

• Content that converts best from touch to screen

• Most popular content

• Effects of merchandising on conversion

• Effects of content on conversion

• Planogram influences on product engagement

• Demographic breakdowns of engagement

Learn more about the Perch by Raydiant Retail Analytics Platform

Perch by Raydiant provides:

• Real-time retail shelf data that can be exported to third party systems

• Sales conversion data

• The ability to A-B test campaigns

The data is used to inform merchandising decisions and planogram designs. With Perch by Raydiant, brands and retailers can see which positions on the planogram get engaged with most so they can maximize sales.

Johnson & Johnson Beauty discovered that its  product on the bottom shelf had the highest pickup to screen conversion because of influencer videos. They switched all products to  influencer videos and increased engagement 20% and drove an additional 10% sales lift!

Macy’s provides brands premium space that drives 50-100% sales lift as well as providing insights to sales conversion, packaging and pricing optimization to prove value to their brand partner.

When comparing your media spend across channels to determine what impacts revenue, Perch by Raydiant typically provides CPCs that are 25-50% less than Facebook, Instagram or Google, with maximal impact on sales conversion delivering the right message as customers consider your product near the point-of-sale.

The Future Of Smart Shelves - Integrated Electronic Shelf Labels And Interactive Displays

The future will be a combination of technologies above that can deliver cohesive, helpful and convenient media and product experiences. At Perch by Raydiant, we’ve begun to imagine what that future will look like.  We see a future where:

• Sound and rich media are coordinated with the electronic shelf labels  to drive greater attraction to shelf interactivity and apps.   Animations will literally drive shoppers to the right products and services.

• Larger format screens will offer more complex local applications and rich media for product exploration and high-value service enrollment

• Local QR codes and NFC append location at every shelf with intelligence so that shelf screens react when a mobile phone scans them and in turn the mobile phone reacts in coordination (web, app, or Apple’s new Applet architecture)

• Sensors detect demographics for messaging personalization

• Physical product interaction like pickup is detected to optimize the funnel and deliver the right message at the right time, and is used to constantly improve media delivery.

A Sample Shopper Journey With Coordinated Interactive Retail Displays And Electronic Shelf Labels

• Perch by Raydiant media attracts nearby shoppers

• Perch by Raydiant detects presence and demographic and coordinates targeted media, driving engagement to a product through media and animation driving focus

• Customer scans a QR code on the shelf OR picks up a product 

• Perch by Raydiant detects behavior and pulls up product A media on screens and shelf

• ESLs further encourage interactivity and apps on screen (subscription enrollment, gift cards, accessories, etc.)

• Perch by Raydiant detects if the product is taken from the shelf and decides the right next message (cross-sell, cashierless checkout, etc.)

• Perch by Raydiant continuously analyzes and A-B tests content to more effectively drive behavior

• All customer behavior data is uploaded to the cloud for updating CRM, retargeting online and more

Book a demo to learn more.