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.
What’s changed?
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.
Sales uplift
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.
(Originally posted on WhichPLM.com)
Did we spark your interest?
16. August 2023
13. October 2022
13. September 2022
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.
Human machines
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.
16. August 2023
13. October 2022
13. September 2022
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
- Ship-from-store
- 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.
Did we spark your interest?
IT specialist syspro acquires Detego and forms European RFID development center
The IT system integrator and leading European RFID specialist sys-pro GmbH (Berlin) is acquiring the Graz (Austria) based RFID provider Detego GmbH. Through this acquisition, syspro expands its development capabilities for customised lifecycle RFID solutions. The new European RFID development centre in Berlin and Graz focuses on highly integrated, future-oriented enterprise applications along the entire […]
How Will the Cost of Living Crisis Impact the Golden Quarter of Retail This Year?
The Golden Quarter of Retail, approximately between October and December each year, is typically retail’s most profitable period. Shoppers are planning for the Christmas period earlier than ever–59% of consumers will plan gifts at least a month before the holidays–and Black Friday offers another opportunity for companies to maximise profits. However, the Golden Quarter of [...]
2023 Retail Operations Strategy: How To Improve Your Retail Operations Management Next Year
We’re over mid-way through 2022, and despite optimism regarding recovery from the recent Covid-19 pandemic, this year has had its own unique challenges for retailers. Across Europe, rising inflation has impacted consumer spending, while supply chain issues have also been exacerbated by Russia’s invasion of Ukraine. As a result, the retail sector is suffering from [...]
Stocktakes are mandatory for retail businesses. With the right software, they can fulfil much more than just legal requirements. A real-time view on inventory provides the basis for high on-shelf availability and customer-oriented services.
The word inventory has its roots in the Latin “invenire” which means “to find something“. Anyone who has ever been involved in the process of a stocktake knows exactly how well this terminology fits. Finding something becomes particularly complex if the ERP system displays a different stock than what is counted on the sales floor and in the backroom. Usually, the products are written off as loss or attributed to shoplifting – which is a big problem especially in the fashion retail industry. But what if articles that could not be found are still in the store? And what about “positive differences” – meaning a surplus of stock?
The crux with inexact stocks
RFID-based article management with permanent inventory offers a very precise and reliable view on the stock-figures. Businesses are presented with real-time data, which the store personnel can access at any time. With this form of inventory, retailers get accurate stock information at any time and do not have to deal with numbers which may or may not be accurate at present. At the same time, the level of granularity can be increased: RFID technology makes it easy to determine which items are in the backroom and which ones are on the sales floor – the ideal starting point for a truly efficient refill process.
The optimal inventory cycle
The objectives of an intelligent inventory management process go far beyond the accounting requirements. A question that is frequently asked is “how often do we need to do that in order to achieve our targets”? Today’s systems, using AI and machine learning techniques, can automatically suggest the optimal inventory cycle, providing increased efficiency and store performance with positive effects on the overall profitability. A perfectly balanced inventory requires systems with an integrated and automated replenishment process, analytical forecasts on top sellers and the corresponding size breakdown.
Project implementation: a few hours. Stocktake duration: a few minutes.
It’s not only expensive to close down the store and hire additional personnel to carry out stocktakes – also the degrading accuracy has severe impact on the top and bottom line results of a store. For a quick start into exact inventories, intelligent software that drives article availability and inventory accuracy near 100% within just a few hours is now available –without having to invest heavily in a time- and resource consuming project. The quick-start system delivers a convincing performance in the store from day one and makes the roll-out across the entire store network easy and fast. The tedious and time consuming way of looking for articles that may or may not be there will be a thing of the past. Maybe it is time to find a new Latin word that is more suitable?
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 in-store 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 an in-store 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.
The use of in-store chatbots. Benefits for retailers:
Detega…
- 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 in-store chatbots. Benefits for customers:
Detega…
- 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.’
Did we spark your interest?
Friendly sales personnel, stores in top locations and an appealing product assortment are not enough anymore for successful fashion retailing. Today’s consumers expect more: stores as temples of experiences, sales personnel that understands or even anticipates their needs and frictionless shopping across all channels. The use of IoT technologies in brick-and-mortar stores will support retailers to meet these expectations. But how much consumer engagement does it take to turn “today’s shoppers” into “loyal customers of tomorrow”? A search for traces…
What are consumers actually looking for?
That is quite simple: articles in the right sizes. Otherwise they are leaving the store without buying anything. Assuming that consumer engagement requires a proactive, not reactive sales culture, retailers need to start rethinking their business approach. This involves systems that provide high inventory accuracy and article availability, real-time information capability, and a single stock view across the entire store network including franchise and wholesales locations as well as online shops. In addition, it requires a customer-focused and empowered store personnel, equipped with smart devices and real-time information, to provide consumers with instant information about desired articles and the capability to reserve these articles or to deliver them directly to the customer’s home. It’s all about an effective way of interaction that is leading to a long-term customer loyalty. If the store staff is proactively supported by the in-store system by means of e.g. intelligent stock takes or smart replenishment processes, retailers – and ultimately the customer – benefit from high inventory accuracy and end-to-end article availability. This provides the base for a successful consumer engagement and is available with the Detego InStore Lean Edition.
What exactly do consumers expect?
A lot: individual and innovative shopping experiences. Spoilt by the convenience and services of E-Commerce, consumers’ expectations towards their shopping experience in brick-and-mortar stores are ever more stringent. Omnichannel services such as click-and-collect, return-to-store, ship-from-store and online availability check per store are part of these expectations and have to run smoothly. The Detego InStore Full Edition provides retailers the full-service package for their omnichannel business.
How does interaction with consumers look like?
Very versatile and via different touchpoints that customers choose, e.g. via their smartphone right after entering the store. The chatbot Detega gets in touch and supports with article and availability information, introduces the new collection and is also a virtual guide beyond the actual store visit. The Smart Fitting Room is also adapting to consumer requirements in an entirely experience-oriented way. It assembles preferred article variations and optimises the fitting service in close collaboration with the store personnel who brings desired articles from the sales floor or back room to the cabin when requested by consumers via the Smart Fitting Room application. Detego InChannels provides retailers with various opportunities for interaction with consumers that activate customer potential.
The Detego Suite supports retailers in meeting current and future challenges and keeps the store staff ready for increasingly demanding consumers while making the brick-and-mortar business run more efficiently.
Image source: IStock, Copyright: pixdeluxe
Did we spark your interest?
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.
Did we spark your interest?
The hype about cloud-based systems continues: There is hardly a software system that has not stepped into the cloud. Many applications, especially in the business environment, rely on an “infrastructure-as-a-service” or “platform-as-a-service” model, where existing solutions are simply hosted and operated by a large cloud provider.
In addition, there are true “software-as-a-service” solutions that are available for a monthly fee with guaranteed performance.
Regardless of the actual model chosen, the cloud offers enormous advantages for retail companies, especially with respect to RFID-based inventory management.
Advantages of inventory analysis in the cloud
- IT infrastructure does not have to be operated and maintained by the retailer: Focus on core business
- Lower costs: in comparison to individual operations
- Flexibility: For store openings and closings, and even for the operation of pop-up stores
- Easier integration with existing systems: standardised, open APIs
Smart processing of data at scale
Compared to traditional inventory management, an RFID-based approach brings one thing in particular from a system perspective: More data. Frequent, even permanent and real-time stock takes and tracking of each individual article movement generates more data than before. More data is not necessarily an advantage, and must be processed and stored somewhere. In addition to the – almost unlimited – storage space that cloud-based systems offer, here is another decisive advantage: On one hand, sufficient computing capacity is available for complex and -intensive processing steps, which can be activated simply and automatically “when needed” (“scaling up” and “scaling out”). On the other hand, in cloud-based systems, the application of modern algorithms such as machine learning methods are significantly simplified in order to actually benefit from operational data.
What does data reveal?
This gives retailers access to a broad portfolio of analytic tools, algorithms and necessary infrastructure, without having to become a specialist in the implementation and operation of complex systems and tools for large-scale data analysis. Sounds abstract? The following examples show concrete use cases:
Analysis of the performance of individual articles:
While classical analysis is mostly limited to sales data, new technologies allow far deeper insight into what is happening in the store. With RFID-based inventory management, in addition to sales data, other parameters can be precisely measured and correlated. Derived from this, influencing factors are used to determine in which store the sales probability for certain articles is actually the highest. What is the result of the analysis? Easy to follow recommendations for the sales personnel in the store in order to make the most of the potential of the sales area. Sales personnel receives notifications directly on the smartphone which is processed as soon as possible.
Raw data from the store network – Derive meaningful KPIs – Processing and feedback to the store
Evaluation of periodic inventory data:
The classical stocktake: Not very popular, cumbersome and lengthy – still needs to be done 1-2 times per year for audit purposes. However, an RFID-based system makes it very easy. Reason enough to increase the frequency for better data accuracy. This quickly results in several thousand data records per year. Nevertheless, these datasets contain far more information than just the ordinary inventorydifferences that need to be accounted for in the ERP system: A targeted analysis quickly identifies trends about problematic items, allowing timely countermeasures. As far as the operational process is concerned, smart algorithms can raise additional potential: The classic approach of “one RFID-based stocktake per week” is not necessarily optimal or necessary in every store. Detego InReports suggests the ideal time for a stocktake and can even predict how many people will be needed to complete the process in the desired time. It provides support where it makes sense.
These scenarios show how current methods and algorithms from the world of data analysis, when cleverly applied to inventory data, can show operational benefits.
While this might sound simple, practical implementation is far from easy due to the amount of data that needs to be processed and complexity of procedures used.
Specialized systems that leverage benefits of the cloud can help address this and gain data driven insights rather than pure intuition. This is accessible in a scalable infrastructure that comes with predictable cost within a simple SaaS model.
What needs to be taken into consideration by retailers
Aside from all the advantages, there are also aspects in the use of cloud-based systems, which requires rethinking and possibly even making changes to the existing infrastructure.
Infrastructure
Make sure your infrastructural equipment is bandwidth-rich to enable you to run store applications in the cloud with satisfactory performance and to adequately size Internet uplinks for today’s and tomorrow’s applications.
Data collection in the store
Make sure to install optimal WIFI in your stores. That is what customers expect nowadays. Not only do customers interact with their smartphone while shopping, persons accompanying them do so too. That is an aspect which should not be underestimated in order to keep customers in the store and offer new services.
„Shared“ versus „Dedicated“-Cloud-environments
Many software packages allow operation either in a so-called “shared environment” where resources are shared with other companies, or in a “dedicated environment” which is operated exclusively for a particular customer. Both variants have their advantages and disadvantages. While “shared environments” are generally cheaper to operate, there are some dependencies, e.g. in terms of performance. “Dedicated environments” usually offer more flexibility but also entail higher costs.
Lock-In to a Cloud-Provider
Cloud software packages that can be transferred at any time from one cloud to another if necessary are advantageous. This bypasses a long-term dependency on one of the classic cloud providers, e.g. Amazon, Google, Microsoft and Co. It is recommended to make sure that the software you use is not dependent on a particular provider, but can also be operated flexibly with another provider.
Conclusion
Your inventory data contains information going far beyond the typical inventory differences or what ordinary sales data can tell you. Smart analytics and state-of-the-art processing helps you to unlock this potential – a new way where cloud-based systems flex their muscles.
Did we spark your interest?
Although we are not allowed to publish names of our retail customers who chose Detego InStore Lean Edition, the reasons that led many international fashion retailers to equip their stores with it, are summarised in the following:
- A solution that is productive within HOURS:
Not within weeks or months. No complex IT integration or complicated implementation.
- Advantages for the store are effective immediately:
Inventory accuracy and on-shelf availability > 98%.
- Intuitive and guided processes:
Sales personnel are guided through all the relevant store processes quickly via a smartphone and without any need for trainings. A lean and intuitive application actively supports and unburdens the sales personnel in their daily work.
- Unbeatable flexibility for fashion retailers:
Whether it is your own store, franchise store, wholesaler locations or shop-in-shop setups: Detego InStore Lean Edition fits all of them and delivers fast results/ROI.
- Scalability:
Start with a few stores and scale to hundreds or thousands. Starting with the features of Lean Edition to ensure inventory accuracy and on-shelf availability, additional features can be added later with Full Edition, e.g. retail analytics, efficient omnichannel services and consumer engagement applications. Fully integrated inventory management across the entire supply chain is also possible at any time.
If you also want to benefit from these aspects, we´ll be happy to discuss the introduction of the Detego InStore Lean Edition to your stores. We will show you how to get started quickly with one or more stores, what to do in terms of preparation, which results can be expected and for what budget. If you would like to see results, get in touch with us. We look forward to hearing from you.
Bildquellen: Fotolia, Copyright: Rawpixel