Nov 20, 2002Nov. 20, 2002 - The retail industry is increasingly excited about the prospect of installing smart shelves that use RFID to monitor what's in stock and track consumer preferences. Right now, RFID tags and readers are too expensive to make such shelving practical for widespread use, but one company is positioning itself for the day when the economics change.
SAMSys Technologies, a Toronto-based RFID reader maker, recently signed a value-added reseller agreement with LG&P In-Store, a Montvale, N.J., company that designs and manufacturers merchandising displays in conjunction with in-store marketing programs. The deal is the first of several, according to SAMSys chairman and CEO Cliff Horwitz.
"We are working with two other companies and we hope to announce similar relationships in the not-to-distant future," he says. "It's a recognition of the fact that the only way that RFID and smart shelving is likely to be cost-effective in large-scale environments is through joint development and seamless integration into the unit itself."
LG&P is a 15-month-old company founded by industry veterans David Lloyd and Rob Gerstner. It conceptualizes in-store marketing programs and then designs and builds in-store displays. It recently completed a shelf display for children's books, which is being rolled out at CVS pharmacies. Lloyd has worked with SAMSys before on smart shelf prototypes.
"Together, we are building the infrastructure for the application of RFID at retail in the future," says Lloyd. "Their reader boards need to be housed somehow at the point of sale, whether that is the smart shelf design of the future or retrofitting existing shelves. That's where we come in."
The two companies will cooperate on designing custom smart shelves for retailers or manufacturers that want them. SAMSys makes a wide range of reader boards that operate at multiple frequencies and use multiple protocol, providing the flexibility needed to track different types of products on store shelves (see photo). Horwitz anticipates that the shelves will likely be used in specific departments, such as for displaying cosmetics or compact disks, then spread throughout stores as the price of RFID tags falls.
SAMSys has worked on a number of smart shelf prototypes. The company developed a sophisticated system with an interactive screen for Revlon. And it developed a prototype of a generic mass-merchandise shelf for Procter & Gamble. Horwitz says it will be too expensive to retrofit miles and miles of store shelves with readers and that it's more likely that companies will gradually role out shelving designed to achieve specific aims.
"RFID is not a generic technology," he says. "That is all the more relevant when it comes to point-of-sales or point-of-purchase merchandising units because there is no such thing as a generic product. Whether you are talking about a shelf for magazines or cosmetics, there are going to have to be very specific functional elements built into it."
SAMSys and LG&P will focus on designing shelves that deliver a return on investment for the customer. The shelves can be designed not only to make it easier for customers to find what they want when they want it. They can also provide information on what products customer picked up and put back, how they responded to a promotion, or the impact a new display location or design has on sales.
"What makes smart shelving so compelling," says Horwitz, "is that it is the only way retailers can empirically monitor specific results of certain promotions and operational changes."
