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Powershelf Adopts RFID With One-Penny Tag

The smart-shelf technology, from Compass Marketing, now features RFID readers built into the shelf labels and low-cost tags, proprietary to the system, with about a 3-foot read range.
By Claire Swedberg

For instance, explains Julia Flood, Compass Marketing's project manager, a retailer or brand can view how well the products are selling, when they go out of stock, and the cost in lost sales related to that out-of-stock incident. The software compares the average sales rate of the product, the value of each sale of that product, and the amount of time it is missing from the shelf, thereby creating a dollar-based loss in revenue. "A lot of algorithms go into the process," she says.

The software can also be set to alert store personnel or managers, either immediately when a shelf is out of stock, or every few hours when shelves are not replenished. This information can be more specific, however, with the use of RFID to detect exactly how many products are on the shelf, as well as how often each one is removed from the shelf and then returned (by browsing customers, for example).

Ernst & Young measured the effectiveness of the Powershelf data prior to implementing RFID into its system. The analyst firm measured the impact of Powershelf at Giant Eagle across 200 brands and found that the technology reduced the rate of out-of-stocks. "Inventory is one part of a larger picture around customer experience," Raghuraman says. "If you [as a consumer] go to a store and they don't have the products you're looking for, you'll go somewhere else. That's a central part of the customer experience."

While Raghuraman says there is no one-size-fits-all technology solution for retailers and brands to prevent out-of-stocks, he sees RFID as a good solution for stores with a fast product turnaround. "When you have a high SKU-count environment with lots of rotation, or where products are small or can be misplaced," he states, RFID can be a good solution.

The Powershelf technology is also of interest to other industries beyond retail, White reports. For instance, hotels could use the shelves for visibility into products they have on their shelves, such as towels, linens or items they provide or sell to guests—toothbrushes or razors, for instance.

"Its always hard to forecast technology but we do see [Powershelf and RFID] as a long-term solution for out-of-stock issues," Linehan states. "They can help us experiment with a variety of solutions and actually see, in real time, which ones are working and which ones are not."

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