Is Retail Heading for a Smart Label Revolution?

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January 19, 2017


New technologies are making their way into the retail sector and sooner or later their impact will be felt in South Africa. Smart labels provide detailed information about individual items on store shelves, ensuring authenticity and supply-chain integrity, while creating new opportunities for brands to engage with customers. As the technology evolves, smart labels are getting smarter.

By David Jenkin

Smart labels, or smart tags, are loosely defined but can be described as labels that use technology to provide insightful data – far more than a standard barcode – applied directly to packages, pallets or shipping containers. Although the term isn’t new, smart labels are gaining greater capabilities as the technology evolves and interesting developments are forecast.

Roy W. Bjorlin wrote for the industry magazine Flexible Packaging in June 2016, “By some estimates, smart labels, which incorporate some level of electronic function at the item level, can grow from a near standing start to more than $5 billion by 2020 … Certainly hang tags and labels which interact with the consumer will likely be first.”

He adds that smart labels that can gather metrics and provide important consumer data to brands will fuel that growth dramatically. “However,” he notes, “it may take more time to gain a significantly higher adoption rate due to its complexity and backend infrastructure requirements.”

How they work

Radio frequency identification (RFID) is the technology behind smart labels. RFID chips are widely used and can be found in e-tags and even household pets. They contain electronically stored information by which items are uniquely identified using electromagnetic fields. Near field communication (NFC) is a newer, specialised subset of RFID technology that allows for communication between two electronic devices at a range of just a few centimetres.

Although still emerging, the technology can already be found in some credit cards, allowing for contactless payments, and smartphones for sharing data. NFC allows for data from a smart label to be uploaded to a smartphone at any point along the supply chain.

The pioneers

A few companies are making headway with NFC smart labels, such as Oslo-based Thinfilm, who create electronics through printing rather than semiconductor fabrication. The company produces smart label sensors that measure temperature and track time, and for monitoring shipments of pharmaceuticals, fresh produce and the like. Thinfilm recently partnered with luxury handbag brand Mario&Donato to combat counterfeiting with NFC technology, allowing consumers to authenticate the bags themselves before making a purchase.

Used this way, NFC technology can also be a powerful tool for driving customer engagement on mobile, pre- and post- purchase. This software comes in the form of a branded app with integrated content management, allowing for personalisation and social sharing, and creating customer data profiles for targeted marketing campaigns.

Another company forging ahead with smart labels is the US packaging company Avery Dennison, who in 2016 announced a partnership with tech firm EVRYTHING, who develop software for managing data related to the Internet of Things (IoT) – which encompasses smart labels. Avery Dennison’s Janela™ Smart Products Platform “enables apparel and footwear products to have a unique, serialised label, which then connects to EVRYTHNG’s IoT cloud-based software”, according to a statement on the company’s site. These products have the ability to capture real-time data, enhance consumer experiences (with product information), and streamline manufacturing and selling through greater intelligence, the statement adds.

How long to wait

Currently, smart labels, even those which use the older RFID technology, are difficult to find in South Africa. Craig Wilson, editor of Stuff Magazine, says that any smart labels currently in use are in commercial or enterprise settings rather than in the consumer retail market.

“The primary obstacle to uptake is most likely cost,” he says. “As smart labels become cheaper, and the benefits become more demonstrable, I expect local retailers to jump on them. But I don’t anticipate they’ll become commonplace in South Africa for a few years yet.” Smart labels will have to prove themselves elsewhere, he adds, before local businesses will commit to them.

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