Category: Article

In the final instalment of our series exploring predicted retail trends for the coming year, we analyse why online order fulfilment will be a key metric for 2021. With COVID-19 causing an unprecedented acceleration in the shift towards eCommerce, retailers must quickly adapt and strengthen their fulfilment capabilities to ensure they can keep up with the higher demand. Read on to learn what the priorities are for retailers to achieve this, and what technologies are delivering the answers.

Online shopping or eCommerce has been steadily growing since its invention. This means that the number of online orders that a retailer needs to fulfil gradually goes up year-on-year. The gradual increases required to a retailer’s order capacity are normally easy enough to anticipate and plan for. Like so many other things, however, 2020 kicked this idea to the curb.

This year has seen a massive shift towards eCommerce as a result of COVID-19. Even after things go back to normal, experts predict that a large portion of this growth will remain. In fact, according to data from IBM’s U.S. Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by roughly five years. Online or multichannel retailers are therefore faced with dealing with a seismic shift in the industry. Many brands will have to deal with the fact that the sudden shift may put the demand for online orders beyond their current capacity for fulfilment. Retailers then need to strengthen and invest in their fulfilment capabilities to avoid being caught out. But where to look first?

So, when we say fulfilment will be a key priority for retailers, what exactly does that mean? What are the limiting factors for online fulfilment, or, in other words, what areas will struggle without additional investment or technology?

Online capacity

The first step in any online purchase – a customer going online in the first place. For a webshop, or indeed any website, capacity simply means the number of visitors it can support. How much capacity is needed will vary, for example – this website does not need to have the same capacity as Amazon (at least for now). With regular demand, capacity is easy enough to get right. It’s sudden shifts or surges that can cause problems. We have all likely experienced this ourselves at one time, with a recent example being the PlayStation 5 UK launch crashing several major retailer’s sites! With eCommerce numbers predicted to stay high – web store capacity may need some attention.

Delivery speed

Delivery is one of the biggest challenges (and costs) of online retailing. Shipping products across an entire country at scale is already a challenge. What makes it worse is customers are starting to expect more and more from online retailers. Amazon has set the bar high for this, with next-day and free delivery now more and more sought after by customers. As eCommerce channels grow in popularity, retailers may find their delivery models only scale to a point.

DC efficiency

Supply chain bottlenecks can be a killer for fast online fulfilment. The most likely place for this to occur is where the majority* of online orders are shipped from – the distribution centre. If the way orders are being processed is time-consuming or inaccurate, the whole process can slow down. This supply chain efficiency is particularly important for new products (go-to-market) or restocking OOS (out-of-stock) products. If the process for a DC receiving and processing goods is not efficient enough, drastically increasing the number of products required for the DC to process could cause problems.

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Operational costs

The final big consideration for retailers attempting to scale up their fulfilment capabilities: the cost! All of the previous points are also examples of running costs associated with fulfilling online orders. Many retailers, particularly multichannel, often struggle ensuring their eCommerce arm stays profitable as the margins are much finer. If the balance between online and offline shifts too much, those fine margins could cause problems. Next year will see many of these retailers invest in their fulfilment processes to reduce long term costs and keep their increasingly crucial online channels sustainable.

Automation

As demand for online orders goes up, distribution centres have to evolve. More modern DC’s with high order capacities are highly automated. This includes conveyor systems, automated processing and exception handling (with RFID). High-tech DC’s such as these are more efficient in terms of throughput of items and are far less susceptible to bottlenecks. An example of such a DC is Detego customer Marc Cain, who’s highly automated DC can process 35,000 articles a single day, with 100% accuracy.

Big data and Artificial Intelligence

For larger retailers, online channels produce a lot of data. For retailers who have the technologies to keep track of them, their supply chains also produce huge amounts of data related to the movement and flow of merchandise. As we often say though, data is useless if it’s not being used to produce actionable or useful insights. With AI, retailers can utilise all of this data from their web stores, supply chains and stores to great effect. Operational KPIs like DC throughput and dwell times (how long an item sits at a certain stage of the supply chain) are incredibly valuable for optimising fulfilment. This data can also be used for more advanced algorithms like demand prediction, so retailers can adjust their inventory levels for different regions before there is a shortage of products.

RFID

Tagging products with Radio frequency identification makes a huge difference to supply chains and online fulfilment capacity. Not only does RFID produce real-time item visibility from the factory to the customer, meaning more efficient handovers, but for DC’s it is a game-changer. RFID tunnels within an automated conveyor system can automatically count and check the content of cartons without needing to open the box, in a matter of seconds. This means all products coming in and out of the DC are processed in seconds and with complete accuracy. After the initial investment, the solution also drastically lowers operational costs, not to mention the reduction in chargebacks of incorrect shipping penalties.

In the penultimate instalment of our series running through predicted key trends for the upcoming year, we explore the direct to consumer (DTC) model. Over the last few years, DTC channels have gone from strength-to-strength because of the better margins and closer ties to customers from selling directly to consumers. In the aftermath of 2020 DTC, a mostly online channel is well-positioned in the new normal and beyond, which begs the question – is direct to consumer the future?

A direct-to-consumer model is where a manufacturer promotes and sells its products directly to consumers without ‘middlemen’ like third-party retailers or stores. DTC largely refers to eCommerce channels but can include brick-and-mortar stores in the case of larger brands who own and operate the entire product line and supply chain from source to store.

The most common sectors for DTC are fashion, consumer goods and housewares. The model was pioneered by independent retailers and start-ups, who took advantage of the minimal upfront costs and a gap in the market. The first DTC brands were often hyper-specialised, web-only, marketed heavily on social media with a well-defined brand identity, think dollar shave club and Warby Parker. In recent years bigger brands are utilising DTC as a channel, with fashion brands like adidas Nike, and Levi’s are investing heavily in the model. But why?

You can benefit from better margins

When selling items through either their webshop or brand-owned stores, DTC retailers see more profit. The reasons for this are simple enough, as instead of third-party retailers selling their products for a profit, a brand can sell their products at a similar price at an improved profit margin by keeping the mark up for themselves.

You can increase customer loyalty

DTC offers more opportunity to connect with your customer, as all of the touchpoints are direct between them and the brand – with no one in-between. This means between your website; social media marketing and in-store experience customers get to know the brand behind the products. If this sounds trivial, it’s not – customers care more and more about a brand’s social values. With a DTC arm, it is easier to express a brands personality and foster a more connected loyal customer base.

You can make more data-driven decisions

 By selling directly to their end customers, a brand gains far better insight and data on exactly who their customers are. In modern retailing, this kind of data is key, and when selling through a third party this information is lost. By removing the barrier between them and their customers, brands gain the data to market to their customers more effectively and are more mobile when it comes to product and brand positioning.

adidas

The global sports brand announced this year that it now makes a third of its sales direct-to-consumer. A large part of this is online, with their eCommerce channel seeing increases of 93% during the peak of the pandemic. Beyond COVID this looks set to continue, as adidas’ massive store network will continue to serve customers and deliver a uniquely adidas experience beyond the pandemic.

Levi’s

Similarly, Levi’s is a big proponent of DTC, even before the pandemic. At the start of the year, Levi’s publicly said they were confident that they would weather the impact of COVID better than many other brands because of their strong DTC business. And they were right – in April DTC sales were up 10% and their Net revenue for the quarter was even up 5%. Levi’s is also focused heavily on the experiential elements of DTC, with unique in-store experiences building closer ties with their customers “We’ve been on an intentional path to strengthen that direct relationship,” said Marc Rosen, Levi’s executive vice president.

So, is Direct to consumer retailing the future, and if so, what does this mean for the industry at large? To again use the example of adidas, right at the start of the year the brand said they are aiming to generate 60% of their sales from direct retail by the end of 2020, showing that even before the pandemic brands are repositioning. The reasons why seem clear enough, with the mentioned benefits alongside increasing levels of eCommerce making increased reliance on DTC, especially for bigger brands, a no-brainer. But will retail of the future be entirely DTC? Exactly like when these questions come up for eCommerce, the answer is always more of a balance. Harmony between varied channels and offerings will always be optimal and foster greater resilience, but the balance can always shift – and DTC is looking like the king moving forward.

Product manufactures selling directly to customers is an end-to-end operation. So when trying to ensure accuracy and visibility, they need an end-to-end solution.  For retailers running a DTC operation, the Detego RFID platform ensures the experience for customers is smooth and reliable, with products always available and seamless integration between online and offline channels. The RFID technology means brands can truly streamline their DTC channel with item-level visibility right from the factory to the customer – no errors, no guesswork. Our two examples of fashion retailers who are leading the way on direct, Levi’s and adidas, both use the Detego platform in their stores around the world. If you want to find out how the Detego platform can help you deliver to your customers, get in touch today!

In the second instalment of our series exploring retail trends for next year, we’re exploring the latest development in fashion retail sustainability. The industry has been aiming to reduce its environmental impact in recent years – read our article on a general overview of sustainability in fashion retail. A growing trend is the concept of a circular economy, particularly recommerce and rental. By 2023 it is estimated the resale market will be worth 51 billion dollars and the newer rental market close to 2 billion. Read on to find out how and why these new services are here to stay.

A circular economy is one that reduces waste and pollution, keeps products and materials in use, and benefits the environment. In other words, a circular economy is a model that is sustainable to the core. For fashion retail, this means sustainable materials and re-using and recycling products and materials. This is a stark contrast to the fast fashion model that is pervasive in the industry, but consumer preferences are changing, and retailers are changing as a result. According to the McKinsey apparel CPO survey, there has been a 500% increase in the number of sustainable fashion products launched over the past two years.

But more sustainable products are just one part of the puzzle, achieving a circular fashion economy requires new models altogether. Since retailers still need to see a profit these initiatives need to be sustainable on three levels, they need to work for the customer, the environment, and the retailer’s bottom line.

So what initiatives are retailers exploring to build towards a more circular fashion economy?

Preventing return fraud 

For rental services, and retailers ‘buying’ back pre-owned items, fraud is a big concern. Much like with regular retail returns, scammers can abuse the system by returning the wrong item (a similar or counterfeit item of clothing for example) and keeping the more expensive original. So how can you prevent this type of fraud-theft? When dealing with unique, high-cost products the best option is digitally labelling items with individual non-forgeable ID’s. These allow you to scan the code, like an RFID tag, and the identity of the product. So, through supporting software like the Detego platform, you can confirm each item received is original and ship with confidence to your customers.

Item-level inventories

Retailers offering pre-owned products or rentals will need to re-think the way they look at their inventory. Since second-hand and rental collections consist largely of unique individual products rather than large quantities of the same stock, working with stock-keeping units (SKUs) will not be sufficient in managing inventories and keeping track of stock online and in-store.

Managing these types of inventories will require a different level of accuracy. We regularly advocate the benefits of raising item-level stock accuracy from 70-80% to 99% but for these operations, missing 20% will be crucial. This is because unlike fast fashion, this would mean a fifth of all items are under or overstocked, as you are not carrying multiples of the same SKU so the potential for missed sales or opportunities is massive. Only with complete accuracy can you eliminate disappointing customers and offer them stock information on rentals or second-hand products online, so they can find the perfect product.

Reverse logistics

The final big challenge for both recommerce and rental services is handling the two-way flow of merchandise between the retailer and end-customer. An end customer may order a rental online, have it shipped from store, and then return It at a different location, where it will then need to be sent back to the DC for the next customer. Without even mentioning cleaning or repairs, this is a big logistical challenge. With the unique nature of rentals, in particular, retailers will need to ensure returning items are processed and ready-to-rent again as fast as possible. Achieving this requires a single real-time view of stock across all channels. This means that every item coming in, out or moving between channels need to be tracked, with the real-time view of items shared between all channels and customers.

As fashion retailers build towards a more circular economy by exploring and expanding their use of new sustainable business models like recommerce and rentals, they will need to invest in the right technologies to offer these services at scale. Radiofrequency identification is already well-positioned in the apparel industry, with more and more retailers utilising the technology to gain accurate stock visibility and offer omnichannel services. For rental and recommerce models, particularly on a large scale, RFID may prove to be non-negotiable. The unique item-level ID’s will be invaluable for both rental returns and recommerce goods and will allow customers and retailer to ensure the legitimacy of all items. On an operational level, RFID delivers 99% accuracy across channels and is an ideal tool for reverse logistics as it delivers a real-time view of stock movement.

2020 has been an incredibly difficult year for people, countries, and businesses. We have covered the effects of COVID-19 on retail in great detail, so let’s begin to look ahead at 2021 and what the key trends are likely to be in the increasingly-familiar ‘new normal’ and beyond. Starting with a key priority for retailers both for now and next year: Reducing labour costs in stores.

With the financial impact of this year, as well as the reduced sales in brick-and-mortar stores as more customers opt to shop online, retailers need to cut costs in innovative ways to stay profitable. Cutting costs negatively, by getting rid of staff or stores or putting pressure on employees over scheduling, time theft etc all harm staff, customers, and sales. However, there is a more positive or proactive way to achieve this – improving store processes by implementing technology in stores. In this article, we’ll cover where these improvements can be made and where RFID, in particular, can allow retailers to drastically lower labour costs.

Before we get into what technology can do to cut labour costs across the board, let’s first establish why other forms of cost-cutting should only ever be a last resort for retailers, and even then are unlikely to produce positive results. To do that its helpful to establish the difference between optimising costs and cutting costs.

Optimising – not spending on excess staff or stores that are not needed (very rare)

Cutting – getting rid of staff or entire stores that are required as a cost-saving measure.

When it comes to large or global retailers with hundreds of stores, cutting labour costs at scale by reducing staff falls almost always into the latter category.

But this can have huge repercussions on a stores performance and their ability to serve customers. According to RetailDive a study of one apparel chain found that they were only achieving 85-95% of their potential sales due to its staffing levels. According to a separate report from Massachusetts Institute of Technology, 6% of all possible retail sales are lost because of lack of service, as customers are unable to locate help.

In short, cutting labour costs by reducing staff in stores simply doesn’t pay. So, what are the more positive and proactive ways retailers can cut labour costs in stores without harming staff, customers, or profits?

When looking at the most staff-intensive areas of a store, you have to start with the checkout. While it does vary depending on the category, with grocery being particularly prevalent, cashiers and point-of-sale are a huge drain of staff and therefore a large source of labour cost. But removing staff from this area without offering any alternatives is not effective as long ques scare away customers and hurt sales. So, the options to reduce costs associated with the checkout are:

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Offer self-service checkouts

It may seem like a no-brainer, and for some retailers it is. Since there is no need for a cashier at every register, one employee can easily monitor 6-10 self-service registers which free up staff to be available elsewhere in the store. However, outside of the food industry, self-service hasn’t really taken off mostly due to the higher price points of items making checkout theft a much bigger concern, in these cases, there is often also a need for staff to remove things like security tags (more on this later).

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Implement technology at PoS that makes the checkout process faster

The other option that is available instead of or in tandem with self-checkouts is improving PoS technology to make it faster and more efficient, reducing the number of cashiers needed. Popular European food retailers, Aldi, who was described by CNN as a ‘brutally efficient grocery chain’ have barcodes all over their products, making their cashiers infamously fast. But for many retailers and sectors, this isn’t feasible, so what is the other option? An RFID tag can achieve the same purpose as the radio frequency it emits can be read at any angle. Even better, every item can be scanned/read at the same time! Having RFID-enabled checkouts can not only massively cut queue times but also reduce labour costs by having fewer staffed checkouts per store.

Loss prevention is a key principle for most stores. When you are trying to maximise revenue, losing stock and sales eats into profits and makes thin margins even thinner. Naturally, the majority of retailers have systems and technology implemented to combat shoplifting in stores, with the most common being ‘hard’ security tags that need to be removed by staff before passing through the store’s EAS gates. But these tags come with a hidden cost: it’s estimated that a single security tag costs around $0.30 in labour costs to add and remove from each item. Added to the cost of tags themselves this can add up fast, particularly in sectors like apparel where this is done for every item. But since not having loss prevention in place is just as costly, what are the alternatives? RFID tags can be used with EAS gates, and provide a more cost-effective option. They are the ‘soft’ version of such security measures meaning they do not need to be removed before leaving the stores but are slightly less durable. If we are keeping score here, using RFID instead of hard tags have the following advantages:

• The tags themselves are cheaper
• They are tagged at source, meaning store staff don’t need to do it
• They do not need to be removed by staff, as once confirmed as purchased by the PoS, they simply do not set off the EAS gate
• They are multi-functional, meaning that tags can be used for stock management, PoS and loss prevention

Finally, let’s move away from daily processes and labour costs and look at something that (most) retailers only do a handful of times a year but at great cost: The full store stocktake or cycle count. The cycle count is a necessary evil to know exactly what is in retailers stores to maintain stock accuracy and optimise working capital. However, without supporting technology these stocktakes are big undertakings – which is why they are done so rarely. Larger retailers often use third-parties to perform these stocktakes, which cost around $2000 per store (depending on size). When you do this for an entire store network – the costs add up fast.

The best alternative to this? Implement RFID in stores, meaning staff can regularly perform RFID stocktakes on a weekly or even daily basis. This removes the cost of the annual stocktakes, but are you just replacing it with the cost of RFID itself? The reason this works financially is the long list of benefits you gain from using RFID, most notably an increase in sales and a reduction in running costs (both from reduced labour and less running capital). This is not just us saying so as the list of retailers who use of RFID has grown hugely and more and more retailers are choosing to adopt the technology.

As we look to round off what has been an incredibly disrupting year with the all-important holiday season, how is the retail industry likely to fair? Will the usually busy holiday season provide some much-needed relief to retailers feeling the pinch of a tough year, or will sales and profits continue to struggle? We analyse the figures and identify the key trends that will rule this year’s holiday season.

In terms of general outlook, the majority of experts are predicting the coming season to be positive in general, but with less growth compared to previous years. ICSC and CBRE both predict less than 2% growth in sales for the period, compared to the average of 4.1% we typically see in the holiday season. Considering the economic and social disruption of the past year this lower than normal increase is to be expected, but ultimately will cap off what has been several months of steady growth in both the UK and the US. If we look at consumer polls, the outlook is similar, with a survey from Maybe* finding that its ‘Christmas as usual’ for 71% meaning they plan on spending the same as in ‘normal’ years.  But the way customers, and indeed retailers, go about this holiday season looks to be very different from previous years.

Let’s take a look at some of the key trends for the upcoming holiday season:

Black Friday is the event that kicks off the holiday season, typically meaning high discounts, crammed shop floors and long ques outside of stores. Due to the realities of the pandemic many retailers have extended their Black Friday offerings to cover several days or even weeks, in an attempt to prevent overcrowding in stores. COVID may have moved the starting line of the season altogether however with prime day, typically taking place in July, pushed back to earlier in October. If ever there was a retailer big enough to move the needle by themselves, it was Amazon – and several retailers in the US including Target and Walmart launched their own deals at the same time to compete with the online giant. Customers will be keen to take advantage of these deals this year more than ever, and according to AlixPartners, 49% of consumers plan to start their holiday shopping by Halloween or earlier in the US, and in the UK Maybe*’s survey found that 65% of respondents have already started their Christmas shopping this year.

‘The season will ultimately cap off what has been several months of steady growth in both the UK and the US.’

‘COVID may have moved the starting line of the season altogether however…’

‘eCommerce sales (are predicted to) grow between 25-35% year-on-year, compared to 14.7% in 2019.’

‘Retailers hoping to make the most of the period will need to focus on ensuring safety and customer confidence in their stores’

‘it seems many retailers are planning on discounting deeper and earlier this year’

‘online channels have been, at least temporarily, promoted from supporting operations to the heart of the business.’

‘80% of shoppers expect to increase their use of these services over the next six months’

Omnichannel retailing, offering customers a unified and convenient experience across and between shopping channels, has exploded back into relevance this year. For those in the industry, it might feel like it’s been around for ages – and it has. So long in fact that omnichannel grew into a buzzword that was thrown around relentlessly to the point that the term was declared ‘dead’ by many. The reports of Omnichannel’s death have been greatly exaggerated, however, with the ability to serve customers across multiple channels becoming a life raft for many retailers this year. While the conditions faced this year will be once-in-a-lifetime, many of the effects and trends may be long-term.

In short, omnichannel is the perfect connection and interplay between a brand’s physical and digital channels. A pie in the sky omnichannel experience is one where the differences or barriers between shopping in-store, online or on a brands app do not exist. You can check a physical stores stock levels on an app, the webshop remembers what you purchased in-store and uses it to recommend you more relevant products and so on. More grounded and familiar examples of this type of retailing are services like click-and-collect (Buy-online-pick-up-in-store) or ship-from-store (buy-online-ship-from-store).

Omnichannel was born from the need for (traditionally) brick-and-mortar brands to compete with online shopping. When retailers tried (and failed) to compete with established eCommerce giants such as Amazon or ASOS by simply launching webshops of their own (Multichannel retailing), they took it one step further. Rather than beat the likes of Amazon at their own game, retailers began doing something Amazon (at the time at least) couldn’t do – leveraging both their physical and digital channels, not in tandem but in unison. For this to work the connection between these channels should be as seamless as possible, so that it stops being the brand’s online experience bleeding into the physical, or vice versa, and it simply becomes the single brand experience.

This move towards omnichannel can come from both directions, as in recent years we have seen pure-play eCommerce brands expand into stores. Amazon for example is building futuristic stores which use customers’ existing amazon accounts instead of checkouts, and are filled with advanced retail technology, blurring the line between physical and digital. Not only is this a unique example of an omnichannel offering but it shows the fact that an omnichannel approach is not just for brick-and-mortar retailers trying to stay competitive, even the ‘disruptor’ e-tailers are repositioning to an omnichannel offering.

The effect of COVID-19 on retail has been well reported so we won’t delve into that here. The key conditions for the relevance of omnichannel are the huge spike in eCommerce and customers reluctance to return to stores. A report from Nosto claims at the height of lockdowns online channels spiked 66%, and a separate report from Klarna found that 71% of shoppers are putting off doing their Christmas shopping in-store this year due to COVID concerns. Whilst brick-and-mortar sales struggling or stopping entirely was bad news for any retailer, brands that have more advanced digital and omnichannel capabilities have weathered the storm far better. They have done this by being flexible and serving the customer wherever is more convenient and comfortable for them. Whilst for many this is online for others it is a mixture of both. This is where the interplay between channels with services like curbside can make a real impact.

As stores have re-opened, many customers want to purchase products from their local stores but are still cautious about fully returning to in-store shopping. Buy-online-pick-up-from-store (BOPIS) offers a convenient and safe solution to these concerns. Customers can check online what stock their local store has available; purchase items online and then collect from the store the same day. This offers a convenient and contact-free alternative to shopping in-store, with Curbside pickup the same concept except customer don’t even have to enter the store. According to customer surveys, 80% of shoppers expect to increase their use of these services over the next six months, and 85% have already significantly increased their use of curbside since the year began. Whilst the initial spike in demand for these services was due to COVID-19, as customers grow accustomed to the convenience, the demand for BOPIS will continue well beyond the pandemic.

On the other side of the omnichannel coin, we’ve seen many retailers absorb the eCommerce bump through the use of ship-from-store. Simply put, ship-from-store involves fulfilling online orders using store stock, effectively leveraging stores as miniature distribution centres. The benefits of this under normal circumstances are already significant, such as cutting down on last-mile fulfilment and offering customers more stock. During the pandemic, however, ship-from-store was a lifesaver for many, allowing brands to not only capitalise on increased online orders but to leverage quiet or even closed stores to prevent unsold inventory piling up. Two of the largest retailers in the USA have been betting heavily on ship-from-store this year, not only as a way to ride the wave of the pandemic but to even compete with the power of Amazon. Walmart expanded their ship-from-store capabilities to 2,500 locations earlier in the year, whilst target reported fulfilling 90% of their online orders from store cutting the cost of fulfilment by 30% and overseeing 100% increase in digital sales YoY.

The key question is of course, how temporary is this change? As things start to get better around the world, will brands who have bent over backwards to reposition to the ‘new normal’ only find themselves at a loss if things completely revert back to normal? While the drastic increases to eCommerce will fall off a certain extent, in the long-term it will remain higher than pre-pandemic levels. The report from Nosto suggests that this is now levelling off to an average increase of 7%. Not only does this mean the business case for omnichannel services is still stronger than it was at the start of the year, but as customers have relied on services like online and curbside out of necessity, in the future they will continue to demand it of a preference for convenience.

Not finding the right product in the right size is a pain point all too common when shopping in stores. How many times have you not purchased something from a store simply because it wasn’t available, or you couldn’t find it in your size? Use of the Detego replenishment feature improves the availability of products in stores to over 95%. Product availability means having at least one of each product on the sales floor ready to purchase at all times – down to each specific size and colour. So, this means that customers looking for a particular product have at least a 95% chance of finding what they’re looking for, increasing both sales and customer satisfaction.

All stores will have processes for replenishment. It’s a core operational function for retailers that’s vital to maintain sales and keep stores running. Like many operational processes, however, there is great variance in how effective a stores replenishment might be. The two key factors to look at are the accuracy and the timeliness of replenishment. If stock information is incorrect, then any replenishment list created from it will be inaccurate, meaning items that aren’t available on the sales floor are not replenished and therefore can’t be sold. Similarly, if items aren’t replenished in a timely manner, then they will be unavailable to purchase even though they are sat in the backroom of the very same store!

The Detego platform delivers reliable and accurate replenishment through the use of the Detego mobile application and goes hand-in-hand with the application’s stocktake feature. With the 99% accurate view of both the backroom and the salesfloor achieved by performing daily stocktakes, the Detego replenishment feature compares the inventory on the sales floor to either the store’s planograms or the ruleset of inventory for the store. It then lists all the products that need to be replenished from the backroom on to the salesfloor – providing staff with a pick list. Stores may also have additional capabilities for replenishment depending on which features they have enabled.

Let’s explore the different options for replenishment with the Detego platform:

After an associate completes a full RFID stocktake, the Detego platform has an accurate view of the items on the sales floor and in the backrooms. It then creates replenishment advice to ensure that products either out-of-stock or running low on the sales floor are moved there from the backroom to maintain a high On-Floor Availability (OFA).

1. The Detego platform uses the results of the latest stocktake and creates a list of items that need replenishing from the backroom to the sales floor.
2. Staff use a hand-held reader with the mobile app to see the replenishment advice.
3. As staff move an item to the sales floor, they confirm the transfer by swiping on the mobile app.

With an integrated Point of Sales (POS) system, the Detego platform can update the replenishment advice whenever an item is sold. This ensures that the item is replaced on the sales floor if there is stock available in a backroom.

1. When an item is sold, the Detego platform checks if that product is now out-of-stock or below the set thresholds.
2. If this is true, a notification about the need to replenish the article is sent.
3. Staff use a hand-held reader with the mobile app to see the replenishment advice.
4. As staff move an item to the sales floor, they confirm the transfer by swiping on the mobile app.

COVID-19 caused a huge increase in the role digital technology plays in our lives. Even for the already tech-savvy, work habits, social lives, exercise, and entertainment were all transformed into digital-first activities. Many of these trends existed before, but the pandemic accelerated this change by forcing many people to rely on digital channels and services more than ever.

The same is true for retail – online shopping and social media marketing are not new but have grown exponentially in the new normal, as customers stay at home and spend more time online. This means that, for all retail industries bar perhaps food, online channels have taken centre stage.

More than ever, customers are not only buying online, but they are also shopping online. What’s the difference? If we think of buying as the purchasing of a product, where the price is the primary factor, shopping is everything else – the experience, and the browsing and sampling of products, and ultimately the purchase decision itself. Traditionally e-commerce has always great for the former, but for actually browsing and discovering products its never been as good as in real-life. This is changing though, with digital technology like augmented reality (AR) allowing the customer to virtually try on products or see what they look like in true-to-life scale.

So, to adapt to this increasingly digital way of shopping Multichannel retailers or even pure-play brick and mortar retailers need to make more of an effort to reach their customers online. In the new normal, online is the focal point of the journey.

A webshop is one thing, but retailers need to make more of an effort to reach and meet their customers online. This means not only bringing products to customers with online and social media advertising but taking the entire brand experience online by engaging with customers on social channels and adapting to digital forms of experiences.

While adapting to meet customers in the new environment is crucial, its just as important to really understand who the new normal customer is.

While they are of course the same people as before, habits and circumstances have completely changed – what customers want, and their priorities have completely shifted. As a result of this shift brand loyalty for many has gone back to square one, with more consumers changing and trying new brands this year than ever before. Whilst this puts retailers under even more pressure, it also presents an opportunity to attract and impress completely new customers.
But what has caused this shift, and who is the new normal customer?

Omnichannel retail, offering an integrated and consistent experience between online and offline channels, is not a new concept in the industry. But much like online shopping, omnichannel offerings have become exponentially more valuable since COVID-19.  With the balance between digital and physical retail shifting, retailers offering a strong omnichannel experience are in a far stronger position than those who do not. Simply having an eCommerce site on top of stores (multi-channel) will put retailers in a better position as pure-play brick-and-mortar retailers, as they can take advantage of the increase in online shoppers and still be able to deliver to loyal customers who can no longer shop in-store. However, with pure plays being rarer than ever this is simply not enough anymore.

Omnichannel goes beyond this, by seamlessly integrating online and offline channels, allowing for offerings like click and collect (Buy-online-pickup-in-store/BOPIS), return-to-store and ship-from-store (BOSFS). The benefits of such a strategy go both ways. Customers get access to more available stock and convenient purchasing options; they can collect from stores (BOPIS and curbside) or can get products shipped straight to their homes. For retailers, omnichannel allows you to leverage stores as miniature distribution centres, cutting down on shipping costs while keeping struggling stores busy. With click-and-collect, the benefits are similar and allow stores to benefit from and serve online customers, Curbside pickup is a new type of click-and-collect that has become hugely popular since the pandemic as it keeps customers feeling safe and allows for social distancing.

As much as positioning for the new normal is vital for success going forward, the unfortunate fact is many brands will be struggling with the financial impact of COVID-19. As a result, optimising costs across the board is vital for retailers trying to weather the storm and stay open long enough to adapt to the new normal. Retailers feeling the worst of the financial strain of COVID will be forced to rethink their footprint in order to survive. Closing down stores and losing staff is always a last resort, but one the vast majority have been faced with this year, as less profitable locations are surrendered to ensure the survival of the brand. But what about retailers in stronger positions, those looking to optimise their costs in the long-term without hampering themselves or their customers?

For stores, improving the efficiency of in-store processes across the board can reduce operating costs in the long-term. Processes like inventory management (Processing inbound shipments, stocktakes, replenishment) point-of-sale and loss-prevention can all be streamlined with cost-effective technology. The focus should not be to manage these things more cheaply but to manage them more effectively. To use the point of inventory management, Detego has repeatedly found that increasing stock accuracy in our customer’s stores from an average of 70% to 98% means stores can run with far leaner inventories. If you do this at scale across your entire store network, it’s possible to reduce working capital by 10-15%.

In the supply chain too, there are huge opportunities to run more efficiently and reduce costs. The cost of handling and processing the flow of goods throughout the supply chain, particularly in Distribution centres, can be reduced by investing in technology like RFID and warehouse automation which reduces labour and handling costs. By improving the accuracy and visibility of their supply chain retailers can also reduce chargebacks and other costs associated with shipping mistakes. Finally, there are huge savings to be made by achieving full supply chain visibility – knowing exactly where individual items are (and where they’ve come from) allows retailers to fully optimise their supply chains reducing losses from shrinkage, counterfeits, and grey market goods.

Retail, particularly sectors like fashion and beauty, has been facing the need for digital transformation for a few years. The rise of online channels, digital-first consumers, and the continuous advance of technology has meant brands can’t afford to stand still when it comes to how they run their businesses. Whilst understandably many brands are focusing on staying afloat in the immediate aftermath, COVID-19 did not stop this need for transformation – it accelerated it. Now there is a greater need than ever to ensure brands have the data and IT infrastructure to react to change and make the right decisions. With the sudden shift in the industry caused by the pandemic, retailers may need to revisit digital and analytics priorities but adapt them to a post-COVID world.

In times of uncertainty, accurate data, improved visibility, and effective analytics can make all the difference. We’ve already discussed how retailers with the right infrastructure (meaning accurate visibility over their products) are profiting from their omnichannel offerings. But having a mature tech stack can unlock tonnes of value that will be vital in the new normal. For example, item-level visibility and granular data in the supply chain not only allows for greater agility when dealing with supply and fulfilment but the data can be used for advanced analytics like demand prediction and inventory optimisation across store networks.

Why is having a high stock accuracy in stores so important?

Stock accuracy for stores has become a core KPI for retailers. At the most basic level its vital for maintaining the availability of products on the salesfloor and preventing out of stocks which in turn increases sales – our customer, Reiss, increases sales by 4% by increasing their stock accuracy. Stores without such accurate inventory must compensate to maintain sales, so they will often carry excess stock to prevent out of stocks and lost sales. Increasing stock accuracy in such cases results in a significant reduction in inventory size, reducing working capital by as much as 30%.

When you look at more advanced retail trends, like the increasing connection between online and offline – high stock is simply non-negotiable. Offering online customers real-time store stock information naturally requires the retailer to know exactly what is in stock, and advanced services like buy-online-pick-up-in-store (BOPIS) built off of poor stock accuracy are destined to fail.

The Detego stocktake in action

Our customers, fashion retailer Reiss, implemented the Detego platform in their 50 UK stores. They moved from doing 2-3 cycle counts a year to a stocktake every day. The result was an average store stock accuracy of 98%, and a resulting 4% uplift in sales.

Types of stocktake with the Detego platform

Partial Stocktake

A Partial stocktake checks a subset of inventory, for example, a category of items, such as footwear, or a specific product. Partial stocktakes are useful if there is not time to perform a full stocktake, or if there are issues to resolve with certain types of stock. Partial stocktakes are useful in the following situations:

• A full stocktake would take too long to complete in the time available

• A full stocktake has highlighted issues with a particular item or location that need further investigation

• A full stocktake for large stores would be complex and difficult to manage, so it’s more efficient to check individual locations separately