Sustainability in fashion retail is gradually becoming one of the industry’s top priorities. With apparel contributing to around 10% of all greenhouse gas emissions, consumer attitudes towards brands are increasingly being influenced by their efforts towards sustainability. This is in turn causing many retailers to look to improve their environmental records and explore new strategies to do so. In this article we’ll explore exactly what that looks like for the industry, and how RFID (Radio Frequency Identification) can be leveraged to help with this, particularly to improve traceability of items.
Sustainable retail is a priority for more and more consumers
Sustainability in Fashion has been a concern for some time but in recent years consumers, particularly younger generations, who are increasingly concerned with the sustainability of their clothes are forcing major change in the industry. According to the McKinsey apparel CPO survey, there has been a 500% increase in the number of sustainable fashion products launched over the past two years.
This proves that the industry is beginning to move in the right direction, but there is still a long way to go. A report by environmental agency Stand.earth claims that only two major brands are delivering on their commitments to reduce emissions, American Eagle and Levi Strauss, who came out on top of the recent report card.
What does sustainable retail mean for the fashion industry?
So, if most of the work is yet to be done to improve sustainability in fashion retail then which areas should retailers focus on? Whilst key areas like sustainable materials and practises will be crucial, retailers will need to make improvements in several different areas in order to improve the footprint of their businesses. Edwin Keh, CEO of the Hong Kong Research Institute of Textiles and Apparel argues that “There is no silver bullet; rather, there will be a combination of a lot of small innovations and a few radical changes.” In the figure below, from the McKinsey survey, we can see the truth in this, as brands are focusing on a variety of methods to reduce their environmental footprint.
RFID and Sustainable Fashion Retail
So, what part can RFID play in all this? There are three key ways retailers can improve sustainability with the help of RFID:
- Produce less through leaner inventories
- Consumer transparency with item-level traceability through supply chain
- Digitise the emerging ‘fashion rental’ market
The most obvious solution for fashion is to produce less merchandise and prevent wastage of resources. By implementing an RFID inventory system, retailers can have on average 10-15% less inventory in stores, due to the increased stock accuracy and the ability to leverage their stock more efficiently.
Another way brands can use RFID to improve sustainability is to utilise the item-level traceability that RFID tags can provide. As far as sustainability initiatives go, this is a fairly customer-facing use, as brands can leverage the additional data stored within RFID tags to provide transparency about where their products are sourced. Often this will be displayed through customer facing applications such as the brand app and/or NFC (Near Field Communication) initiatives.
This use case is already being implemented by some retailers, and the majority of RFID-enabled brands seem likely to employ it in the years to come. In the McKinsey survey, 65% of surveyed sourcing executives expect to achieve full traceability from fibre to store by 2025, and the majority of brands plan to use RFID to do so:
The other big impact RFID looks set to make on the fashion sector is in new markets that are only beginning to emerge on to the world stage:
The second-hand clothing market may not be second best for much longer
Due to the large increase in consumer interest in sustainability in fashion retail, something of a sub-industry has developed in the second-hand clothing market in recent years. This is no longer just traditional second-hand clothing outlets such as eBay and charity stores, but also brands that actively trade in used clothing. Chris Homer, CTO of online clothing marketplace ThredUp, says its research found the size of the second-hand clothing market has doubled to $24 billion in the US over the past 10 years, and he predicts the market will overtake fast fashion sales within the next 5-10 years. It isn’t just disruptor brands who are looking towards second-hand clothing, as British retail giant John Lewis recently launched a ‘buyback’ scheme with 20,000 customer to help combat clothing waste.
Could the growing rental-clothing industry be the green alternative to fast fashion?
The other subset of fashion retail that is growing out of sustainability concerns is the rental clothing market. This allows consumers to have access to the same variety and turn-over of clothing that they could have with fast-fashion, but without the waste of resources and impact on the environment. Much like the second-hand market bigger brands are also looking to get involved here, with the international apparel brand H&M having very recently announced a trial of a rental service in their flagship store in Stockholm.
New markets = New challenges
Both of these emerging sustainable apparel markets are yet to truly find their feet, and time will tell how sustainable they are as business models. One of the main challenges we see for such markets is the traceability of items and combating counterfeit returns and losses. In both second hand and rental fashion models, you will be dealing with far more individual and one-off items than in typical fashion retail. As such, keeping track of individual items will be vital, but more challenging than normal. In such models, items will be moving in and out of the store in both directions rather than predominately in one. Strong inventory management will therefore by imperative for these businesses to succeed.
Could RFID be the backbone of the emerging used clothing & rental fashion industries?
It seems RFID could be the perfect technology to build these new sub-industries around, as an RFID system would be able to deliver the perfect conditions for second hand and rental businesses to thrive. With each item having a completely unique ID, retailers would know exactly what they have available, and exactly what they have out with which customer (in the case of rental). As RFID tags are unique and can’t be forged or copied, retailers could offer these services with full confidence that the right product is being returned, eliminating the possibility of any new illicit markets forming.
Finally, using the real-time digital view of inventory created by an RFID system, second-hand and rental retailers would be able to show exactly what products they have available online making items available to click-and-collect or order online. Without such systems these new models might struggle to have a digital presence, which would limit their reach and ultimately their success.
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:
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.
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.
‘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
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.
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 (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.
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.
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.
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.
Planograms: Planning and implementation
Planograms aim to optimise article availability and thus specifically stimulate sales. The term planogram refers to two aspects: on one hand the actual merchandising, i.e. which articles are presented on the sales floor and how, and on the other hand, the detailed quantities for individual colors and sizes in order to meet customers’ demands in the best possible way.
Ideally, merchandising and planogram go hand in hand: customers are inspired by the form of presentation and then, their desired product is available in the matching size. The reality, however, most often paints a different picture.
Planogram – Merchandising
Planogram – Quantities and Priorities
Visually appealing and available in relevant sizes
Breaking this down, there are two questions that retailers face: 1. How to define a planogram for my stores with a suitable size distribution? and 2. How can we implement an efficient refill process such that the plan is properly executed?
With AI (Artificial Intelligence) and RFID-based processes, Detego InStore helps to answer both questions by producing AI planograms. Since the manual maintenance of the planogram per store can be enormously time-consuming, we rely on machine learning procedures to define a precisely optimised size distribution for all articles across the store. Not only does this save an enormous amount of planning time, but it also addresses the ongoing dynamics in individual stores. The self-learning system adapts to possibly changing conditions and continuously optimises the plan.
During the operational process in the store, Detego InStore also supports the store personnel at several occasions: The software offers two parameters that provide information about article availability at any time and therefore represent important KPIs:
- On-floor availability: The percentage of all available articles that are currently displayed on the sales floor
- Planogram compliance: Provides information on how well the planogram with its individual size distribution is implemented on the sales floor
If one of the two parameters fall below certain threshold values, store staff needs to action: In addition to classic ERP systems, Detego InStore offers a finer level of granularity in the stores, by telling store staff that certain articles are available in the backroom but not on the salesfloor and therefore need to be refilled to comply with the predefined planogram. Retailers benefit from a complete process for the planning and implementation. Another advantage: Refill advices in the app are sorted such that the search in the back room is made as efficient as possible by minimising walking routes.
With AI planograms, shelf space is used for top sellers and is not wasted on sizes that are rarely or never bought. With its self-learning components, the Detego platform for the store makes a suitable proposal for all sizes and facilitates implementation in daily processes – including relevant KPIs for measuring performance. And if a certain size is not available in one store, the platform offers an exact inventory view of surrounding stores – ready for click & collect.
Benefits for retailers:
- Individually optimised AI planogram per store
- Efficient use of shelf space according to bestsellers per store
- Guided processes: from planning to refilling
- KPIs to provide insights on operational excellence per store – in real-time
Benefits for consumers:
- High on-floor availability for the locally popular sizes
- Positive customer journey
- Overall increased article availability through exact inventory data on the entire store network – including reservation options
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.
“We’ve implemented RFID across our business in the US and UK and that’s actually really turning into money”
Charles Bergh – CEO Levi Strauss
Watch the video below of our customer Levi Strauss’ CEO, Charles Bergh, discussing the brand’s success and growth, particularly in relation to their large-scale RFID roll-out. He explains the ‘instant clear visibility’ that RFID provides, and how retailers now have the means to reduce the loss of sales due to article availability.
Detego and Levi’s partnership continues to grow as we roll-out RFID across their store network. With omnichannel retailing being a key strategy of Levi’s, our Detego InStore Lean Edition is providing the building blocks of successful store operations with optimal product availability, stock accuracy and efficient in-store processes.
Watch video below (start at 3:30mins)
“We’ve implemented RFID across our business in the US and UK and that’s actually really turning into money”
Charles Bergh – CEO Levi Strauss
Retail software specialist, Detego, will showcase three of its software solutions at EuroCIS, taking place from 19 – 21st of February 2019 in Düsseldorf, Germany. Visitors to Europe’s leading trade fair for retail technology can experience Detego’s market-leading solutions for the fashion retail industry, including real-time inventory intelligence and pioneering IoT and artificial intelligence (AI) projects. The live demos being showcased will be part of an impressive booth setup (Hall 9, booth #C04) which showcases the future of physical retail stores.
For inventory management of the store, Detego offers the InStore Lean Edition which meets the demands of the fashion retail industry for a quick-start solution into the digital store. Offered as a SaaS (Software-as-a-Service) solution with cloud hosting, retailers benefit from high inventory accuracy and consistent article availability at low cost. This is possible through fast and accurate stocktakes and automated replenishment processes, bringing long-term benefits to fashion retailers and most importantly, delivering quick results. The app-based solution can be active within hours and has a clear path of scaling to ensure rapid deployment and an easy functional extension to the Detego InStore Full Edition. “More and more fashion retailers are living by the mantra of ‘keep it simple’ for their RFID implementation which is exactly why we successfully implemented across the world the Detego InStore Lean as an ‘out-of-the-box’ SaaS-based RFID solution.” Says Kim Berknov, Executive Chairman of Detego.
The fitting room is the most important place in the entire store when it comes to purchasing decisions being made. This means that it’s crucial to provide support and additional services for customers. Detego’s Smart Fitting Room provides product recommendations, such as matching items available on the sales floor that can be brought directly to the fitting room by sales staff via a “call-to-assist” button. The customer can gain access to the benefits of e-commerce by looking up other products, checking for availability, reserving articles or having them delivered directly from the store to their home. Links to videos or social media feeds can also help. These value-adding services are what continue to drive consumers to shop in-store.
Answering as many questions as possible for shoppers through AI, Detego’s chatbot supports the sales personnel and bridges waiting times for customers until there’s a salesperson available for individual service. The virtual store assistant accompanies customers throughout their entire shopping experience and provides additional support in the vital decision-making process, such as making product recommendations and earmarking other popular items, bestsellers, discounted articles or product variants. The AI capabilities are not just limited to the chatbot itself, but also work continually in the background by communicating with other systems in the store. The chatbot checks the actual availability of articles and compiles data about customer types and their preferred article combinations and choices. As a result, recommendations become more meaningful and personal and only articles immediately available in the store are recommended.
“We want to introduce fashion retailers to solutions that support them in their daily challenges,” says Dr. Michael Goller, CTO at Detego. “We can show how fashion retailers can positively influence buying decisions and how a digital fitting room or a chatbot help in the sales process, as well as witness how several global fashion brands have successfully adopted the Detego InStore Lean Edition.”
Detailed analysis by retail tech specialists at Detego has confirmed that the average retailer’s data is only about seventy-five percent accurate when it comes to knowing exactly what inventory is actually in stock at any particular time. The problem is often compounded by retailers continually managing stock across multiple channels and increasingly having to stay on top of consumer demands for up-to-the-minute, reliable information. Detego, which has been monitoring its own chatbot service that allows consumers to engage with retailers via their smartphones, found the most common enquiries to be about stock availability. It found data inaccuracies around inventory to be most of an issue in fashion retail where ever shorter product lifecycles, fast turnarounds of stock and multiple style, size and colour combinations can play havoc with the supply chain and in-store operations.
“Customers, above all, want instant and accurate information on product availability,” says Dr. Michael Goller, CTO at Detego. “If you’re shopping for clothes, you want to be sure of getting the exact size and style you’re looking for. But many retailers fall by the wayside here – their systems might tell them that a particular size is available; yet, there’s a one in four chance that this isn’t the case.”
According to Goller, continually relying on manual processes for something as vital to the retail business as stock – usually by shutting up shop once or twice a year for store or warehouse staff to do a stock-take – is madness. And especially given that smart technologies abound, including RFID and mobile devices which ensure continual monitoring and lead to near hundred percent accuracy and operational excellence in the stores.
Research by the University of Parma in Italy has shown consistent sales increases in RFID-managed apparel stores and deduced that “RFID item-level tagging is a powerful tool for improving inventory accuracy, which is a prerequisite for both omni-channel strategies and store floor replenishment from the backroom.”1
Thanks to technology that helps increase the availability of products on the shopfloor – such as using wearable devices that rely on alerts and images to guide staff and speed up the replacement of missing articles and gaps on the shelves – the industry is starting to see a gradual shift towards more connected technologies in retail. IDC Retail Insights predicts that eighty percent of retailers are due to spend on visibility platforms powered by RFID and IoT2 over the next few years.
An extraordinary four-month project sprint for 500 adidas stores in Russia has been successfully completed. The goal: Boost store KPIs such as inventory accuracy, article availability and consumer service to the highest levels. The means to achieve that: Extremely fast, error-free stock taking of 45 million articles per year through real-time in-store processes that are more efficient and intuitively managed, using decision-relevant analytics. The end-to-end integration was accomplished in just four months. The interdisciplinary project team consisted of business, IT, logistics and retail experts coming from five different countries – all working together across ten different time zones. The result: 99% inventory accuracy and the highest on-floor availability that adidas wanted for its stores. The winner: The adidas end customer.
The future? Athletic.
99% Stock accuracy
98.5% product availability
2000+ sales employees trained
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Detego, a market leader in real-time business intelligence for the fashion retail industry, is releasing its latest whitepaper, providing valuable information on the use of Internet of Things (IoT) in fashion stores. Titled as “The perfect customer relationship – How fashion stores leverage Internet of Things (IoT) technologies to put the customer in focus of all activities “, fashion retailers get a practice-oriented guide that highlights the most important aspects such as: Why should fashion retailers deal with IoT?, What problems could be solved in the stores?, What results can be expected? Retail decision makers need to deal with IoT if increased article availability, exact inventories, interaction with customers and operational excellence in the stores are set as objectives. The 35-page guide sheds light on the triangle of “customer”, “processes in the store” and “deployment of new technologies” and shows how the use of IoT benefits retailers and ultimately the customer. The whitepaper is available for download on the Detego website.
Detego discusses the various IoT technologies as a way for retailers to realize the perfect customer relationship. Based on customer’s needs, the practical tips are divided into 1. Self-service in the store: The customer as the main actor, 2. Brand Ambassador: The customer as influencer, 3. Co-Value Creation: The customer as partner and 4. Predictive Analytics: The Customer as creator of the future. All four subchapters describe what retailers can do to connect with the customer and enable an interaction in the store.
In addition, infrastructural prerequisites such as the optimal process support through IoT technology and in particular support for the sales personnel are discussed. With the help of IoT, retailers and their store personnel gain valuable data that is translated into recommendations for concrete action to take. In addition to the operational excellence in the store, it is primarily about the new shopping experience for the customer. The whitepaper reveals the formula for the perfect customer relationship, based on the right technologies and processes and shows how retailers can apply them to their business.