Altierre: Bringing Retail Industry to the Digital Age
Date: Wednesday , December 02, 2009
Late one night in 2001 Sunit Saxena had to make an urgent dash to a grocery store., He was unable to find the items he needed -- nor could he find clerks to help him out. Looking around he saw the workers gathered in a back room preparing new paper price tags for the merchandise for the next day. Saxena was very surprised to know that this was an everyday task for the store clerks. On further research, he found out that this manual task of re-pricing not only wasted thousands of man hours but also cost the retail industry a whopping $40 billion every year.
Saxena thought this manual process was crazy because the entire process could be automated with the use of technology. He grabbed this opportunity to co-found Altierre in 2003 along with Anurag Goel. The company, headquartered in San Jose, has revolutionized the world of price and signage changes in retail, bringing stores into the Digital Age.
The Idea and Innovation
A couple of decades ago, grocery store clerks used to put a price sticker on every single product using a pricing gun. Next came the barcode scanners, enabling retailers to put a single price label on the shelf below each product and just scan the item at checkout. But it was still a tedious task for the retailers when it came to re-pricing the merchandise. "Having understood the pain points of the retailers, we thought of developing electronic tags that could be controlled wirelessly, allowing retailers to instantly change the price of items throughout the store," says Saxena, Chairman and CEO of Altierre.
The company has developed a complete Digital Signage and Electronic Price Tag system. The tags in the Altierre system are wireless LCD display devices that can be placed on shelves like normal price tags. Since the Altierre system is fully networked, pricing and promotion data can be generated for all stores at the Retail HQ and downloaded to each store. At the local store, the Altierre system takes over and automatically sends the data ‘over the last mile,’ so to speak, over its wireless platform to the RF Display Tags. This is the execution tool that retailers have been waiting for to make dynamic pricing and promotion a reality, giving the flexibility to change the price of any product in one or all of the stores in a chain, based on store traffic, season and competitive strategies. As an example, the tags let retailers launch promotions such as ‘Buy One, Get One Free’ almost instantly. At the local store level, with the click of a mouse, a grocery store manager could drop prices for a happy hour sale, and just as easily with another click return prices back to normal just in time for the dinner rush.
So how does it work? The foundation of the company’s solution is its mixed-signal chip technology and its RF Systems platform. Its software technology platform is built on top of its custom RF technology stack, which allows for a massively scalable ultra-low-power network of display tags, sensory tags and active and passive RF tags to coexist in an integrated fashion within its long-range RF network.
The Altierre server appliance sits as a local node in a distributed computing network to provide control and communications via its RF network. It provides integration with other local appliances, contains system-monitoring functionality, and enables applications such as electronic pricing solutions, inventory, store operations, sensor networks, supply chain, and asset tracking. It also has built-in support for future RFID applications when individual-item RFID finally becomes cost-effective.
Each label's RFID chip stores the product's stock-keeping unit (SKU) number, name, price, and other information. Additionally, Altierre's long range Wireless Access Points are placed in the ceilings of every store of a retail chain. A computer server in each store's back room is set up to receive pricing updates from the retailers' headquarters via a Wide Area Network. The server sends the changes via Altierre’s RF Network to each of the electronic shelf tags affected. Upon receiving the instructions, the tags immediately update the product information on their display screens, and also send a confirmation to the Altierre server indicating the transmission's reception.
With the system, a store can update the product information displayed on 10,000 labels in less than an hour. The stores piloting the system have typically installed two Wireless Access Points – high volume transports that control 25,000 shelf tags deployed across a sales floor measuring 50,000 square feet. In addition, store employees can use a handheld interrogator, also designed by Altierre, to cause the data displayed on the tags’ display to switch from customer information (such as pricing) to data such as bar-coded SKU numbers that might be utilized to order additional inventory. The handheld can be used to ‘flip’ that information on a particular aisle, or throughout the entire store.
The Altierre software also enables stores to facilitate recalls by sending them recall data associated with a particular product's SKU number. The specific labels for the recalled products would then flash a recall alert on the display in bold lettering, immediately warning store associates to replace those items.
The entire system is installed and supported as a complete turnkey solution for every customer.
Altierre's solution, which has been conceptualized and built entirely within the company, combines a host of technology innovations. Since cost is a key factor, the company has developed its own low-cost, long-range RF technology, proprietary low-power RF and display chips, display technology, systems integration, and software technology.
In the initial days, Saxena and Goel had decided to purchase the hardware needed to implement their plan from third parties, but quickly realized that the type of high-reliability, low-power, low-cost chips they required were not available as an off-the-shelf solution. Hence, they decided to build everything from scratch.
So, tapping into his 27 years of experience in the semiconductor industry Saxena, along with Goel, put together a design team to create Altierre's own communications controller and display driver chips. “Both devices are implemented in 0.18 micron CMOS. The chips have been designed in such a way that they require a minimum number of external components, resulting in lower bill-of-materials cost and smaller board area. Using a mature process technology has also helped save costs and offer higher yield. Some years down the lane, we plan to migrate the chips to 0.13 micron technology,” says Goel, CTO and VP-Software Development, Altierre.
A lot of hard work and innovation has gone into developing the proprietary displays. While optimum contrast, readability, weight, and size have been important factors in developing the display, the major criterion has been providing a long battery life without raising the costs. By applying power-saving criteria at all hierarchies of the design, including clock gating, dynamic voltage switching, dynamic frequency scaling, low-power SRAM compiler, low-voltage operation, and low power standard cells, the company has managed to achieve a battery life of five years, setting a new benchmark for LCD dot matrix displays. Since the company is able to deploy its technology chain-wide at a per unit price that is far below what others have ever been able to offer, the rollout of hundreds of thousands of Electronic Price Tags is now affordable to retail-chains for the first time.
“The Altierre system has been designed and built from the ground up, component by component, to allow easy induction of new components, technologies, and applications into the system. In addition to the five-year certification, our proprietary chip technologies — coupled with the Altierre RF protocol and Altierre Access Points — now allow Altierre’s technology to achieve as high as 10-year battery life in non-display RF(ID) applications beyond the retail vertical. Altierre’s long range Wireless Network, highly scalable server and mobile-devices infrastructure, and active tags go far beyond RFID, to power innovative applications such as asset management within the store and in the supply chain,” explains Goel.
Though in the pilot phase, the company’s proprietary electronic tag system has demonstrated a significant improvement in pricing accuracy, thereby eliminating pricing errors typical to paper-based price signage. The system efficiently delivers realtime, chain-wide dynamic pricing, improves price accuracy, sharply reduces costs and paper waste, and enables targeted communications with customers and employees.
End-to-end Retail Solutions
Altierre’s store solution not only represents a revolutionary green technology with the potential to save billions of sheets of paper currently wasted on price tags and marketing messages, but also provides a unified infrastructure for a host of applications that could help retailers combat losses due to wastage and out-of-stock problems.
Food safety and spoilage are significant concerns and nagging problems for all food retailers, especially large grocery chains, where ready-to-eat and refrigerated foods constitute a big percentage of sales. Most of these stores have employees monitoring their cooling and heating units by manually reading thermometers on a scheduled basis (four or five times a day), a process that is subject to human error and delays. If a problem occurs between two inspections ? such as a door being left open, or an equipment breakdown ? it can be hours before the staff come to know about it. In most situations, workers tend to notice a problem with a unit long after a malfunction first occurs, forcing the retailer to discard all food items within that unit since it is impossible to know how long it remained at the incorrect temperature. The cost of such wastage is difficult to measure. Hence, to combat this problem, Altierre has developed digital temperature tags that monitor hot, refrigerated, and freezer cases day and night and act as a warning system to help prevent spoilage due to temperature changes by alerting managers to temperature variations via their computer screens, e-mail, or text messages.
Typically, a 60,000 square feet location would require two Altierre access points to exchange data with the sensor tags in the store via a proprietary air-interface protocol. The tags can be placed directly inside a refrigerator or freezer. In case of a heating unit, a temperature probe is placed within its heated interior and connected to the RF tag outside it. The tag continually measures the temperature, and reports its unique ID number along with the sensory data to the server upstream.
The entire system can be programmed to send alerts based on preset permissible temperature levels. For example, if a cooling or heating unit's internal temperature changes by two degrees, an alert is sent to the store manager and the maintenance crew. If the temperature continues to change, a second alert is sent again to the same individuals, but this time also to a remote location (such as the company's headquarters) or to other employees on-site as well, thus indicating the problem has not yet been attended to.
“Though wireless temperature tracking has been in use in hospitals for some time, there has always been a limit in terms of the number of sensors that could be used over Wi-Fi. Hence, the traditional tracking method cannot be deployed in a typical store, which might usually require hundreds or thousands of sensors. This is where Altierre’s solution stands apart, and with its low-power architecture based on RFID it can read and record the temperature at much shorter intervals, while consuming much less power,” explains Saxena. The same solution can be scaled up for use in other retail verticals, e.g. pharmacies for storing drugs under controlled temperatures.
Similarly, ‘out-of-stock’ conditions cost more than $6 billion in lost sales in just the top 25 categories at the U.S. grocery store chains alone.The main cause for this is inefficient and insufficient shelf monitoring. A landmark 2002 study on inventory management that examined retail practices and consumer habits revealed that retailers lose about four percent of sales due to not having items on the shelves. When confronted with an out-of-stock situation, nearly forty percent of consumers will make that purchase at another store; while very often the product is available in the store but not on the shelf.
Inventory control is often a costly, time-consuming process for retailers. Altierre’s Out-of-Stock Sensors, which are also wireless tags, automate the inventory tracking process, allowing the stores to keep the costs down by maintaining optimum inventory levels ? avoiding stock-outs and eliminating unnecessary orders. Altierre’s sensors send an alert when products are no longer detected, notifying managers that it’s time to re-stock. The system continuously monitors shelves 24/7, which is virtually impossible to do manually. This gives retail chains the ability to monitor, quantify, and manage the lost sales from out-of-stocks across the chain.
"Part of our effort, from day one, has been to create a full platform giving users multiple applications," says Saxena. The platform began with the wireless ESL tags, and now includes the temperature monitoring tags and out-of-stock sensors, thereby providing a ‘total store solution’ portfolio of digital applications for retail chains. There are also plans to add more features in the future. "Creating an umbrella wireless platform will reduce our customers' infrastructure costs and implementation problems, and will foster the development of additional applications that will improve productivity and positively impact the bottomline,” he adds.
‘Innovation with customer satisfaction’ is the underlying motto in Altierre’s corporate culture. And a proof of it is the Retail Technology Center at the company headquarters in San Jose, CA, consisting of a 45,000 square feet paperless demo retail store and adjacent tech lab. Designed as a full scale, fully functional replica of a large retail outlet, Altierre’s Retail Technology Center serves as an incubator and testing facility for the company’s products as well as other companies’ new applications aimed at improving productivity, merchandising, display, and the consumer shopping experience for large retail chains.
“Forward looking retailers are all looking for ways to improve the customer’s shopping experience, increase efficiencies and productivity, and enhance profitability. The demo store is perfect for test-driving new hardware and software under actual retail conditions,” says Saxena.
Altierre’s Retail Technology Center has been designed to be a proving ground for green tech and other retail-oriented innovations, where the company’s customers, partners, and vendors can work with it to develop applications under conditions that are identical in size and scale to a real world store. This is tremendously cost effective way to test solutions in a real environment without affecting the operation of a real store. The company’s out-of-stock sensor was an idea that was completely developed and tested in the technology center, which also houses its 50-member team. The company also plans to set up an R&D center in India to further extend the innovation and development.
For the past two years the company has been in a pilot phase, testing its solutions with three of the largest U.S. retail chains. Based on the success, it plans to partner with several other supermarkets and departmental stores and also take it across a wide spectrum of large retail chain verticals that include apparel, drugs, and more.
The company has raised a total funding of $60 million from ATA Ventures, D.E. Shaw & Group, DuPont Capital Management, Labrador Ventures, and Kinetic Ventures and has a good revenue outlook for succeeding years.
With the new era of RF-based applications developed by Altierre, Saxena aims to enhance productivity, merchandising, and the consumer shopping experience and address other pain points of retailers and their customers; but the challenge is in bringing it to the small and medium sized retailers that are always reluctant to invest in new technologies.
What started off with a digital pricing solution that offered the retail industry the potential to save billions of sheets of paper currently wasted on price tags and marketing messages, has grown to a full suite of end-to-end infrastructure and customer facing solutions for the retail sector. From addressing food safety issues with temperature monitoring to preventing lost revenue from out-of-stocks and food spoilage, the platform offers retailers a new level of execution capability spanning thousands of stores across diverse geographies from a central location.
IDC has estimated the total global spending on retail software, in all sub-segments and across all retailer revenue levels, to grow to $20.1 billion in 2010. With most major players like IBM, SAP, and Oracle trying to take a bite off this pie, Altierre has a promising road ahead with its innovative end-to-end solutions addressing the everyday problems of retailers.
The food retail vertical (supermarkets, grocery, and convenience stores) in the U.S. alone offers a $10 billion market to Altierre. Addressing a major pain point within the $3 trillion U.S. retail industry, Altierre is effectively attacking the ‘next big thing’.