NICE, France – Store Electronic Systems forecasts it will sell at least 10 million electronic shelf labels with NFC chips inside to merchants, at least double the NFC-enabled shelf labels it will sell this year, the France-based company said this week.
"This is not a vision. This thing is taking place right now,” said Store Electronic Systems CEO Thierry Gadou during a presentation at NFC World Congress 2013. “We launched the first NFC tag last year in October, so that's not yet a year ago. We sold, a couple of months after that launch, half a million of these tags. This year we will have sold five million of these tags.”
Gadou said merchants are increasingly interested in using NFC to improve their communication with customers at the physical point of sale. NFC tags allow for pinpoint accuracy at the shelf to enable retailers to market to consumers when they tap their smartphones on the labels.
The 5 million NFC-enabled electronic shelf labels the company will have sold in 2013, accounts for about one third of total electronic shelf labels for the year, the company told NFC Times. That’s up from also no NFC-enabled labels sold last year. The percentage of NFC-enabled labels to total labels sold would increase next year. The 10 million NFC-enabled labels projected for 2014 is a conservative estimate, the company says.
“We're very careful about a prediction because it might be much more than ten million next year,” Gadou said in his presentation. “We're right now installing full NFC stores at a pace of 25 stores a week.”
Conventional electronic shelf labels display product names and prices and in some cases 1-D bar codes, on a mini-LCD screen, which can be updated wirelessly. The labels save retailers the cost of manually changing price tags, as well as providing location information for each product, which helps in program management. Store Electronic Systems is the largest supplier of the labels worldwide.
The standard, non-NFC electronic shelf labels cost €8 and €10 each, not counting the NFC tags, which cost more than €0.20 each.
The vendor announced this week that it has sold NFC-enabled tags to a dozen retailers. It had earlier said its retail customers for the tags are located in four countries.
But the only merchant the company has named as a customer so far is French chain, E.Leclerc, which has ordered labels for seven or eight hypermarkets in France. The company had equipped one suburban Paris hypermarket with 47,000 of the NFC-enabled labels by the end of 2012 and has yet to fully equip the others.
Although it declines to mention other clients specifically, the vendor has supplied conventional electronic shelf labels to major France-based merchants such as Intermarché, Auchan, Monoprix and Carrefour, along with international merchants like Spar, Dansk and FairPrice.
Store Electronic Systems marketing director Guillaume Portier said that the extra cost of NFC chips only “weighs marginally” on the total cost of the electronic shelf labels, especially compared with the “wealth of new functionalities” the technology provides.
According to Gadou, “That is why it's going to ramp up very, very fast, because it's a marginal cost, and it's a very massive incremental value.”
Customers can tap the NFC-enabled labels to view product information, such as ingredients, allergens, nutrition, and manufacturing chain information. Merchants can also provide marketing content for the tags. The shelf labels also support loyalty programs and allow merchants to collect some analytics, which will likely depend on the merchant’s application.
The company said it believes that the NFC labels will help address common consumer complaints about shopping at physical stores, such as long checkout lines, a lack of interaction and information, and an “anonymous” shopping experience. “It's a kind of painful experience, and that has not been addressed by the retailers so far, to be frank, or at least not by all of them,” Gadou said in his presentation.
He said NFC-enabled electronic shelf labels would allow consumers to scan products for checkout at the shelf. “The checkout is not only one of the pains that is reported by consumers, but is also 8% or 9% of the cost of a retail store, so it is a big, big challenge,” said Gadou.
Another challenge for physical retailers is conveying marketing messages about the store or product while collecting data from shoppers. Gadou said that the physical retail experience differs substantially from the e-commerce experience. “On one hand, there is no data capture, nobody talks to the consumer, and there is no interactivity. On the other hand, what's happening is that there is a lot of consumer data, 100% trackability,” he said.
“In fact there are 12 times more people surfing in aisles of physical stores in the world than people surfing on e-merchant websites, so there is a big prize, in other words, for retailers to address that issue.”
Gadou said NFC tags on store shelves would gather consumer data while marketing to shoppers, especially when used with merchant smartphone applications. “It's media at the shelf, obviously. It is a customer identifier,” he said. “So now the ESL (electronic shelf label) is not alone. Actually, the extended ESL is your smartphone. You tap the label, it goes to your smartphone.”
Portier earlier told NFC Times that the company is not including NFC capability in its shelf labels by default. Retailers have to request the technology.
He told NFC Times this week that the company doesn’t believe the decision by Apple to again keep NFC out of the iPhone would not hurt sales of NFC-enabled labels. Store Electronic Systems customer base is mostly in Europe, especially France.
“Most of the Android smartphones are NFC readers,” he said. “In the end, Apple smartphones worldwide are less than 14%.”
U.S.-based tag supplier Identive announced in April 2013 that it had received an order of 3 million tags for a retail deployment in France. The first 800,000 of those tags shipped in the second quarter of 2013. The tags contained chips from NXP Semiconductors, which were expected to be the NTAG210, the low-cost member of the NTAG21x line announced in the fall of 2012.
The deployments follow an October 2012 trial by French retail chain Groupe Casino. The chain deployed 25,000 NFC tags in electronic shelf labels in a single supermarket in Paris.
The project, implemented by France-based Think&Go NFC and using electronic shelf labels from Sweden-based Pricer, works with Casino’s mCasino mobile app.
This trial allows users to tap the tags to get discounts, view information about product ingredients, and add items to a digital “shopping cart,” then tap at the register to check out–but not to pay. Payment would have required a payment application on an NFC-enabled SIM card in the phone, which the trial did not include.
While Casino has not yet expanded its trial, Tim Baker, Think&Go’s director of marketing and communications, had told NFC Times that other commercial rollouts, “confirms a trend that we have seen over the last couple of years that retailers, in general, are looking to explore the potential of mobile, and NFC fits totally with their objectives.”
On the other hand, consumers may not see the value of NFC-enabled shelf labels just yet. Store Electronic Systems seems unsurprised by this, and Gadou said, “very often, the infrastructure is followed by the marketing applications and the development of consumer applications, so we anticipate that the visible change, significant change for consumers in stores, coming actually in 2014.”