Tag: Fashion

Complete Supply chain visibility was once an optional bonus for retailers, but in the modern industry it is becoming more and more of a necessity.

Whilst in the past, limited tracking of shipments in the supply chain was commonplace, in the modern environment with its more complex supply chains, delivery options and increasing customer expectations, retailers need to do more.

This isn’t just us saying so, retailers recognise this too. According to a report by Zebra Technologies, 72% of retailers are working on digitizing their supply chains in order to achieve real-time visibility.

The ‘New’ Challenges:

Multi/omni-channel businesses – It seems like an age ago, but traditional retail supply chains went in one direction and to one place – stores. Now almost all retailers also run their businesses online meaning their they operate on multiple sales channels, therefore, their supply chains service far more destinations than before.

Multiple delivery options – A relatively recent challenge created by the growth of online and the already mentioned omnichannel purchasing options. Retailers want to offer their customers as much stock and as many purchasing options as possible, but without the technology to support it, this can cause problems. In an Accenture survey, respondents claimed that 31 percent of their Ship from Store orders triggered a split shipment.

Customer expectations – Customer expectations has shifted. In a 2019 report, it was found that Half of shoppers reported abandoning a purchase due to a lack of cross-channel buying options. This is a major impact on sales, and many retailers are starting to adapt to the change in expectations.

The Old Challenges:

Supply chain inefficiency – Supply chain inefficiencies and miscommunication through “Chinese Whispers” are costing UK businesses over £1.5bn in lost productivity according to analysis of industry data from Zencargo.

Supply chain shrinkage – According to the National Security Survey, businesses in the United States lose $45.2 billion through inventory shrinkage a year. Whilst retail stores make up the majority of this, supply chains still experience large amounts of inventory shrink, particularly when they have no visibility of products.

The Detego Platform allows retailers to gain complete visibility over their operations

If you’re looking for a solution or partner to help achieve better supply chain visibility, consider our platform!

Using RFID item level-tagging, the cloud-based Detego platform gives each individual item a unique digital identity. Items are then tracked from factory to shop floor using radio frequency identification (RFID) methods. RFID makes this possible as inbound, outbound and even exception handling can then be done through RFID reads – which are fast, accurate and can be done without opening cartons.

Since RFID works on the individual item-level, the result of this is complete visibility of the supply chain. The platform utilises the IoT to create a complete overview of every single product in the supply chain, as its cloud hosted this can be close to real-time and is the ‘single point of truth’ for the entire business.

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.

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 logistics – On 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 fraud – This 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.

When it comes to digital transformation, RFID (Radio Frequency Identification) has been the hype in retail for several years now. It has, however, been a bumpy road to success. In the past, stories of failed implementations and botched rollouts were far too common and kept many retailers from taking the plunge. Thankfully these days the picture is much more encouraging. We are now spoilt for case studies and examples of retailers having enormous success with the technology to digitise their inventory and processes for the modern retail environment.

So, what makes the difference between failure and success?

Ultimately it comes down to a combination of knowledge, technology and price. Improvements in all three of these areas have evolved the technology into a vital component of any digital transformation journey in retail. But as with any transformative project, getting the detail right is vital. The approach to implementation and suppliers you choose to engage with will have big implications on ROI.

A best-practise approach is easier said than done, so you need to surround yourself with a team of experts who have skin in the game and ensure the solution you choose to implement has the capabilities to lead your digital transformation for years to come.

 1.   Understand the problems you want to solve and clearly define the KPIs

The first step in any new tech investment is to be sure that you have clarity around what problems you are hoping to solve. This will often require some hard-hitting questions and honest auditing of current processes and data to understand where you and your customer’s biggest pain points are. Customer feedback surveys are always a good way to gain insight into this.

What common retail problems can RFID solve?

• Stock inaccuracy leading to out-of-stock situations
• Poor product availability on salesfloors and webshop resulting in lost sales
• Labour costs and operational inefficiencies
• Reduction in excess/safety stock
• Inventory visibility and supply chain traceability

Luckily, these problems all have clear KPIs related to them and can be used as a great measurement tool to understand your current position and build a business case for the investment.

2.   Choose a software partner that will help you achieve more

Once you have clearly defined RFID as the technology you want to implement, it is then vital to choose the right partners to go on your digital transformation journey with. Within the RFID market, there are generally three partner types – hardware, labels and software. The software component is the most important aspect as this must be able to process all the data, integrate with existing systems and empower employees with user-friendly applications to improve daily processes. Choosing the best-suited partners will make all the difference to ensuring you have a scalable and future proof solution for the next 5+ years.

What to look for in an RFID software partner?

• Credibility in the market – do they have proven RFID deployments with reputable brands in your sector?
• Future-proofed services – do they have a product roadmap that inspires innovation and constant improvement?
• Scalability and flexibility – does the solution fit your business needs and implementation roadmap?
• Industry expertise – do they have deep industry knowledge to understand your specific business requirements and help you think through these challenges?

5.   Full omnichannel enablement

After securing the foundations of stock accuracy and on-floor availability in stores, the next step is to connect the online and offline business. Omnichannel services such as click & collect (aka BOPIS) and Ship-From-Store are expected in the modern retail environment as consumers demand to shop anywhere, anytime and any way they want. However, it’s important to ensure you can deliver on these retail experiences so that customers don’t end up disappointed. Enabling this requires connecting inventory from your store networks with your distribution centres and webshop to create a single and transparent view of stock.

 What’s required for Omnichannel retailing?

• Transparent view of stock across all stores made available to the online store
• Automate warehouse processes with RFID tunnel and outbound processes
• Offer new services such as click & collect, ship-from-store etc.

At Detego we know retail and we know RFID. This combination has enabled us to develop the most innovative RFID software solutions on the market, alongside major global fashion brands. With RFID now on almost every retailer’s roadmap, we have the answers for any step of the journey, anywhere within your operations.

Everyone has to start somewhere, which is why we have out-of-the-box solutions to quick-start your RFID journey. Alternatively, if RFID is well and truly ingrained in your business, then talk to Detego about how we are using AI and innovative new practices to take real-time decision making to the next level.

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…

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.

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

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.