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New York
1st February 2023

Why shelf vision matters – and why retail businesses’ health starts at the shelf

The humble store shelf has moved from being a convenient place to range goods to a critical indicator of the performance of the whole retail business, and cameras can now monitor the status of the business at all times, explains Magnus Larsson, acting CEO at Pricer

We’re all used to seeing cameras in retail stores for a variety of tasks.  Cameras to count footfall so store managers can schedule staff; cameras at self-checkouts to help customers manage their purchases as quickly as possible; and cameras overhead to record – and deter – instances of shoplifting.  However, there is now a new generation of cameras installed into the shelf to assist retailers with inventory management.

The camera in itself is of less interest than the software that drives it.  It can see the shelf but, using computer vision, it can report on the status of the shelf by detecting the identity and position of electronic shelf labels (ESLs).  This enables it to spot shelf gaps and out of stocks, and then to send alerts to staff to restock or reorder.

In this way, customer service levels are met because their chosen goods are more readily available.  This is not the case right now.  In our latest research, 52% of UK retailers said up to 20% of their inventory is unavailable at any given time, 25% said anywhere between 26 – 50% of stock was unavailable at any given time, and 18% of retailers said this was true for over half (50%) of their inventory.  Result?  The average retailer could loses 4.1% of annual revenue due to out-of-stock products, meaning that this doesn’t just cause poor customer experience, but it deeply impacts the business’ bottom line.

And this matters more than ever in a fiercely competitive market because margins are under such pressure from inflation, rising wages and supply chain disruptions.  Moreover, customers are less likely than ever to put up with stock outs, preferring to leave the store, often never to return.  Retailers lose the sale but the customer as well, and given the high cost of acquiring them in the first place, the cost of poor inventory management racks up even further.

Software is also bringing longer term and incremental benefits.  Fixing shelf gaps there and then is one thing, reducing them over time is another.  Driven by data and machine learning, cameras can detect non-compliance to a planogram, which will be of interest to both category managers and brand owners, particularly if they can also see how promotions are performing.  They can also spot if products have been misplaced or mislabelled, which can lead to problems for shoppers looking for products as well as for staff picking for online orders, who are under time pressure to process the order quickly.

Concerns over security for customers are dispelled because the cameras contain sensors that comply with GDPR and other privacy regulations by not capturing images while people are present.

Fixed cameras make it possible to reduce or eliminate the need for roving “robot” cameras, or it can work in concert with these devices to provide low-cost, dedicated coverage to specific, high-traffic, high-concentration or high-value areas that require constant monitoring.

These days, cameras are not only easy to install but to set up as well.  They are capable of automatically detecting and identifying ESLs within their field of view.  This saves significant time during set-up and also ensures the accuracy of the information passed to the cloud by enabling precise and accurate identification of each ESL’s unique ID and the information it is displaying to be requested from the cloud-based ESL management system.  This saves significant cycles and ensures greater accuracy of results as the cloud system does not need to try to analyse the image to capture the information on the ESL.

The real truth of what is happening in a retail business starts at the shelf, so while cameras are there to continuously monitor shelf status, they are also processing data that will reveal performance of upstream processes, notably the supply chain.  As Europe moves ever deeper into a cost of living crisis, retailers will have to work even harder to operate effectively in every area of their business. Getting stock right is the best place to start and cameras can help them improve within hours of them being installed and then incrementally over the following years.