VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

Get a Little Closer to your Sweetheart with AutoID

Are you a Valentine’s Day procrastinator? You are not alone and it’s not too late.  AutoID is here to save the day.  In the spirit of everyone’s ‘favorite’ Hallmark holiday, we decided to blog about how an AutoID-enabled ecosystem can help ensure a romantic, love-filled day with your significant other.

OK – you’re late to the game because you’re just coming home from a business trip, but no sweat … you’ve got your NFC-enabled smartphone (which you used as your boarding pass).  As you get off the plane and sprint toward the baggage claim, you pass a flower dispensing kiosk that has the perfect bouquet.  You quickly select the bouquet, swipe your phone near the machine, approve the transaction with a tap and voilá, instant flowers for you to hand deliver.

You grab the flowers and make your way to the baggage claim.  Although you take solace in the fact that your bag isn’t lost because the airport is using RFID, you still get there before the bags come out and know you’ll be there for at least a ‘few’ minutes. During these valuable few minutes, you call to make a dinner reservation at her favorite restaurant and are told that the only reservation they have is for 10pm and the table is next to the kitchen.  But you don’t panic, because this restaurant has a loyalty program that ensures a premium table for its members and you are a longtime member.  So you go online, transmit your loyalty card information (as a tech savvy user, you already have this scanned into your smartphone) and reserve a table for two in a dark, romantic corner.   

Surprisingly, your bag comes early – must be that RFID system – and you are quickly on your way home, speeding along the highway using your toll transponder to avoid the long lines – and added stress - at the toll booths.  You finally make it home, with flowers in hand, are greeted by your significant other with open arms, and are summarily rushed out of the house to make your dinner reservation.

Upon arriving at the restaurant, the hostess scans your loyalty card (displayed on your phone) to authenticate your reservation.  You sit down and enjoy a lovely meal.  When the bill comes, you pay with your NFC smartphone – at the table, with a quick and virtual ‘high five’ with the waiter’s device.  As you are walking out of the restaurant, your sweetheart sees a movie poster advertising the latest Rom-Com (romantic comedy) and says they want to go.  You quickly hold your NFC phone to the movie poster, watch the trailer and decide that this is not the movie for you both, but another movie playing at the same theater is.  You buy your tickets online and drive to the cinema.  At the cinema, you display your tickets on your phone, have them scanned (barcode) or read (NFC), make a quick stop to grab some soda and popcorn (again paying with your phone), and watch the movie. 

You’ve had a successful and romantic evening, but wait…we’re not done yet.  Keeping this blog post rated ‘G’, you get home and both of you slip into something more comfortable.  As you cuddle up by the fire with a glass of merlot, you use your NFC phone to pair with your Bluetooth speakers and play some smooth jazz to set the mood.  The rest is up to you – even AutoID has its limits.

Happy Valentine’s Day!

What Themes Dominated the CET Market in 2011

In 2011, there were 3 themes that dominated the customer engagement technology (CET) landscape - Mobility, Convergence and Application Development.

The need to take the store (or the checkout environment, in the least) to the customers at the point-of-decision, as opposed to drawing them to siloed touchpoints, is contributing to this growing demand for a seamless & consistent shopping experience across multiple customer-facing technology solutions.

A whole host of retail organizations have announced consumer handheld deployments within their installation environments in order to elevate customer service levels and drive loyalty over the past 12 months. VDC expects to see continued investment by retailers in these devices in 2012, especially given their relatively low upfront costs, intuitive user interface and high consumer appeal. While the verdict is not out yet on the success of these installations, it has become fairly commonplace to read about chain-wide deployments of Apple products.

Enterprise mobile device vendors have also been investing heavily in partnerships with the Independent Software Vendor (ISV) community to offer customized application sets that enable end-users to seamlessly integrate mobile solutions into their installation environments, ensuring consistency in service delivery and customer experience. As adoption of mobile devices scales, development of applications with varying degrees of configuration and control seems to be a very distinct possibility.

Finding Success in 2012

VDC expects the most successful suppliers in 2012 will be those who enable end-users to extend the value of their initial hardware investments and reduce TCO by supporting multiple applications with a single (mobile) device.

At the NRF later this month, we look forward to seeing CET vendors’ product roadmaps for 2012. We expect they will showcase their ability to effectively engage consumers and elevate service levels by way of immersive and interactive technology solutions – in alignment with today’s consumer handhelds featuring highly responsive, intuitive UIs and visually appealing image quality.

Multi-touch displays for kiosks and digital signage solutions anyone?

Smartphones Meet Smart Posters

Proxama, a global Near Field Communication (NFC) solutions provider, has launched a smart poster marketing campaign in New York and Los Angeles advertising the upcoming new season of VH1’s hit show Basketball Wives. There are several partners working on this campaign, including Hyperspace, a firm specializing in out-of-home communications, Nokia, a leader in NFC-enabled mobile devices and marketing media distribution specialists JCDecaux and Cemusa. Proxama led a similar, well-received campaign earlier this year in London to promote the latest X-Men movie.

The smart posters are straightforward: By tapping an NFC-enabled phone on the poster, passersby  can access an exclusive trailer and link to the show’s Facebook page. Given the low penetration of NFC phones in the US, the campaign is intended to be more of a demonstration of the technology’s potential in the rapidly emerging mobile marketing industry.  

NFC offers opportunities for mobile marketing that reach beyond basic smart poster interactivity. As consumer-level NFC adoption scales in the US, advertising applications leveraging this technology will evolve rapidly. Potential marketing applications include location-based messaging, personalized/targeted offers, mobile couponing and loyalty.  NFC is a versatile technology that will enable direct, immediate access to consumers through which personalized, targeted content can be delivered. Mobile and interactive marketing is just one of the NFC applications we’ll be exploring in our upcoming NFC report—stay tuned for more details.

Special acknowledgement: Dan Mandell, Research Associate, co-authored this blog post.

Application-specific Deployments Driving Kiosks Market Growth

Suppliers experienced strong growth in kiosk installations across a variety of vertical market segments as end-user enterprises embraced a number of applications targeted at enhancing customer engagement and loyalty. Vendors are expected to derive maximum revenues from product vending kiosks & pedestal kiosk installations in big box retail chains (including department stores and mass merchandisers) and supermarkets/grocery stores.

Kiosk sales into the Government and Healthcare vertical markets tend to be highly application-specific, necessitating partnerships with the ISV community, whose domain expertise and systems integration capabilities enable vendors to adequately address the highly targeted solution specifications posed by end-user organizations.

Deployments are also seen gaining traction within the transportation vertical as airports, bus and rail stations increasingly rely on kiosks to ease congestion, lower employee headcount and reduce costs for rendering basic services. Globally, this segment is expected to register a CAGR over 9%, with suppliers generating over $100 million in kiosk sales to the transportation vertical by 2015.

VDC expects to see those vendors devoting resources toward building systems integration capabilities (in-house or via strategic partnerships) to create a compelling competitive advantage as they address & assuage enterprise end-users’ concerns regarding ROI, compatibility with existing in-store infrastructure, and overall installation/deployment costs.

To learn more about our coverage of the Self-Service Kiosks market, click here.

Kiosks – Ringing in a New Age

Interactive Displays & Digital Signs and consumers’ personal handheld devices (including smartphones and tablets) have been steadily converging with kiosks and increasingly changing the market’s landscape.  These devices have caused kiosk vendors to rethink and re-engineer their traditional applications such as product/service information lookup and wayfinding, particularly for consumer-facing organizations. While these applications continue to be popular, organizations are constantly looking for solutions that effectively align with and engage their increasingly technology-savvy consumer base, enhance their in-store experience and improved customer loyalty. Kiosk suppliers are responding to this increased convergence by:

- Enhancing the software solutions set for self-service kiosks – Kiosk suppliers are leveraging relationships with ISVs and SIs to capitalize on the boon of application development in the mobile device and digital signage markets as a means to extend their own platforms. Popular applications include:

    o Smartphone applications (e.g.: RedBox mobile)

    o Online portals (e.g.:  JC Penney’s “Endless Aisle”, Toys ‘r’ Us “Wish List”, Coinstar “Face Cube”)

- Leveraging the same user experiences as some of these next-generation devices - User experience is not just about flashy imagery and music anymore … it’s more interactive.  Retailers are increasingly demanding multi-touch capabilities, particularly for kiosks and digital signage solutions, leveraging the same type of interface many consumers already use. The enhanced capabilities are enabling retailers to further interact with their customers as well as create new sales and marketing opportunities. Examples include Beyond Kiosks & iBracket (build kiosk enclosures for iPads) and IN Media (recently launched IPTV technology based HD kiosk running on an Android platform).

How is the growing surge in tablet sales expected to impact the market for traditional kiosks? Are dynamic software solutions that enable seamless in-store and cross-channel technology integration a must-have for end-users today?  We expect to answer these questions and learn more trends in our coverage of the Kiosk market as a part of the 2011 Customer Engagement Technologies Market Intelligence Service (CET). Stay tuned.

Tablet Computers: A Key Point of Convergence for Customer Engagement

The emergence of tablet computers, such as the iPad, Motorola Xoom, and Samsung Galaxy has many businesses thinking about ways to integrate these devices into applications that compliment their existing customer engagement solutions. Tablets are a cost effective, flexible, and easily scalable addition to a variety of enterprise hardware devices such as POS terminals, self-service kiosks, and interactive displays.  In the near term, we expect these devices to become increasingly common in enterprise deployments, as businesses seek to extend the value of existing systems via the integration of tablets.  VDC’s 2010 Mobile and Wireless study forecasted 130% revenue growth in 2011 for tablet devices used within the enterprise. During the next several years, VDC expects growth in this category will continue to accelerate as more hardware suppliers and ISVs offer integration and application development support.
Examples of tablet integration into the enterprise include:

1. A number of Arby’s locations are piloting programs that integrate an iPad with their existing POS terminals, using the tablet as a mobile POS terminal as a means to scale POS bandwidth on an as-needed basis and for queue busting during peak hours.
2. Larger retailers such as Nordstrom, Sephora, J.C. Penney and Converse are conducting iPad pilot programs in stores across the US.  These retailers are experimenting with tablets as electronic catalogs, informational kiosks, social media platforms and interactive displays, as well as leveraging them for payment processing and inventory management.   Examples include:   
   
   • Converse has developed an application that allows customers to design and order customized sneakers while in store.
   • Sephora has created an interactive program that enables customers to test various makeup and color combinations on a virtual model.

Tablets possess tremendous potential for both the enterprise and the customer.   The enterprise will benefit from operational efficiencies, improved margins, increased customer loyalty, and new opportunities to reach consumers. On the other hand, customers are expected to benefit from greater access to information, which will result in enhanced decision making and an improved in-store experience.

VDC expects that adoption of tablets will scale rapidly, as they increasingly become a center of convergence for a diversity of customer engagement technologies.

The Many Faces of Personal Shopping Systems

One of the more exciting in-store retail technologies we study as part of our Retail practice is Personal Shopping Systems (PSS), a handheld or cart-based self-scanning device that enables retailers to personalize promotions and the in-store experience while also allowing the shopper to scan-and-bag items on the go. Although suppliers have long touted the value proposition of this solution, it is only over the past couple of years that global retail conglomerates have moved from pilots to larger scale deployments, particularly in Europe.

One of the more interesting trends for the PSS market is that just as the solutions are beginning to gain traction and scale, a new threat is beginning to emerge: Smartphones and tablets. These devices have the potential to integrate many of the same functionalities and values that PSS solutions offer, primarily through applications.  For example, smartphone applications such as AisleBuyer™ (currently available on Apple and Android phones) have the potential to convert the shopper’s personal handheld device into a PCI-compliant self-checkout solution while also supporting the personalization of content and highly targeted advertising and promotions.  Retailers could potentially refrain from investing in this solution given the high upfront costs for procurement & installation, lack of an established market for personal shopping systems and the threat of early obsolescence posed by emerging mobile applications.

Suppliers of PSS solutions are increasingly embracing this trend, with market leaders such as Motorola and Datalogic offering highly functional PSS devices that resemble ergonomic, touch-enabled mobile device solutions such as a smartphone.  Not only are these devices well-aligned with the highly intuitive graphical user interfaces and applications that today’s customer base is comfortable with, but they are also increasingly resembling and being marketed as mobile kiosks or compact digital signage solutions.  

Continued evolution in this direction could eventually enable retailers to bring the advantages of an e-commerce shopping experience to their brick-and-mortar stores as well as converge the benefits of multiple technologies into one device.  

For example:

• In a recently concluded end-user survey of retail automation technology users, a primary adoption barrier for kiosk deployment was the high price of the hardware and the extensive integration required. PSS solutions could offer a more cost effective solution as well as minimize the installation/integration pains.

• Retail in-store digital signage deployments are currently transitioning from a more traditional ad-based model to a more specific and highly personalized platform – which is aligned with the multi-dimensional value propositions as offered by a PSS.

Our research indicates that hardware for personal shopping systems accounted for nearly $27.4 million in global revenues for suppliers in 2009 and has the potential to grow to more than three times that number in five years’ time.  Learn more about VDC’s coverage of the personal shopping system market at: http://vdcresearch.com/_Documents/tracks/t1v7brief-2625.pdf

 

Retail Automation in 2010: What Needs to Be Done to Operate Successfully?

In yesterday's webcast, we provided a sneak-peek into the data from our 2010 Retail & Transaction Automation Equipment Business Planning Service. 

The webcast was recorded and the slides can be found below.  We encourage you to review both to get a good high-level picture of the current state of the traditional and next-gen retail and transaction automation markets, and how customer experiences with multiple technologies are aiding, or hindering, retail automation supplier efforts to gain traction in this turbulent market. 

To quickly summarize some of what we covered, we thought we'd use this platform to share how retail automation suppliers can operate successfully, given the still-turbulent state of retail today.

• Recognize and leverage your strengths – above your brand – in alignment with the common key product and vendor selection criteria including: reliability, durability, product quality, price and ease of use.

• Be specific, differentiated and relevant when it comes to your product(s) because brand matters less than ever when it comes to product selection – and customer requirements differ materially across certain product class boundaries. 

• Promote ROI.  Adoption in every product category is being hindered because of fuzzy ROI.  

• Take on the integration / compatibility challenges by thinking about new product opportunities or brand-worthy opportunities.

• Develop your communications/ network management capabilities, both wireline and wireless, as it addresses the acute challenges of integration  and compatibility.

• Study how some of the differences in requirements and preferences across technical segments can be as powerful as the differences across vertical segments.

Staying Ahead of the Joneses: Retail Automation in 2010

View more presentations from VDC Research Group.

2009 Retail Automation Investments Hampered by Store Closings and Shifting IT Priorities, Spurring Holistic Innovation Among Tier 1 Suppliers

We have nearly completed our research campaign with leading and emerging suppliers of retail automation solutions.  We’ve learned that 2009 was a challenging year for many of these suppliers, as leading retail chains extended their refresh cycles for core POS solutions and related components.  This contraction left many retail automation suppliers with a short list of less than compelling strategic alternatives likely to create margin compression that could adversely impact the industry long after these markets recover. 

Thankfully, many of the thought leaders we interviewed took a different tact, innovating well beyond feeds and speeds to address the operating requirements of deploying enterprises more holistically, all while reducing the CAPEX burden and providing a clear migration path to next generation technologies.  As the appetite for retail automation investments rebounds in 2010, these suppliers are reaping the benefits of investments made to broaden their software and managed service offerings:

• Access to new sources of revenue
• Increased customer retention
• A higher degree of insulation against competitive displacement

We’re seeing examples of this type of holistic innovation in many of the retail automation technical segments we cover including self check-out, kiosks, and digital signage, reflected in the revenue contribution many suppliers are attributing to software and services compared to previous years. 

We believe the viability of managed services as a growth strategy is strongest for those suppliers who have direct selling relationships with their key accounts, broad product portfolios, and the strategic alliances required to support new application development and commercialization.  As the retail automation markets rebound in 2010 and beyond, these suppliers will emerge better positioned to address the requirements of their key accounts with flexible and scalable managed services offerings, providing a viable source of differentiation against more hardware-centric suppliers of retail automation.

These themes and other trends will be expounded upon in many of the retail automation technology market analysis volumes being published in the weeks ahead.  Stay tuned.

Retail Automation Industry Expert Opinions Needed

VDC is conducting its semi-annual survey of companies deploying retail automation systems.  If you are involved in the selection of the retail automation systems deployed by your company, this is your chance to have your voice heard by the supplier community. 
 
Our research covers traditional retail automation solutions (POS terminals and peripheral technologies) self-service technologies (kiosks, SCO and more) and multi-channel marketing platforms (including digital signage and m-marketing and commerce platforms). Your perspective will improve the insights we deliver to the supplier community and help to influence next generation solutions.
 
Every respondent who completes the survey will receive:

• Instant access to a summary of the 2009 Customer Interaction Management (CIM) survey findings;
• Entry into a drawing for one of five (5) $100 Amazon.com gift certificates (drawing to be held August 30th, 2010); and
• An executive summary of our 2010 survey findings once the results have been tabulated

 
To begin the survey, go to: http://vdcresearch.com/survey/10raps_user.html
 
Thank you very much for your assistance.
 
 
Best Regards,
 
The VDC AutoID and Transaction Automation Research Team