Online returns have been a challenge for retailers since the beginning of eCommerce. This is because of both their volume compared to normal stores, and the costs associated with processing them. In the wake of COVID-19, this problem could prove more critical then ever, as online becomes retailers’ singular sales channel. There is already early evidence of this, with preliminary data from Quantum Metric showing that eCommerce associated with Brick and Mortar retailers saw an average revenue weekly growth rate increase of 52%, and Nike Inc.’s digital sales went up by 36%.

The eCommerce returns dilemma

Online shopping is popular for a reason, but the convenience and choice of eCommerce comes at the price of not being able to ‘try before you buy’ for customers.

This simple difference is the reason online returns are so much more prevalent than for Brick and Mortar stores. In eCommerce the customers’ homes becomes the fitting room. And, just like any fitting room, products end up back on the shelves. According to Happy Returns, while shoppers return only 10% of what they buy in stores, they send back up to 50% of what they buy online.

This is compounded by customers accounting for this when ordering online. A survey from Barclays found that 30% of shoppers deliberately over-purchase and subsequently return unwanted items. Additionally, 20% regularly order multiple versions (often sizes) of the same item so they could make their mind up when they are delivered, all of which is facilitated by the retailer at great cost.

While it might seem logical to have stricter returns policies, or make customers cover the cost of returns, consumer expectations make this a risky strategy. According to the 2017 UPS Pulse of the Online Shopper survey, 68% of shoppers view returns policies before making a purchase. This leaves retailers with a catch-22 situation when it comes to losing out on online sales or losing profits from processing the inevitable returns that comes with those sales.

Retail returns by product type

What are the challenges of retail returns?

So why are returns such a strain on retailers?

Cost of returns First and foremost is the simple cost of returns. Since returns are in themselves essentially lost sales, the added cost of returning them, which according to CNBC is on average 30% of the purchase price, can heavily impact retailer’s margins.

Processing returns and reverse logisticsOn top of this is the resources and effort of processing returns and getting the stock back available to be sold as quickly as possible. This reverse logistics can be particularly challenging and can result in returned stock not being available for purchase again for some time, often leading to out-of-stocks on the webshop. According to the Barclays report, 57% of retailers say that dealing with returns has a negative impact on the day-to-day running of their business.

Contamination concerns with COVID-19? – A unique and recent challenge, particularly for apparel retailers, is dealing with the potential contamination and contact of returned good with the COVID-19 virus. Initial research suggests that the virus can only survive on fabric surfaces for 24 hours, but for up to 72 on plastics like packaging. This will need to be addressed by eCommerce retailers who continue trading throughout the epidemic.

Return fraudThis is a challenge shared by brick-and-mortar stores. Fraudulent returns cost the US alone 27 billion dollars a year. This can involve the ‘returning’ of stolen merchandise for cash, stealing receipts to enable a false return or using someone else’s receipt to return unpurchased store stock. Naturally, using receipts for returns presents a risk, APPRISS found that receipted returns are more than twice as likely to be fraudulent as other methods.

Summary of retail returns fraud US

How to reduce the impact of returns on eCommerce

So what options are there for retailers looking to tackle their returns problems?

  1. Reduce the likelihood of returns, without harming customer experience or sales: Include accurate and detailed product descriptions. Use uniformed/standard sizes where possible and provide a more specific sizing filter. Offer virtual ‘try-ons’ with augmented reality/3D imaging.
  2. Set clear and accessible rules regarding returns: Make sure customers know what and how they are allowed to return items, this reduces spending resources processing illegitimate returns.
  3. Improve visibility: Maintain a single view of stock with item-level inbound and outbound processes, this will also allow for online returns back to stores, and ship-from-store. Make this visibility accessible to your entire team and your customers.
  4. Improve efficiency of inbound and outbound processes: Utilise reliable & efficient technologies and automated processes like exception handling. One of the leading technologies for this is RFID, which prevents the need to open any boxes or packages as it can count and verify items without direct line of sight.
  5. Improve internal processes: Ensure returns processes (and supporting software) enables additional layers of merchandise management such as grading items based on quality and tracking when the item was returned.
  6. Counter Return Fraud: Verify legitimacy of returns as much as possible, best practise involves unique item-level validation like RFID or unique serial numbers.
  7. Ensure returned stock is safe to sell: Implement processes to ensure returns are not damaged in any way, implement a policy to account for safe handling of merchandise during theCovid-19 pandemic, either sanitising products or leaving them a set amount of time before adding back into webshop stock.

Using RFID tagging and looking to improve return processes?

NEW: eCommerce returns module

eCommerce/ DTC is increasing due to COVID-19. This causes an over proportional increase in returns which normally would require a ramp up of staff and equipment to handle the process – Detego’s new RFID enabled return process provides an approx 90% productivity increase.

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The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
How will retail cope with the impact of coronavirus and how might it look different in the future because of it?
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.

The Current Impact of COVID-19 on Retail

Supply Chain Chaos

Retail manufacturing and production have been heavily disrupted by COVID-19, particularly in China. In apparel and textiles, China is still the world’s biggest exporter. Even apparel manufacturers based elsewhere are often reliant on textiles imported from China. China being hit by COVID-19 and having to shut down factories and production has caused huge supply chain and production disruption around the world, with luxury retailers like Burberry and Prada being hit particularly hard.

As more and more countries are affected, supply chains may be disrupted further downstream. Larger distribution centres that service multiple countries could be most problematic, not only for fears of contamination but stores in countries that aren’t as heavily affected could have their product supply disrupted. On the other hand, since China was affected by the pandemic first they may recover first, so by the time other countries are beginning to come out of lockdown and preventative measures, this supply bottleneck may well be clearing further upstream.

Shutting of physical stores & reduced footfall

Across the globe  brick and mortar sales are suffering. Stores are either being closed on government orders or simply being closed by the retailer to protect staff and public. The stores that remain open are being hit by the heavily reduced footfall as the majority of the public attempt to avoid unnecessary social contact.

The effects of this on revenue have the potential to be fatal. Lost sales are damaging enough, but when you factor in continued overheads for stores like rent, wages and inventory, it is a dangerous situation. Only time will tell how damaging these effects will be on retailers across the globes, with the main variables being:

  • How long areas remain affected & stores are closed for.
  • To what extent a retailer’s eCommerce operation can pick up the slack (more on this below)
  • How big or financially stable the retailer is prior to the epidemic – large tier 1 & 2 retailers may be able to shoulder the burden for longer than their smaller or independent counterparts.

Spike in Online Sales

With many stores closing and consumers avoiding most of the ones that remain, it’s no surprise there has been a spike in online shopping due to COVID-19. This is exemplified by the eCommerce kings Amazon who are taking on 100,000 extra staff across the US as it tries to keep up with a surge in orders sparked by the pandemic.

Whilst its good for both the retailer and the consumer that most brands now operate both on and offline, the sudden shift in proportion between online and offline sales may cause retailers problems if they struggle to keep up with demand. These issues include fulfilment centres not coping with increased demand and the amount of returns that come alongside online orders. 

 The other major consideration for many retailers is the typically smaller margins on eCommerce orders compared to brick and mortar sales, meaning that they may not be able to rely on their eCommerce branch to survive for too long.

Future Considerations

So, what might a post-COVID-19 retail landscape look like? Will retailers take lessons from the crisis and bolster their infrastructure so they are more prepared for similar events in the future? Or once the dust settles will this be counted as a freak event and forgotten about? Here are possible considerations for retail life after COVID-19.

Continued advancement of e-commerce

This was bound to happen even without the pandemic, but COVID-19 may just have accelerated, or at the very least highlighted, the growth of online shopping and its advantages over physical retail. It is likely that retailers with a strong eCommerce offering will come out of the slump in a much better position. 

For multi-channel retailers who had to rely on their online sales more than ever during COVID-19, evaluation into their eCommerce operations, particularly at their efficiency and smaller margins, are very likely. This may take the form of bolstering their supply chain technology and distribution centres, to increase efficiency and reduce running costs to see better margins in the future.

Diversifying manufacturing facilities

Steps have been gradually made in this area even before COVID-19, but in the aftermath of the pandemic, this may be a real concern for retailers and manufacturers. The problem isn’t China, or anywhere in particular. The problem is having such a heavy reliance on a single market, which then becomes a single point of failure for the business. Profit margins will always be a priority, but more cautious retailers and manufactures may look to diversify their production operations to be less reliant on a single region in the future.

Source-to-consumer traceability in supply chains

This is another area that was already a growing priority for many retailers. In the aftermath of COVID-19, it is likely to be even more of a concern, for both retailers and consumers. Not only does traceability help create smoother operations in the supply process, but it can offer assurances to consumers who may have growing concerns about where their products are sourced. With item-level traceability being where the industry is headed, consumers will be able to judge for themselves that their food, clothing and other things they bring into their homes is safely made and transported.

Automated warehouses and supply chains

The other element of the retail supply chain and distribution process that may change in the future is a heavier reliance on automation. This will make supply chains and distribution centres more robust, so able to withstand increased pressure. Automating processes like exception handling also means DC’s can run faster and with a leaner workforce.

Why may retailers look at automating supply chain operations in the future?

  •       More efficient – can deal with larger quantities of goods
  •       More accurate can deal with larger demand without creating bottlenecks
  •       Takes the reliance away from human resource constraints

Self-service stores and cashierless checkout 

Finally, could the coronavirus be a catalyst for increased investment in self-service technology like cashier-less stores? We’ve seen retail giants like Amazon and Sainsbury’s explore these initiatives, but they have yet to be adopted on a large scale. Could that change? It may feel like a knee-jerk reaction to invest in technology that supports reduced human interaction but, particularly for supermarkets, solutions like Marks and Spencers’ mobile scan & pay could alleviate pressurised checkout lines.

Conclusion

We’ve gone over the major concerns for retail, the possible impact they could have, and the potential knock-on effects of the COVID-19 pandemic on the retail industry. But the fact is no one really knows. We are in uncharted waters, and for now, retailers are just struggling to ride the wave to the other side.

What we do know is this will pass. The main question for retailers that will determine the severity of the pandemic’s impact is when. Whilst this isn’t the second ‘retail apocalypse’, it is more than likely that the retail landscape that comes out of the coronavirus crisis may be very different from the one that went into it.

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The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

Visual Merchandising’s Data Problem  

 

Visual merchandising is one of the ‘dark arts’ of retail. For the uninitiated, it’s the practice of designing visually appealing sales floors and store fixtures that attract customers and ultimately sell the products on display. It’s a subjective and artistic means of delivering a concrete KPI – sales.

One of the challenges of visual merchandising is data, experimentation & design is all well and good, but not if you have no way of knowing what does and doesn’t work. Sales data is always a good place to start, but there are so many other factors at play that it’s often unwise to attribute visual merchandising to an increase or decrease of sales to a single product. You have to go one step further…

Survey: How does your organisation measure in-store execution and compliance?

What is Money Mapping? 

 

So, how do you measure the sales performance of a store based on its layout and design? 

First, you map out the sales floor with the exact location of products. Then you break the map of the store into ‘zones’, typically around certain fixtures, shelves and displays. These zones can consist of several different items, grouped by either category or style depending on the design of the store. 

You then collate the sales of every item in this zone and compare it to others in the same store. The result? An impression of shop floor sales broken down by areas of the store.  

This is called ‘Money Mapping’ and allows retailers to visualise and analyse which areas of a store are ‘hotspots’ and which are ‘cold’ in terms of sales. This gives an initial view of which areas and fixtures are selling products and which aren’t.

To account for other external influences on sales, best practise is to swap items between fixtures or observe a ‘money map’ over a long time, as collections and merchandise changes between seasons. This way, if the localised sales data remains relatively similar even after products have rotated, then it’s clear the design or locations of the fixture is having an impact.

Money Mapping Infographic

What are the benefits of Money Mapping?

  • Insight on consumer experience
  • Provides valuable data for visual merchandisers
  • Breaks down areas of sales floor by sales performance
  • Can be used to optimise store layout
  • Drives Sales
  • Can compare Product Placement & Visual Merchandising
  • Can be used to conduct A/B tests

This all sounds great, so why doesn’t every retailer and every store do this already? The simple answer – the process of matching the sales data to specific locations on the sales floor, manually for every item and every store, is logistically a big ask. This means, if this can be done at all by visual merchandisers, it can only be done in a small number of stores.

How does AI change money mapping?

 

So how can we solve this data problem for visual merchandisers and make ‘Money Mapping’ easier and more accessible for retailers?

The first issue is having an accurate map of a store which includes exactly where every single item is sold from. Traditionally this would have to be done manually, and then have the sales data of items cross-referenced with their location in a store.

The solution: Using RFID (Radio Frequency Identification) and AI localisation techniques, we can now create a map of a store as part of the daily or weekly stock count.

This is done by adding ‘reference’ RFID tags into the store. Small tags just like ones that go on products are placed on fixtures and walls in the store. Because these never move, we can use the signal strength (relative to the fixtures) from stock counts to map exactly where items are in the store and what items they are grouped with.

This location info is then integrated with data from point of sale to generate an automated Money Map of a store, as part of the regular reporting and analytics function of the store. This can be done for as many stores as desired. With the data collection automated, visual merchandisers can focus on using the data to optimise product placement and store design across stores.

With larger data sets to work with, this also opens up the potential for more detailed analysis and experimentation such as A/B testing product combinations and store layouts!

 

What’s the process for AI Money Mapping?

  • Attach reference RFID tags to walls and fixtures within the store
  • Perform regular RFID stock takes as normal
  • Software uses machine learning to ‘map’ out item locations within the store
  • Integrate point of sale data with RFID software
  • Software produces ‘heat map’ of the store based on sales
  • Visual merchandisers can use data to inform strategy and measure results
Retail Money Mapping

Conclusion

Visual merchandising is a subtle but valuable process for retailers. Done properly it has a huge impact on both sales, customer experience and brand image. The only problem with this is visual merchandisers often don’t have enough data to measure performance and identify where their attention is needed most. The data they can collect is either time consuming, expensive or inaccurate.

Artificial intelligence changes the game for visual merchandising. By utilising RFID tags and Machine Learning, it is possible to ‘map out’ the location of items in a store, and more importantly, the sales distribution of the shop floor. These ‘Money Maps’ tell visual merchandisers what areas of the sales floor are ‘hotspots’ for sales and which are underperforming. Using this data, they can then focus their attention on improving the design or layout of certain areas.

Additionally, with this data stores can look to leverage their sales hotspots either by prioritising the best locations for best-sellers, high-value items or items that are due to go out of season.

Either way, AI-enabled Money Mapping is another important evolution in retail data and analytics. Providing retailers with unprecedented insight into exactly what goes on in Brick and Mortar Stores.

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The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

What is a Smart Fitting Room?

Smart fitting rooms consist of an interactive touch-screen mirror connected to an RFID reader and a motion sensor. They sense when customers enter the fitting room, and sense what items they have brought in with them by reading their RFID tags. They then assist the customer throughout the fitting room process, giving them information on products and calling for assistance if required. In simple terms, they allow consumers to experience the same benefits they get from online shopping whilst in the fitting room, as well as let them request items be brought directly to them.

 

What does a Smart fitting room do?

  • Detect movement and presence of a customer
  • Identifies which item the customer brings to try on
  • Displays additional product information
  • Provides availability information to the consumer
  • Shows product recommendations that would complement the currently selected style
  • Provides additional services such as Call for Assistance or Call for different products / colors / sizes

 

Smart fitting rooms have existed in the fringes of the retail technology space for a number of years. The interactive mirrors certainly capture the imagination, but they’ve only really existed at trade shows and in concept stores rather than out in the wild. It’s fair to say the technology was in the category of interesting and fun but not really taken seriously. Fast forward to 2020, and we have just seen the first major commercial use of smart fitting rooms, in a truly digital, experience-first, award-winning store.

 

What makes up a Smart Fitting Room? 

 

So, now is the time to start paying attention to Smart Fitting Rooms. But for those looking at the technology, either for the first time or with fresh interest now that solutions are live in the market, the business case might be a concern. In this article, we will break down exactly what a smart fitting can do, and what kind of value they offer for retailers, customers and retail profits.

What are the business benefits of Smart Fitting Rooms?

Improving Customer Experience

As a customer-facing technology, we’ll start with the most obvious (yet qualitative) use of the smart fitting room – an improved customer experience.

Rather than taking this for granted, however, let’s dig into how, why and even if smart fitting rooms offer a better experience for customers. Having a mirror automatically detect and display item information is nice and will wow customers (at least to begin with) but doesn’t really add much more value than an interactive screen that can scan products barcodes or even a product QR code.

What sets smart fitting rooms apart from these solutions are the interactive options and how they support customers. This includes offering additional and related or ‘frequently bought together’ items, information on exactly what is available in the store (using the real-time stock view RFID provides) as well as being able to request items be brought directly to the fitting room. These options being built directly into the mirror that customers already use will both delight customers and make the fitting room experience more convenient.

 

How smart fitting rooms benefit the customer:

  • Shows different product combinations
  • Makes product recommendations
  • Article availability check
  • Shows full range of articles to browse through
  • Additional information, videos, social media integration
  • Customer-friendly fitting (Article-Bring-Service)
  • Enables digitally supported purchase decisions
  • Direct reservation or ordering of articles
  • Different delivery options (delivery to home address, from another store, etc.)

 

The economic value of customer experience:

The economic value of customer experience

Increase Sales

‘Customer experience is king’ has been a favourite tagline of innovative retail for some time. While it’s probably true and certainly sounds good, when it comes to the business case of new technologies you really do need to look at revenue. In terms of the customer, that generally means sales. So, what effect do smart fitting rooms have on sales? Other than more tenuous effects like bringing more customers in to the store, Smart fitting rooms increase retail sales in two ways:

Combating Lost Sales

Fitting room conversions is a self-explanatory if unfamiliar term for brick and mortar stores. That’s because as a KPI retailers have never had any way to measure or track this (more on this later). But fitting rooms are absolutely pivotal to apparel sales.

According to The Retail Doctor, shoppers who use dressing rooms are 70% more likely to buy versus those who don’t. It’s easy to see why, as customers have already decided that they like the item and want to purchase it, so fitting rooms become a question of making sure, and finding the right size.

It’s finding the correct size where most fitting rooms sales are lost. If a customer needs a different size, they will have to leave the fitting room and come back. Studies prove that this can have a major impact on sales, as 50% and 21% of people say they will sometimes and every time respectively leave the fitting room and the store if they were looking for assistance to change colour or size of an item and can’t find anyone.

This is why helpful fitting rooms assistants have such a big impact on sales, customers who receive assistance in fitting rooms make twice as many purchases as those who don’t. Smart fitting rooms address this issue, showing customers what other sizes are available and letting them request different sizes be brought directly to them. This allows stores to have assistance on hand (they are notified via a mobile application) without needing a permanent fitting rooms assistant, which is not feasible for many stores.

 

Increasing basket size with in-store cross-selling

The other sales driver of smart fitting rooms is having product recommendations made based on the items brought into the fitting room. This brings cross-selling common in e-commerce to the brick and mortar experience. Whilst these can be done as an endless aisle (so the entire product range of a store) the better way is to only offer items that are available in the store (using the stock visibility RFID provides). Much like requesting additional sizes, customers can request to have items that catch their eye brought directly to them. This can drive sales significantly and has been seen to increase fitting rooms basket size by 100% in initial studies.

Smart Fitting Room Gif

New Data and Insights For Stores

The lesser-known use case of smart fitting rooms is the data and insight provided about the customer experience. It’s often said that compared to e-commerce, retailers have next to no data about what actually happens inside their stores. Other than what gets sold, they’re blind. In an industry as competitive and fast-moving as retail, this lack of analytics can be fatal.

We’ve already established how important fitting rooms are to apparel sales, so it seems that collecting and analysing data from them is a no-brainer. Traditionally however this hasn’t been the case, but with RFID and smart fitting rooms, retailers can collect that data in a non-invasive way.

 

What kind of insights are provided by smart fitting rooms? 

  • Item Conversion rate – How often are items selling (or not selling) immediately after being tried on in a fitting room?
  • Fitting baskets vs shopping baskets – Most tried on vs most sold
  • Number of items per session
  • Session duration
  • Recommendation conversion rate – How often are items recommended, requested and then sold?
  • Need assistance use – How often are staff called to the fitting room using the mirror?
  • Staff response time – How long does it take for store staff to react to customer requests? (gaining actionable insight to customer experience)

Conclusion

Consider the context of interactive displays, AR, VR and even RFID tables. Smart fitting rooms are both a part of this space and completely apart from it. This is because fitting rooms aren’t new, they are and always will be a part of the apparel shopping experience. Rather than adding a new element to the shopping experience like VR for example, smart fitting rooms are improving an integral (and for many, unpleasant) part of the customer experience.

In other words – it’s an evolution, not a revolution.

Whether retailers embrace this evolution will be decided in the coming years, now that smart fitting rooms are finally out in the wild. Perhaps even more crucially, especially when talking about business case, now smart fitting rooms are out in the market we will begin to see data and results that will prove the value once and for all. As early innovators of the technology, we can’t wait.

Want the latest retail and retail tech insights directly to your inbox?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

A single point of truth in retail means having a single view of stock across the business. It means stores and distribution centres aren’t islands of merchandise that are clunkily attempting to share their version of stock information with one another as best as possible. Instead, at the foundation of the business is a unified view of every single product. Because this view of stock covers the entire network, items can move between stores and DC’s and remain in line-of -sight the entire time. This has huge benefits for individual operations and the business as a whole.

A single point of truth for retail inventory must be:

Single stock view

What is gained from having a single stock view?

Delivering a single stock view with RFID

So how do you achieve this reliable and complete view of stock? A single view of inventory starts with the single item. By giving each item an RFID tag, you’re essentially giving it a unique digital identity. This means, using regular RFID reads and sensors, you can easily track the item as it moves along the supply chain. Once it has arrived in a store, the stock becomes far easier to count, monitor and control. Because all this information is stored centrally in a single place, the individual item can be seen by the online store (and its customers) and even neighbouring stores and DC’s. This transparency boosts efficiency and makes cooperation between different arms of the retail operation far easier to manage.

Single Stock View Roadmap

The Detego platform is the single point of truth for retail inventory

The Detego platform puts all this together and delivers a single stock view that can be counted on. Using RFID we effectively digitise every single product in the supply chain and the store network. The information can then be fed into existing systems, such as ERP and OMS. This delivers all the benefits mentioned above, and our in store application guides store staff to effectively capitalise on this complete view of store inventory.

Single point of truth across supply chain

‘Detego is our “Single point of truth” in terms of in-store inventory. As a result, we are able to improve our omnichannel services such as click & collect, returns from e-commerce in the store or directly deliver to consumers from the store in a very efficient way. These are exactly the services our consumers expect today.’

Tobias Steinhoff, Senior Director Business Solutions Sales Strategy and Excellence, adidas

Did we spark your interest?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

In the modern retail industry, you’ll no doubt read a lot about how ‘customer experience is king’, but with such a subjective notion that can’t be measured in any reliable fashion, it often feels like a vague concept. An actively bad experience is more tangible (and something we described how to avoid in our previous article) but what makes an exceptional one is more of a grey area. In fact, the elusive notion of customer experience is at risk of becoming yet another retail buzzword.

So, what does good customer experience look like? We’ll start with making an important distinction between shopping and buying. Shopping is the all-round experience of browsing in a store, looking at items, trying them on (in the case of apparel) and finding items and making decisions as you go. Buying on the over hand is a more straight forward (in theory) process were a customer knows what they want to buy, or at least has a rough idea, and finds and purchases their item quickly and easily.

It’s often said that E-commerce is ahead of physical retail when it comes to simply buying but struggles to match the shopping experience of brick-and-mortar. Some retailers have leaned into what sets them apart from online, focusing their investment and new technologies on improving the shopping experience, to surprise and delight their customers. Others have looked to implement technology to compete with e-commerce’s convenience and provide a more streamlined and ‘seamless experience’.

The reality is both of these elements are pivotal to a strong customer experience, and retailers should look to improve both, sticking to the principal that:

 

Retail should be fun when you want it to be, but fast when you don’t.

Fun retail

 

The fun side of retail is mostly concerned with the shopping side of the retail experience. This is obviously very subjective, and many retail customers will simply find the traditional shopping experience fun, provided they are not hampered any problematic friction points. For other customers though, more needs to be done to amplify the ‘wow factor’, as Steve Dennis says, to tempt them away from either a competitor or the convenience of online.

Retailers are increasingly looking to technology to boost consumer engagement in the store and provide a more entertaining shopping experience. Examples of this include:

 

Augmented reality

Augmented reality (or AR) is an interactive experience where virtual images are placed over images of the real world. Applications of AR in retail include mobile applications and fitting rooms where consumers can virtually try on products like clothes or even cosmetic products.

 

Smart Fitting Rooms

Smart fitting rooms offer a considerable improvement on the traditional fitting room experience and bring a little bit of the online experience into the brick-and-mortar store. The mirror automatically detects items (when tagged with RFID) that have been brought into the room, displays them on the mirror with product information and suggests other items that are available, effectively bringing cross-selling into the store.

Smart Fitting Room

Virtual & Robotic store assistants

Robotic store assistants are certainly on the more futuristic end of the spectrum, with the ability to talk to customers and guide them around the store. Whilst this technology is in the earlier stages, with fairly low adoption rates, they are an undeniably fun concept that will make customers think ‘wow’. On the other end of the spectrum we have virtual assistants or chatbots, which can communicate with customers through their smartphones and answer queries and provide them with information about items and stock-levels.

Fast retail

 

But what happens when a customer doesn’t want to spend their time on the full shopping experience? In such a case, a customer is only focused on buying and not shopping. Certain retailers leave something to be desired here, with disorganised stores and long lines for customer service and checkouts. The buying side of retail also happens to be what e-commerce excels at, so retailers need to invest in technology to be able to compete and keep customers choosing their stores when it comes to fast and convenient purchases. These technologies and strategies include:  

 

Advanced Points of Sale 

Long lines for checkouts are a common problem in retail, and for customers looking for a fast experience this is a major friction point. Thankfully there are a range of PoS technologies that make checkout fast and frictionless. Self-checkout is very common in the food industry and reduces queues if not the time taken at the checkout itself. Alternatives like RFID PoS on the other hand significantly reduces checkout times, were as checkout-less solutions like Amazon go and Mishipay remove the checkout altogether.

 

RFID’s smart inventory

The other main thing slowing down the buying process in the brick-and-mortar experience is finding the correct item in the first place. Locating a specific item in the store can sometimes take far more time that it should, especially if staff don’t have the time or the information to help. What’s even worse than this is if after searching for the item the customer finds out that its out-of-stock altogether. We explored this in detail in our previous article but RFID not only significantly reduces out-of-stocks and increases on-floor product availability, but the real-time view of inventory it provides means customers can check available stock online before setting foot in the store.

 

Omnichannel services

We’ve spoken about e-commerce being good at the buying half of retail, and with the vast majority of retailers now being online and 73% of customers using multiple channels in their shopping journeys, it’s no surprise the demand for omnichannel is as strong as it is today. For a fast retail experience, customers can take advantage of click-and-collect and click-and-reserve when they just want to buy products rather than shop for them.

Good customer experience does both

 

So, to wrap things up, if retailers want to establish a reputation for a great customer experience, they need to have an equal focus on the shopping experience and the buying experience. Shopping should be fun; the in-store offering should be superior to online and at its best it should surprise and delight customers with a certain ‘wow factor’. At the same time, sometimes people just want to buy, and if brick-and-mortar stores make that significantly less convenient than online then they’ll suffer to the competition. By effectively leveraging the right technologies retailers can provide a top-level customer experience that delivers on all fronts and keeps customers coming back time and time again.

Did we spark your interest?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

The UK’s first completely Cashier-less grocery store 

The British supermarket Sainsbury’s has recently announced the end of its cashier-less store trial, concluding that ‘it’s clear that not all our customers are ready for a totally till-free store.’

The initiative involved the UK’s first till-free grocery store, utilising a mobile app with smartshop scan, a pay & go technology where customers can scan items with their mobile’s cameras as they move through the store.

Whilst there is huge potential in this technology which Sainsbury’s are trailblazing for, the trial did certainly have some initial setbacks. The pilot store experienced long lines at the help kiosk, due to many customers wanting to pay with cards and cash.

In response to this, Sainsbury’s have added a manned till and two traditional self-checkout tills to support the store’s mobile payments. Whilst this does mean the concept of a completely cashier-less store has been shelved for now, the mobile-scan option was clearly a sucess, with Sainsbury’s  adding the payment option to eight additional stores.

Convenience isn’t one-size-fits-all

The first thing this technology-project highlights is the necessity of piloting new solutions before rolling them out on a larger scale. Sainsbury’s not only got this right, but they clearly paid attention to their customers during their pilot.

Whilst it’s possible Sainsbury’s were partly-motivated about the possibility of totally cashier-less stores (and the operational benefits those would bring), they rightly put their customers first and acknowledged an important truth: Convenience isn’t one-size-fits-all.

Improving customer experience is typically one of the main targets for technology investments in the retail industry. But doing this effectively is often about giving the customer more options, rather than just replacing the existing ones with something more modern and innovative.

Ultimately, solutions like this are designed to make shopping faster (One half of a strong customer experience). However, if you take options away from customers, especially ones they will naturally expect to have, you can slow the experience down and inadvertently add a friction point to your store.       

Key Takeaways:

  • When releasing new technologies, piloting the solution first in a small number of stores is crucial.
  • When evaluating the success of pilots, it’s important to be unbiased and measure the full range of impact of the technology – This includes qualitative results as well as the regular measurable statistics.
  • When improving customer experience, technology should look to give customers more options rather than replace existing ones that they may have grown to expect.

Did we spark your interest?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

RFID in Retail at a Glance

In many ways, RFID is used in retail as an alternative to a barcode system (although it doesn’t have to replace barcodes entirely). The more advanced technology involved in RFID means it has a far greater level of accuracy and efficiency when it comes to counting inventory. As a result of this, it has far broader applications in retail, most of which are built of off the back of this reliable inventory visibility.

By implementing RFID retailers can on average increase their revenue from 5-15% depending on the business. This on top of a margin increase of up to 1% and 10-15% lower working capital due to optimised inventory levels.

According to research in 2018, 69% of retailers cite a significant level of adoption, and this number is continuing to rise.

The 6 Key Benefits of RFID in Retail

Inventory Visibility

Inventory Visibility

Due to the ease and accuracy of RFID stock counts, retailers using the technology can reliably achieve full item-level inventory visibility across their stores and supply chains. Crucially, due to the speed of RFID inventory counts, this can be achieved whilst actively reducing the labour intensity of operational processes. This accurate and up-to-the-minute inventory information is the backbone of so many of RFID’s uses in retail (including many of the points discussed below).

One crucial aspect of modern retail that relies on having accurate inventory visibility is Omnichannel retailing. With a complete and up-to-date view of stock across all channels, it is possible to open up the inventory of your entire store network to customers, providing a better customer experience and increasing sales.

 

Benefits of item-level inventory visibility

  • Improved shipping accuracy
  • Excellent baseline for advanced omnichannel retailing
  • Produces more data for better insights
  • Reduces inventory size (and therefore working capital) significantly
  • Increased customer satisfaction from reduced out-of-stocks and a more connected experience

Increasing Product Availability

Product Availability

Ensuring a high product availability is vital to maintaining retail sales. Despite this, low on-floor product availability and out-of-stocks are an alarmingly common problem in the industry, causing unnecessary lost sales as a result of inefficient replenishment processes and stock inaccuracy. This latter cause is practically removed completely by RFID, with typical stock accuracy being increased to 99% from the standard 60-80%.

Additionally, RFID platforms provide an unbeatable basis for efficient and reliable replenishment processes. The main advantage these platforms have is the item-level and real-time inventory visibility gained from regular 99% accuracy stock counts.

 

How does RFID increase product availability?

  • Makes regular cycle counts possible with efficient RFID stock reads
  • Removes stock inaccuracy (from 70-80% to 99%)
  • Creates complete item-level view of stock between both backroom and sales floor
  • Item visibility makes replenishment easier and more accurate
  • Real-time view allows for replenishment alerts for when items/sizes are running low
  • Item-level data from RFID allows for advanced, even AI-assisted planograms for individual stores

Supply Chain Traceability

Supply Chain Traceability

We’ve discussed the difference item-level visibility makes for stores, but when it comes to supply chains the benefits are just as great. With RFID, inbound and outbound reads become far easier, and are done on an individual item level rather than SKU (stock keeping unit). This means each item is accounted for at each step of the supply chain, rather than just shipments or boxes.

This level of stock visibility also drastically reduces the rate of shipping errors or picking mistakes as they are detected by RFID readers and corrected by warehouse staff during exception handling or outbound reads.

Additionally, the location or status of items and shipments are visible in real-time, so stores and DC’s can easily track shipments and know exactly what they will be receiving. This makes any individual item fully traceable, as time and dates of when the item passed each read point in the supply process can be stored.

Benefits of RFID in the supply chain:

  • Item-level visibility across entire supply chain
  • Trace items against individual shipments
  • Smoother operational processes
  • Track shipments for delivery
  • 100% inbound and outbound shipping accuracy

Increasing Process Efficiency

Process Efficiency

The difference in process efficiency from using RFID in retail is extensive, at every end of retail, be it the factory or the shop floor. An RFID reader, regardless of whether its fixed or a handheld, can read hundreds of individual items at once. Crucially though, as each item has a unique ID, they can never be read more than once. The signals also do not require line of sight to be read.

Naturally, this makes RFID inventory counts and inbound/outbound checks incredibly fast and reliable. In the case of store inventories, RFID has been found to reduce cycle count times by a staggering 96%.  This therefore means they are far more convenient to perform and can be done multiple times in a week rather than a year.

 

Processes transformed by RFID:

  • Cycle counts/inventories
  • Fast & Efficient Inbound & Outbound reads
  • RFID-enabled picking and packing
  • Mobile guided replenishment from backroom to salesfloor

Providing Real-Time Data

Real-time Data Insights

Analytics and data is one area that e-commerce is ahead of physical retail. This is largely due to the fact that everything online can be measured, whereas retailers don’t really know what’s happening with their stores and customers in any specific detail, and the stats and data they do collect are often historical and at risk of being outdated.

However, with RFID this can all change. The simplest and most effective use of the data allows retailers to better leverage their greatest assets; their products and their stores. Quality data and analytics can allow retailers to ensure merchandise is in the right place to be sold. Information on which stores are performing better or worse is a basic retail KPI, but with specific item data, RFID produces far more detailed insights. This includes how well individual items are doing in specific stores, right down to specifics such as which sizes of items are selling better where. Insights such as these are naturally actionable, meaning retailers can take steps to move or reinforce stock at specific stores.

 

Data insights and results possible with RFID:

  • KPI based performance tracking
  • Detailed merchandise data & Analytics
  • Operational excellence
  • Actionable recommendations
  • Compliance tracking
  • Eliminates reliance on historical data
  • Predictive capabilities for inventory counts and merchandise management

Transforming Customer Experience

Customer Experience

There are many effects of RFID in retail that go beyond simple operational benefits to actively improve the customer experience. At the most basic level, this includes things already mentioned like increasing product availability, offering convenient omnichannel services and freeing up store associates to spend more time assisting customers.

However, because of the real-time inventory visibility it provides, RFID can go way beyond this in terms of improving the customer experience. For example, with reliable and up-to-the-minute stock information stores can utilise technologies like chatbots or smart fitting rooms to assist customers with their queries, supply information about other items or sizes available and even cross-sell to customers in the store.

 

What ways does RFID improve the customer experience?

  • High product availability
  • Store associates have more time for their customers
  • Convenient omnichannel services
  • A connected experience between online and offline
  • AI-powered chatbots delivering assistance and product information via mobile.
  • Smart fitting rooms providing a hugely improved fitting room experience.
  • RFID-enabled Point of Sale – including self-checkout services

Did we spark your interest?

RFID (Radio Frequency Identification) uses radio waves to track and identify tags attached to objects. The tags contain electronically stored information and are counted or ‘read’ by either handheld or fixed RFID readers.

In many ways RFID is used in retail as an alternative to a barcode system (although it doesn’t have to replace barcodes entirely). The more advanced technology involved in RFID mean it has a far greater level of accuracy and efficiency when it comes to counting inventory. As a result of this it has far broader applications in retail, most of which are built of off the back of this reliable inventory visibility.

By implementing RFID retailers can on average increase their revenue from 5-15% depending on the business. This on top of a margin increase of up to 1% and 10-15% lower working capital due to optimised inventory levels.

According to research in 2018, 69% of retailers cite a significant level of adoption, and this number is continuing to rise.

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

The age of digital disruption has caused a shift in both consumer expectations and the retail landscape as a whole. Naturally, many retailers have looked towards implementing new technologies in an attempt to either adapt to or capitalise on these changes. When researching new retail technologies, the focus should be on transforming the customer’s experience and eliminating existing friction points.

The question needs to be asked, is this directly solving a major problem for retail customers? In other words: Is there a demand for it? Focusing on the comparatively mundane details first needs to be a priority, as attention on what drives customer experience at the most basic level can be the difference between success and failure in the age of digital disruption.

One technology that consistently meets these demands is radio Frequency identification. RFID is a growing force in retail, with 69% of retailers around the world citing a significant level of RFID adoption. The technology involves tagging individual items of merchandise, like a barcode but entirely unique to the individual item that can be ‘read’ and tracked with ease. One of the most common business cases for the technology is the process accuracy and efficiency that it delivers, but the difference that RFID can make to the customer is not to be overlooked.

Out-of-stock situations

Empty shelves are a simple problem, and yet are still a painfully common occurrence in retail.  In a survey by Elastic Path, it was found that 55% of shoppers surveyed had experienced an issue with out of stock inventory. Is it then any wonder then that ecommerce is putting pressure on brick-and-mortar stores?

As obvious as it might sound, a product can only be bought if it’s on the shop-floor. If replenishment isn’t automated or falls victim to human error, stores can be temporarily faced with unnecessary out of stock situations that damage both sales and reputation. This problem is often a subtle one, with stores and retailers having no way of observing the true level of item availability.

With a cloud-based RFID platform that utilises the Internet of Things, on-floor availability becomes much easier to manage, significantly reducing out-of-stock situations by up to 50%. The main way this is achieved is through fast and accurate stocktakes and automated replenishment processes. Store staff can now perform stock takes of an entire store (50,000 items) in just 25 minutes to a level of 99% accuracy.

This full and accurate view of store stock combats out-of-stocks in two ways. Firstly, the visibility of stock provides store staff to easily monitor stock levels. More advanced RFID systems like the Detego platform can not only operate in real-time and provide replenishment alerts, but can they can also use machine learning to suggest optimised replenishment advice, set on either a set planogram or an AI-optimised one.

Disconnect between online & offline

The increasing influence of online and ecommerce is arguably the biggest driver of digital disruption in retail. The convenience and choice that shopping online offers has resulted in highly demanding modern customers. Whilst these days practically every brick-and-mortar retailer has expanded into e-commerce to meet these consumer demands, there is unfortunately a noticeable disconnect between many retailer’s online and offline shopping channels, damaging the customer experience despite best intentions.

The key to a good ‘omnichannel’ shopping experience is not to necessarily be everywhere, but to be seamless and flexible at every step of the shopping journey. Non pure-play retailers that can do this will have a competitive advantage, not least because of the choice they offer customers, but with features like click-and-collect and ship-from-store, they can offer an unmatchable level of flexibility whilst opening up the entire inventory network to all channels.

To be able to do this, retailers need a complete and real-time view of stock across their store network in all channels. RFID provides this through digitising stock (utilising the IoT) and tracing the movement of individual items in real-time. With this foundation, it is possible to build extensive and reliable omnichannel services, blending shopping channels and providing a flexible and convenient experience for customers. RFID is the backbone of strong omnichannel services such as this. In fact, 83% of RFID adopters offer three or more omnichannel fulfilment options compared to only 24% of non-adopters.

At its most basic level, this can include opening up stock transparency to customers so they can check availability of items online before coming into a store. The more advanced features include click-and-collect and ship-from-store, both of which provide a competitive edge against pure-play ecommerce, as customers get a more convenient and flexible shopping experience regardless of which ‘channels’ they use.

Limited Customer service

When discussing disruption and new technologies, its easy to forget about core principles and traditional strengths, but technology should be built with those in mind. For retail stores, that means customer service. This remains a key part of physical stores’ USP today, but with the demand for store associates’ time being severe, these traditional strengths can sometimes be left behind.

In studies by Elastic path it was found that 42% of shoppers surveyed said they’d had an issue with long wait times for customer service, suggesting that something new is required to stop what was once a core strength of stores becoming a friction point for customers.

RFID platforms meet this demand in two different ways. First and foremost, is simply the fact that RFID operations are much leaner and less labour intensive, for example it cuts cycle count times by up to 96%. This has the simple yet effective result of drastically decreasing the amount of time retail staff have to spend on manual processes like replenishment, therefore freeing up a significant amount of staff time to be spent elsewhere with customers.

The other significant ways RFID can assist customer service are the platforms and features that can be built around the technology. Mobile chatbots can assist customers with queries about item availability and available sizes, thanks to the real-time item transparency produced by RFID. In the fashion industry, Smart-Mirrors can do this whilst also reducing the friction points associated with changing rooms, as they can provide information from within the fitting room and can also be fitted with features to call store assistants to bring any items required to the fitting room.

Did we spark your interest?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.

In recent years the digital age has shaken up retail in unprecedented fashion, and this trend looks sure to continue. One of the main causes of this change is the internet, not only the increasing influence of e-commerce but also the changing standards consumers are used to thanks to their near-constant access to the web. The new status quo of the digital world is connection and convenience, as modern customers have easy access to information and services on demand.

But is retail keeping up with this change? And what does it take for brick-and-mortar stores to meet these modern demands? Thankfully, the growth of retail technology means stores have more tools than ever to do so. Retailers need to look towards digital investment to reduce friction points and offer a more streamlined and connected shopping experience.

In other words, brick-and-mortar stores aren’t going anywhere, but they will have to evolve.

Enter the digital store

 

With customers being more connected than ever and used to the experience they can have shopping online, it’s time for brick-and-mortar stores to take some lessons and adapt. This shift is well underway, and as more brands continue to adapt one thing is becoming clear, digital doesn’t just mean online anymore.

Thanks to the Internet of Things, it’s now possible to digitise every single item in a store, in conjunction with tracking technology such as RFID. This allows retailers to leverage their most important asset, their merchandise, with greater precision.

For example, let’s present an all-too-familiar scenario.

You are looking to buy a new pair of shoes. You’ve decided to purchase them in-store because you want them today and need to make sure the fit is right. Before going to the store, you checked on the store’s website to check if they had them in stock in your size, but it didn’t say. After failing to find them in the store, you ask a store associate who offers to look in the back. You then wait several minutes, for them to return empty-handed, and offer their apologies.

There are several stages where this scenario could have been avoided with the application of the IoT. If every item is digitised and traced effectively, not only can stores know exactly what’s in stock, but retailers can share this information with their customers, and offer them more options like click and reserve and more.

Stores as Digital hubs

 

With this baseline of technology providing a clear view of inventory across store networks, the natural next step is combining and unifying digital stores with the rest of the digital network, namely other stores and the e-commerce online store. After all, online is already digitised by nature, and having all stock across all networks digitised allows retailers to leverage their products far better to serve their customer’s needs.

Whilst omnichannel has become a bit of a buzzword, with the focus on connection and convenience for customers, features like click-and-collect and ship-from-store are essential for leveraging physical stores. When supported with appropriate technology like RFID, retailers can offer extensive omnichannel services thanks to a real-time view of stock and the ability to track and trace items across the supply chain.

Features like this go beyond levelling the playing field with e-commerce as they do something pure-play online retailers can’t, offering their customers more options and a flexible shopping experience.

 

If you are interesting in further exploring how digitisation improves the customer experience, download our free whitepaper on how fashion stores leverage The Internet of Things (IoT) technologies to put the customer in focus of all activities.

If you are interesting in further exploring how digitisation improves the customer experience, download our free whitepaper on how fashion stores leverage The Internet of Things (IoT) technologies to put the customer in focus of all activities.

Did we spark your interest?

The ‘eCommerce returns’ solution, aimed at fashion and sportswear retailers already utilising RFID tags, will help achieve business continuity following the disruption from COVID-19.
An update from the Detego team on our commitments to safetey and continued service throughout the Covid-19 pandemic.
RFID is finally taking off in retail. But how should retailers approach implementing the technology at scale? We break down our 6-step best-practise for effective retail transformation with RFID.