Just a moment, I have to check…
Making a great shopping experience can happen in seconds, but can also fail just as quickly. The customer who is ready to buy a desired article is often left standing in the aisle, being asked by the shop assistant to wait. He/she goes off to search for the article in the stockroom, perhaps call another location or check with the manager. If the article cannot be found, the sales interaction usually comes to an end with something like “Sorry, we don’t have it.”
The possibility that the desired item, say a skirt in size S, could be available in another store is something that the customer has to find out for themself. Of course they could try their luck online, and maybe even order it in the online shop if it’s still in stock.
That’s a shame. All that just happened because the shop assistant did not have the right information.
Lacking item visibility is a massive problem in the fashion industry, and almost all retailers suffer with lost profits because of it:
- If the article is not on the sales floor, it cannot be sold
- If no one knows that the article is in the stockroom, on display in the shop window or in the changing room, it cannot be sold
- If the sales person cannot give the customer information on the availability of an article immediately, a sale is missed and the customer is disappointed
- If the click & reserve inventory is not kept in sync with the store inventory, the reserved article cannot be sold
- If the article surprisingly “reappears” during inventory, for example someone finds it in an unopened box, it’s too late
- If there’s no item visibility in the individual channels, then flexible redistribution will not work
Getting the merchandise to where it is needed most
It’s the dream of every retailer: the merchandise offered is presented to precisely the customer who would like to buy it. With 5,000 articles in 700 stores in a variety of sizes, even the most experienced retailer can no longer make decisions by gut feeling.
- Sizes should not be evenly distributed among all stores
- Buffer stock should not clog up the stockroom
- Excess inventory that later has to be written off should simply not exist
Intelligent Merchandise Distribution
One is always wiser after the fact, for example at the end of the fiscal year or of a collection season, retailers know which items sold well in different stores and which did not. But then it’s too late. The merchandise ends up in the factory outlet store and eventually sold at discounted prices, the amount written off remains high, sales stagnate, etc.
However, retailers should immediately know which articles are sold well in which locations. Also, information on items that need to be reordered as well as the prevailing aging structure of articles at item-level per store is needed. To take the right decisions, it would be wise to have access to reliable real-time data in forms of dependable analysis and clear recommendations.
Actively manage your network of stores using real-time data:
- Real-time control over inventory and more efficient replenishment
- Quicker reordering
- Reduction in reserve stock
- Less merchandise in the channels, combined with greater inventory accuracy
- Smaller lot sizes, more precise control over the flow of merchandise
- Selling out collection merchandise at the planned margin, not via outlet sales
- Fast recommendations for activities to optimise the store
- Real-time dashboards promote the right decisions being made
- Rapid relocation of sale merchandise between the stores
The retail industry has been subject to enormous change in recent years, a trend that looks likely to continue even now retail has found its feet in the digital age. This significant shift in the landscape coupled with the collapse of numerous household brands naturally created something of a panic in the industry and a fear an impending ‘retail apocalypse’. So, has this taken place and are brick and mortar stores heading toward extinction in the age of online shopping? The short answer: no. Retail sales, in general, are increasing, and whilst online sales are certainly growing at a faster rate than in stores, in the UK market Brick and Mortar stores make up roughly 84% of all sales, a trend that applies globally.
In fact, with the help of new technology, in particular, AI brick and mortar stores can take lessons from e-commerce and bring new innovations into the physical store. A study by Capgemini found that around 68% of pure-play online retailers have implemented artificial intelligence in some fashion, compared to only 10% of brick and mortar stores. Utilising new technology can often be the key to growth, so perhaps it’s no surprise that online retailing is growing at such a faster rate. This is beginning to change however, as physical stores are learning to adapt.
AI-assisted cross-selling in the store
The ability to cross-sell using AI is a huge strength of online retail. Online stores use machine learning to make intelligent and tailored product recommendations to customers while they are shopping This naturally increases sales, but does so relative to the quality of the product recommendations, hence the use of AI to perfect the process and make more successful recommendations. Brick and mortar stores have traditionally never been able to make use of cross-selling like this, having to rely on in-person customer service to drive sales. But as technology has improved, they can now make use of both.
The main reason for this is the emergence of chatbots as a mobile platform for in-store product recommendations. Whilst chatbots themselves originate from online, certain retailers now implement them in their stores to assist customers. Their primary function is often to assist customers if store associates are all occupied. Chatbots can help customers locate items, find more information on products and check stock availability, all through their smartphones. Intelligent AI-powered chatbots will then be able to recommend products similar to the item’s customers were searching for, not only increasing sales but improving the customer experience.
The fashion industry has taken this concept even further with the use of smart mirrors. Smart mirrors use advanced tagging technology (RFID) to sense the items that a customer brings into a fitting room. It will then display the products on the mirror and, like a chatbot, assist customers by providing information on other available sizes and colours and recommending products that are often bought with the ones being tried on. Most smart mirrors also have a feature that calls store staff to assist the customer, either providing face-to-face support or bringing the recommended items the customer has chosen to the fitting room. Smart fitting rooms are the epitome of the merger of the digital and physical in brick and mortar stores.
AI-powered in-store business intelligence
Artificial intelligence can also go a long way to revolutionising traditional brick and mortar store processes. One of the best examples of this is the use of AI assisted planograms. A planogram is essentially a plan of where items should be displayed on a shop floor to maximise customer purchases. In certain sectors such as fashion, planograms must be even more detailed and include the optimum display quantities of each different size and colour.
Artificial intelligence can revolutionise the planogram, using machine learning to constantly optimise not only the positioning of merchandise but the most efficient quantities of different articles to display on the shop floor. The advantages of this process being performed through AI are huge. Not only does it largely automate the process, saving time for staff, but it will constantly adapt and improve and can personalise and optimise the planogram on an individual store level.
The future of retail, online and in-store
To conclude, the impact of digital technology on the retail industry, in particular brick and mortar stores, has been significant but not actively catastrophic as many feared it would be. The emergence of ecommerce has gone from a threat to a strength for some physical stores. Not only has omnichannel retailing (something we did not have time to explore, but we go into detail on here) allied the different methods of shopping, but brick and mortar stores have now begun to incorporate certain technologies from online.
AI technology, originally something only online retailers could really utilise, is now finding its way into brick and mortar stores and improving both store processes and customer experience. We are also just scratching the surface of AI’s uses in retail and as more retailers choose to adopt the technology more benefits will be discovered. So, in reality brick and mortar stores are far from going extinct; they are in fact evolving and will continue to do so.
Over the course of recent years, Radio Frequency Identification (RFID) technology has been applied in many different business domains to handle inventory challenges, for example, the problem of monitoring stock. Retailers can use the knowledge of item locations to understand in which area of the store they can locate articles, such as the backroom or sales floor. By possessing this knowledge, retailers can rely on having optimal product availability for their customers through an efficient replenishment process. When using Detego’s InStore software, RFID technology provides the benefit of up to 99% stock accuracy and on-floor availability. However, there have always been limitations with the ability to understand an item’s exact location, due to the long-distance read signal an RFID tag emits. The most common “best-practice” methods that can ensure such high figures are currently known to involve a physical method of shielding between individual stock locations, whether this is using foil or metallic paint. However, this common and costly method of shielding has left retailers and our data scientists wondering what else could be done to lower the hurdles on the initial steps of the RFID journey.
Beating the laws of Physics
Detego’s data scientists have debated and solved this common problem by utilising machine learning and tag localization to establish the ‘Smart Shield’ feature to determine the relative locations of individual items. When RFID was developed, the concept of identifying individual tag locations was never considered a possibility. However, the innovation and progress made by our team has already defied the laws of physics, with our ‘Smart Shield’ results showing performance to be on par with physical shielding requirements. By removing this barrier, a much faster and affordable implementation into brick-and-mortar stores has been made possible.
How it works
Every individual RFID tag creates a specific time & signal stamp when it is read by an RFID reader – up to several times per second. Using the data that this process collects, we apply smart algorithms to our software so that it can continuously learn and improve the accuracy each time a stocktake is performed without physical shielding. Traditionally, ‘fixed reader infrastructure’ was the only technique of identifying individual item locations without physical shielding. To combat the rigidity of this method, we modified this approach to handheld readers to generate a highly cost-effective and scalable solution.
What it means
No more physical shielding – Firstly, we can solve one of the major downfalls of RFID by eliminating the necessity for physical shielding between a retailer’s separate stock locations. In saying that, ‘Smart Shield’ is not the silver bullet that 100% removes the need for physical shielding. There will be challenging stores where Smart Shield runs into limitations. However, there are also stores where it’s difficult to apply physical shielding – so here the ‘Smart Shield’ can help.
Continuous improvement with Artificial Intelligence – Applying our machine learning algorithms to the data will result in automatic learning & improvements with on-going stocktakes; further improving accuracy & efficiency of store processes.
More than just ‘shielding’ – This new capability for RFID tag localization has huge benefits far beyond the removal of physical shielding in retail stores. Through the machine learning infrastructure in place that enables us to identify locations of individual RFID tags, we can improve operations in the following ways:
- Replenishment advice and picking lists for e-com processes can be optimised through location-based sorting to make the process more efficient for the store associate when in the backroom.
- Staff will now additionally be supported in finding items to further enhance customer service.
Utilising the information about relative locations of items can drastically increase staff efficiency and business process efficiency across various functions relating to logistics, warehousing and retail. Not only will this save their budget, but they will also experience faster time to market and their franchise/wholesaler partners will be enabled in a more streamlined process that eases the implementation of the new technology.
The use cases of RFID technology have progressed even further than initially anticipated. From the first use case to our Smart Shield feature using artificial intelligence. The latter is now readily available as part of our platform and retailers can easily utilise the new system, seeing an increase in process efficiency across both the backroom and the shop floor. But perhaps the biggest development enabled by the ‘Smart Shield’ is the greater ease with which retailers can now implement RFID systems in stores. As this relatively-young technology continues to improve, developments like the ‘Smart shield’ are further steps towards RFID becoming part of the status quo in the fashion retail landscape, as advancements such as this discover new use cases for the technology whilst simultaneously reducing the cost and time required for implementation.
“Utilizing the information about relative locations of items can drastically increase staff efficiency and business process efficiency across various functions relating to logistics, warehousing and retail. Together with features that will significantly lower the costs for a roll-out, retailers will experience an even faster time to market and will have the ability to enable franchise/wholesaler partners with full RFID capabilities at low costs.”
Dr. Michael Goller – CTO Detego
Raconteur’s latest business report explores the modern landscape of the fashion industry, in particular, its current main issues and concerns. Chief amongst these is the issue of sustainability. It is approached and analysed from multiple angles in the report, including a piece from our partners Avery Denison on the use of RFID-enabled supply chain visibility to create a sustainable circular economy. Elsewhere the report also goes into the sustainability of the current returns culture and how retailers are struggling to manage.
Our highlight is a thought-provoking article on how the fashion supply chain requires a tech makeover. It describes how the fashion supply chain has waned under the pressure of its growing complexity, and digital technology has the capacity to alleviate these issues, yet due to a ‘culture of resistance’, retailers are reluctant to embrace technology as a way to solve the issue. Although we see a number of these issues identified in the article, there doesn’t appear to be too much direction on how to solve them. The article does, however, highlight how the current growth in the market is dominated by companies developing on the back of newer technologies such as AI and the cloud. Luckily at Detego, we combine these technologies with RFID to supply retailers with the real-time data required to successfully optimise modern supply chains.
Find out about all of this and more by downloading the report below:
Alternatively, contact our team today for a more in-depth discussion.
The Detego Platform enables fashion retailers to reinvent their physical stores and supply chains with intelligent stock management, item-level transparency and innovative methods of consumer engagement in stores.
Inventory management is a problem as old as retail itself, so when brick and mortar stores look to digitise and modernise themselves for the modern age, shouldn’t their inventory systems do the same? Radio Frequency Identification (RFID) has gradually become embedded in the fashion retail industry due to this need to innovate stock management. What makes the technology unique is that every single RFID tag emits a small radio frequency. An RFID reader picks up hundreds of these signals in a matter of seconds, from several feet away, without requiring a direct line of site. The tag then shares whatever data it is encoded with, typically item info, dates, times and shipping information but theoretically, the only limit to what can be stored and utilised is the imaginations of the designers and engineers.
At its most basic level, RFID allows for incredibly fast and efficient stock management with little room for human error, meaning stock accuracy soars (reaching levels of 99% with RFID) and labour time falls dramatically. The technology also allows for more advanced usage such as faster Point of Sale or the enablement of omnichannel services – something the fashion industry has made good use of in recent years.
So, if the technology is so advantageous, why is it not dominating all retail markets? Initially, RFID labels were not only fairly expensive (averaging out at just under £1 per label) but they were also often too large to tag smaller products. This meant RFID did not make financial or logistical sense for many retailers, particularly in markets with a low individual item value. Another big issue was the interference that metal and liquid products have on RFID signals, meaning certain products could not be tagged with any real confidence.
These roadblocks proved fatal for RFID’s success in many industries, including beauty and cosmetics. But in the Fashion sector, with a high individual article price and the need for high stock accuracy and article availability, it was a huge success. However, these barriers to success in other markets are beginning to disappear, and the business potential of RFID is continuing to grow. The Beauty industry could now look to utilise the tags, achieving similar or perhaps even greater results as those seen in the apparel sector.
The beauty industry has been keen to implement RFID for some time. Previous efforts to combat its limitations include the use of ‘smart packaging’ that took steps to make tagging cosmetic products possible through packages that are not only big enough to hold the tags in the first place but can also combat the interference caused by metallic or liquid products. This made RFID a possibility in the beauty industry if beauty suppliers were prepared to take the extra steps to make it so. But due to the solution being built into a product’s packaging, it meant it was not appropriate for every product and it was ultimately out of the hands of the retailers themselves, making full shop floor visibility a rarity.
If we were waiting for something of a ‘eureka moment’ for RFID, then the wait may well be over. Just this month, tag producer and RFID-heavyweight Avery Dennison announced the launch of their first on-metal tags. This is a huge breakthrough for the beauty industry and could be the silver bullet for the biggest barrier to entry for RFID. As the solution is very recent, we haven’t seen it applied on a large scale yet. But because the new tags work with liquid products as well as metal ones, beauty products are suddenly RFID-viable.
But this breakthrough is meaningless if labels are still too big to attach to products, or if they are too expensive to really warrant doing so. Thankfully, it’s good news on both fronts. As with any new technology, the price of RFID tags has been gradually dropping since their invention. Whilst previously an individual tag could be priced around £1, these days they are closer to 5p. The size of labels has similarly shrunk, meaning tags can be physically applied to feasibly any product or its outer packaging. This is great news for the beauty industry, as many cosmetic products are smaller and external pull-off labels, like those used in apparel, are not viable. This means the scope retailers have for tagging individual products is far more generous than it was in the past.
Fresh opportunities for beauty retailers
So, we’ve seen evidence that the technology has finally reached a point where it can be used in the beauty industry, but why should we care? What do cosmetic retailers stand to gain from the technology? And, perhaps more importantly, what difference does it make to the customer?
Efficient & accurate stock counts
We’ll start with the most basic principle: RFID revolutionises stock counts. Whilst this may seem like a lesser detail, the accuracy and speed with which inventories are collected does form the backbone of the business case for RFID. With products arriving at stores and distribution centres already tagged, inventory management becomes effortless. Stock counts become a matter of seconds as opposed to minutes (using barcodes) or even hours (using pencil & clipboard). This increased efficiency will have two big impacts on beauty retailers. The first is the reduction in labour intensity of managing stock. Not only do RFID stock counts not eat up the time of the retail staff but having a complete and transparent view of stock also makes item replenishment from the backroom to the sales floor much simpler to manage. Intelligent inventory systems can display alerts when items need replenishment, so staff can spend less time monitoring shop floor levels themselves.
The other main impact of RFID stock counts is the increase in stock accuracy for retailers. The industry standard stock accuracy without RFID is somewhere around 70% (although retailers often do not realise it is as low as this) compared to 99% with RFID. This stock accuracy coupled with the ease of shop floor replenishment increases article availability and therefore sales by avoiding out of stock situations. Whereas traditionally beauty retailers were often stuck with the choice between neglecting inventory accuracy or losing out on money from higher labour costs or loss of sales, with RFID retailers can have the best of both worlds. This accuracy and efficiency stretch across the entire supply chain, increasing shipping accuracy and aiding logistics at warehouses and distribution centres and, crucially, providing a complete view of stock. Increased process efficiency is perhaps the biggest way RFID adds value to retail. The knock-on effect of this is retail staff having more time to spend on customer service, which improves the shopping experience and increases sales. Beauty retailers could push these results even further by implementing faster point of sale solutions using RFID.
So with accurate stock counts taking place effortlessly both in the store and in distribution centres, and with tags being as cheap as they are, beauty retailers can realistically look at achieving full inventory visibility across the entire supply chain. But what does this achieve? Item level transparency unlocks the real potential of RFID, as it allows innovative solutions and use cases to be deployed which can drastically reduce the time it takes to see a return on investment.
Reduction in shrinkage
For example, one of the biggest challenges for many beauty retailers is item shrinkage. The average shrink percentage in the retail industry is generally about 2% of sales, amounting to $49 billion in losses globally. Having total item visibility would give beauty retailers the tools to combat this critical issue. The complete transparency of supply chains makes individual items entirely traceable, so retailers could pinpoint exactly where shrinkage is taking place and combat it accordingly.
Limited shelf-life is another cause of shrinkage in the industry; one that RFID is well suited to manage as an items sell-by date can be stored on the tag itself. Once scanned, this information then becomes an extension of the 100% article visibility that retailers have access to. This complete view of stock would not only tell staff when items need replenishing from the back room, but it would also tell them which items are passed or approaching their expiry date. Automating the monitoring of this process alongside replenishment would further aid efficiency and assure retailers that products are being marked down and therefore sold instead of expiring, combatting shrinkage and actively increasing sales.
Unlocking effective omnichannel retailing
Having complete item visibility would also mean beauty retailers could finally capitalise on the emergence of omnichannel. The strategy is becoming such a dominant force across retail that it is becoming less and less of a choice to implement and more of a necessity. The beauty industry has yet to make the most of omnichannel as, whilst many retailers operate across multiple channels, they are not fully integrated or connected as well as they could be. A report by Newstore suggests that whilst 80% of shoppers research online before even stepping into a store, only 36% of brands have enabled in-store inventory visibility for customers either online or a mobile app. This experience of seamless integration of shopping experience across all channels is something consumers are beginning to expect, as neighbour industries like fashion already offer such an experience. Perhaps the main reason for beauty being slower to adopt effective omnichannel is the need for total item visibility to really do so. Weaving multiple channels of shopping together requires a total view of stock, which then transforms brick and mortar stores into digital hubs. Now that the beauty industry can finally set its sights on full RFID implementation, it can look forward to benefiting from the omnichannel capabilities that come with it.
The omnichannel experience is a good example of how the beauty industry can use RFID to actively increase consumer engagement, but it is certainly not the only one. Existing technology that is used in other markets like chatbots could easily make an impact in beauty stores, recommending products for customers and informing them on stock. Once RFID begins to become established, we will also no doubt see the emergence of customer engagement solutions specific to the industry and its demands. The technology and its uses are ultimately very flexible so can be manipulated to provide market-specific solutions. But to reach this point the beauty industry will first need to embrace the technology. Then we can really see its full potential unlocked.
There’s a lot of talk about artificial intelligence at the moment, but not that many practical use cases, especially in bricks-and-mortar retailing. We should know. We were one of the early adopters of machine learning in the development of our retail software and have launched a popular chatbot tool to help consumers get quick answers to simple stock enquiries without having to seek out a sales assistant or call customer service.
Aside from a general foreboding that there’s more talk about AI than action, and that machines might eventually outperform humans, we get the distinct impression that most retailers are still trying to understand the basics about what machine learning can actually do for their business and how AI will help with consumer engagement. So, here’s our attempt to unravel the mysteries behind the topic of artificial intelligence in retail and see whether it’s a passing fad, or something retailers should be paying more attention to.
Knowing your product
There is one field where artificial intelligence has already made a significant difference, and that’s getting to grips with vast amounts of data and making much more informed product recommendations. It’s a technique that was spearheaded online by the likes of Amazon – making suggestions about what other products you might like – but still has a long way to go on the high street. There just isn’t a very joined-up approach between the worlds of online and bricks-and-mortar retailing. And the availability of products is often neglected; not many retailers take into consideration what products would be best (or most profitable) to shift.
That’s where AI comes in.
Artificial intelligence, by amalgamating lots of data and making decisions based on a variety of factors – product availability, purchase history, current trends, profitability, and so on – gets better and better at making reasoned choices. All this might sound obvious, but it’s something very few retailers actually do in their stores. Most retailers still have rather disjointed processes across various channels and different departments suffer from a lack of data input on a consistent level. Some processes are semi-automated, but many – such as merchandise planning and product assortments – remain largely manual. For example, buyers still base most of their decisions on out-of-date sales figures and gut instinct, rather than using much more efficient machine learning tools.
Artificial intelligence is ideally suited to forecasting and stock allocation. These processes historically tend to be quite manual and cumbersome and generally are not managed that efficiently – largely because it’s just too much work to find the ideal mix. It’s something that’s typically done by relatively small departments, even though product selection and stock availability are clearly so fundamental to a retailer’s bottom line. Yet self-learning mechanisms can be put in place to maximise availability and promote what’s most likely to sell.
In most stores today, store staff are prone to stack shelves based on whatever available sizes there are and what will fit, rather than having technology that knows what will be best for that particular store’s profit. By using AI, we’ve found that different stores, even in the same town, might require completely different sizes of garments to maximise their sales.
Coupled with RFID tags on every item to help monitor stock with near hundred percent accuracy, artificial intelligence can be used to improve on delivery performance and the distribution of inventory between stores, the warehouse and even to the consumer. For example, we found one retailer flummoxed by hundreds of cartons of products having been shipped but never received and various departments spending a long time trying to resolve – something a machine could unravel in seconds. It’s not uncommon for retailers to not know exactly where stock is at any particular time, but the joy of artificial intelligence is ensuring that human mistakes are minimised and promises – such as a marketing campaign offering the latest product release at a special price in chosen stores – are always fulfilled.
While there’s still a lot of hype about chatbots at the moment – robots to help with customer service – and undue pressure to adopt some of the latest (and arguably more advanced) techniques inherited from the online retail world, this is just the start of what can be done regarding artificial intelligence in retail.
Chatbots, available on people’s smartphones for asking advice when they enter a store, can give an instant link to customer services and access to a much wider catalogue of products and services. The appeal of chatbots has not only come about because young people, in particular, are now used to dealing with them online; but also because a lot of people don’t really want to have to track down a sales assistant in a busy store and then get the ‘don’t know’ or ‘don’t care’ response that can ruin a retailer’s reputation. Simple, product-related tasks and stock checks are ideally suited to machines. We’ve even found sales conversion rates to be up to five percent higher in stores where we’ve introduced chatbots with AI-powered product recommendation tools.
Clearly, chatbots won’t ever replace humans working in stores. But they can certainly complement them: often proving more reliable; never prone to sickness or breaks; not trying to drag you into a conversation and oversell, and always available 24/7.
Increased stock transparency and profitability, as well as better customer engagement, are what will help keep retailers flourishing – allowing them to compete with the increasing threat of online retail goliaths who are setting the trends for the future of shopping. Artificial intelligence isn’t just another fad. It might seem like fiction, but it’s clearly here to stay, outperforming expectations all the time.
RFID ready to digitise the cosmetics industry
RFID (Radio Frequency Identification) has already proven itself in fashion retail, with many retailers taking advantage of the increased product availability (>98%), inventory accuracy (>99%) and omnichannel capabilities that the technology provides.
The cosmetics industry would stand to profit just as much from this level of insight and visibility into their inventory levels, however utilising the technology has traditionally been far more difficult than in the apparel market. This is because cosmetic products are generally too small to be tagged accordingly and they frequently contain liquids or metal materials in their packaging that negatively affect RFID technology.
However, with recent advancements in the technology, this is beginning to change. RFID tags becoming smaller now makes labelling practically any product possible and, with the price of labels continuing to drop, financially viable. Perhaps most important though is the invention of new ‘on-metal’ RFID labels that can be used to tag both metallic and liquid products without issue, hence removing the biggest barrier to RFID in the cosmetics industry.
New developments can benefit cosmetic brands and optimise customer experience
New packaging materials and smaller, more sensitive RFID tags finally help cosmetic brands to provide ever-greater inventory accuracy both in the store and in the webshop, to fulfil the increasing need for fast global shipping and replenishment.
The particular issue of shelf-life is a challenge of the cosmetics industry that is not shared by the apparel market. RFID, however, seems ideally suited to the task of managing expiry dates, as the tags can hold the information on an item-level, meaning the store staff receives real-time visibility on the shelf-life of every item in the store and would receive alerts warning them when items are close to or past their expiry date. This also enables products to be marked-down to ensure they are sold before expiration.
Benefits for retailers:
- Inventory visibility along the entire supply chain
- No out-of-stock situations due to increased product availability
- Superior quality of customer service
- Reduced inventory shrinkage in stores
- Operational efficiencies for in-store processes
- Increased brand loyalty
- Analytics in real-time and store KPIs
- Easily manage shelf-life of products
Benefits for customers:
- High product availability across all channels
- Unique shopping experience
- Product recommendations with additional information
- Supports in decision-making process
- Click and collect
- Instore ordering
Matching the style
The cosmetics industry is aware that the inclusion of advanced technologies in the corporate and retail environment can enhance their presence in the future. This includes not using just any technology, but one that fits the company philosophy and compliments their appearance and store as well as product design. Technology should guarantee the future of the company, retain employees and fascinate customers. And whilst there are of course a multitude of benefits from RFID already established in the Fashion industry, as more cosmetic companies begin to utilize the technology more use cases specific to the industry will be discovered, and its full potential unlocked.
Planograms: Planning and implementation
Planograms aim to optimise article availability and thus specifically stimulate sales. The term planogram refers to two aspects: on one hand the actual merchandising, i.e. which articles are presented on the sales floor and how, and on the other hand, the detailed quantities for individual colors and sizes in order to meet customers’ demands in the best possible way.
Ideally, merchandising and planogram go hand in hand: customers are inspired by the form of presentation and then, their desired product is available in the matching size. The reality, however, most often paints a different picture.
Planogram – Merchandising
Planogram – Quantities and Priorities
Visually appealing and available in relevant sizes
Breaking this down, there are two questions that retailers face: 1. How to define a planogram for my stores with a suitable size distribution? and 2. How can we implement an efficient refill process such that the plan is properly executed?
With AI (Artificial Intelligence) and RFID-based processes, Detego InStore helps to answer both questions. Since the manual maintenance of the planogram per store can be enormously time-consuming, we rely on machine learning procedures to define a precisely optimised size distribution for all articles across the store. Not only does this save an enormous amount of planning time, but also addresses the ongoing dynamics in individual stores. The self-learning system adapts to possibly changing conditions and continuously optimises the plan.
During the operational process in the store, Detego InStore also supports the store personnel at several occasions: The software offers two parameters that provide information about article availability at any time and therefore represent important KPIs:
- On-floor availability: The percentage of all available articles that are currently displayed on the sales floor
- Planogram compliance: Provides information on how well the planogram with its individual size distribution is implemented on the sales floor
If one of the two parameters fall below certain threshold values, store staff needs to action: In addition to classic ERP systems, Detego InStore offers a finer level of granularity in the stores, by telling store staff that certain articles are available in the backroom but not on the salesfloor and therefore need to be refilled to comply with the predefined planogram. Retailers benefit from a complete process for the planning and implementation. Another advantage: Refill advices in the app are sorted such that the search in the back room is made as efficient as possible by minimising walking routes.
Shelf space is used for top sellers and is not wasted on sizes that are rarely or never bought. With its self-learning components, Detego InStore makes a suitable proposal for all sizes and facilitates implementation in daily processes – including relevant KPIs for measuring performance. And if a certain size is not available in one store, Detego InStore offers an exact inventory view of surrounding stores – ready for click & collect.
Benefits for retailers:
- Individually optimised planogram per store
- Efficient use of shelf space according to bestsellers per store
- Guided processes: from planning to refilling
- KPIs to provide insights on operational excellence per store – in real-time
Benefits for consumers:
- High on-floor availability for the locally popular sizes
- Positive customer journey
- Overall increased article availability through exact inventory data on the entire store network – including reservation options
“By optimising the sizing profile of individual items for each store and greatly simplifying the in-store refilling process, we provide retailers with tools that make it easier for them to plan and implement optimum product presentation and thereby help them to boost their sales.”
Dr. Michael Goller – CTO Detego
All store assistants are busy at the moment and another customer enters the store. She has only one question: “Is the skirt in the shop window also available in XS?”– It’s not going to take long, however, nobody is available to assist. She briefly looks around on the sales floor…finds nothing and therefore leaves the store.
Increase service quality in the store with Artificial Intelligence
With digital sales assistants, fashion retailers no longer have to keep consumers waiting but offer them a convenient service. The chatbot serves consumers via smartphone by answering initial questions such as: Is the article still available in my size? Where can I find it? How expensive is it? What accessories go with it? If an article is out of stock, Detega makes suggestions, e.g. to have the desired article shipped from another store to the customer´s preferred store or even directly to her home.
Recommendations for more consumer engagement
If a store assistant recommends additional articles to a customer, it could easily backfire as unwanted assistance can be considered intrusive and the customer might avoid visiting the store in future. However, if a chatbot recommends an article that the customer clearly perceives as a possible additional purchase, he/she will have no problem considering the recommendation or rejecting it by simply swiping it away and look at other articles that he/she likes better. Chatbots enable a non-binding yet personalised dialogue – just as customers are familiar with online shopping.
Detega Video – Initial dialouge before sales personnel takes over
The use of digital store assistants. Benefits for retailers.
- starts a dialogue with the consumer via smartphone as desired
- notifies store personnel to bring certain articles to consumers
- pushes purchases through „live“ discounts
- brings online shopping experience into the store
- activates cross-selling potential by letting customers browse through the entire product range
- recommends articles that are actually available in the store
- supports as well as unburdens store personnel
- deepens the brand experience
- compiles data on customer clusters and their preferred article combinations
- continues to interact with customers after they leave the store to inform them about special offers, etc.
- offers after-sales services to customers such as reservations in the store
The use of digital store assistants. Benefits for customers.
- helps with the decision-making process using information
- provides useful product recommendations such as: popular items, bestsellers, reduced articles and product variants
- accurate product recommendations due to Artificial Intelligence
- offers self-service via customers‘ smartphone
- offers online shopping experience in-store
- answers immediately – customers are not kept waiting
- gives information in real-time
- notifies the store personnel to bring desired articles directly to the customer
- allows customers to browse through the full product range
- guarantees an unforgettable shopping experience
- passes on customers to sales personnel when required
„At the Point-of-Sale, the chatbot serves digitally-oriented target groups via their smartphones and passes them on to the sales personnel for individual service whenever the sales process requires it.“
Dr. Michael Goller – CTO Detego
Personalised offers characterise the trends in 2018
Configuring your own sports shoes, designing outfits according to your ideas, receiving individual offers based on your personal shopping profile – in 2018, the signs in fashion retail point to personalisation. In e-commerce, customers leave their preferences and enjoy the benefits of personalised offers and experiences. With new technologies, brick-and-mortar retailers are now also in a position to serve customers according to their preferences: Chatbots, Internet-of-Things (IoT), open IT platforms and augmented reality will be increasingly used in the stores in 2018 and beyond.
Trend #1 Personalisation
Consumers demand that brands fulfil their needs and even more: They got used to brands being able to predict and provide “personal” offers and services. According to the Boston Consulting Group, brands that create personalised experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6 to 10%—two to three times faster than those that don’t.1 This is a very good reason for retailers to follow the personalisation trend. The increasing digital engagement of consumers facilitates the compilation of information on customers, their behaviour, tastes and preferences. The next important step for retailers will be to gain a “real-time view” of the consumer. The desire for personalisation encompasses both the instore and online experience and loses its potential if relevant customer data isn’t available in real-time throughout the retail organisation – including all channel partners. The fulfilment of this desire will drive the use of in-store technologies, IoT, as well as AI-based systems in retail. These technologies will enable retailers to achieve optimum level of personalisation. Consumers welcome personalisation efforts if their benefits are transparent and relevant and will reward retailers, both in terms of their sales behaviour but also by spreading the word.
Trend #2 Chatbots
Artificial Intelligence (AI) is continuing as a strong trend that is now materializing in very specific applications for retailers and customers. Interacting with customers and offering personalized services will bring AI powered chatbots onto the sales floor and add value through various features. Chatbots will make consumer engagement in brick-and-mortar stores possible at a much wider scale than what was achieved before. Answering as much as possible for shoppers through AI, chatbots support the sales personnel and bridge waiting times for customers until there´s a sales person available for individual service. Millennials might even prefer the interaction with the chatbot to being drawn into a more binding conversation with store associates. The customer will be able to interact with the digital sales assistant at any time via their smartphone and control the dialogue with the chatbot. These chatbots will bring a form of intelligence into the store that is well-known in online retailing, with one of them being filtered recommendations: e.g. popular articles, bestsellers, articles on sale or even product variants. Artificial intelligence, however, will not be limited to the chatbot itself. What will make it even more exciting is when chatbots communicate with other systems in the background, e.g. to check the actual article availability in real-time and compile data about customer cluster and their preferred article combinations. As a result, recommendations will become personal and meaningful.
Trend #3 Internet-of-Things (IoT)
IoT will continue to be one of the biggest topics for stores in 2018 and will increasingly provide tangible results for retailers and customers. Devices that communicate with each other in the store bring a number of advantages and insights. Gained data on popular items, product combinations, purchasing preferences, ‘tried-on- but- not- bought’ articles as well as article movements in the store can be intelligently used and transformed into data-driven recommendations for customers. IoT will also play a key role in driving consumer engagement in the store. The consumers’ new self-perception is taken into account through IoT technologies: enabling customers to become the main actor, brand ambassador, partner as well as creator of the future when shopping. Consumers’ request for more personalised offers will also be supported by the use of IoT in retail.
Trend #4 Augmented Reality
To engage customers emotionally and to enrich their experience of the brand, retailers will increasingly take advantage of augmented reality. These technologies will also support retailers in their approach to bridge the gap between e-commerce and brick-and mortar retail, offering consumers the seamless, non-siloed experience across all channels they are looking for. Retailers want to lure their online customers into their brick-and-mortar stores. In order to achieve this, retailers will increasingly use augmented reality and location-based services. Once a customer has arrived in the shopping mile, retailers can use 3D maps to “push” their locations onto the user’s smartphone. The consumers purchasing preferences are taken into careful consideration. In the next step, this service will also include article availabilities of preferred articles in the nearest stores. This promises great benefits for the customers, for example, finding stores (in pedestrian areas) that actually have the item they are looking for in the right size and colour. For this purpose, customers will be presented with real-time inventory data to create a positive online-offline shopping experience. As augmented reality rapidly improves, analysts predict that the retail industry may be one the biggest beneficiaries.2
Trend #5 Open Platforms
Retail IT landscapes of the future need to be as flexible as consumers are. To compete, retail companies must transition their IT systems to open platforms that enable rapid deployment of new solutions and make use of on-demand cloud services to create outstanding customer experiences. Open platforms will allow retailers to combine own software with third party applications as well as to switch services on or off as needed, leveraging the convenience of the cloud. They´ll also make business innovation much easier, faster and less expensive. While open platforms still have room to grow before being the standard in retail IT landscapes, the increasing demand for greater flexibility will drive the industry to embrace “openness” as a way to meet the needs of customers in the future.