Crisis and change

The relationship between crisis and change is well documented. History is full of innovations coming out of periods of extreme strife. From the collapse of feudalism after the black plague to the invention of the lightbulb during the long depression, even the technology you’re using now, the internet, was a product of the cold war. More recent examples in business (and less historically significant) include both Airbnb and Uber becoming popularised during the 2008 recession. While they both existed before the crisis that popularised them, it was due to a sudden change in customer priorities and needs, where they truly thrived.

Digital technology in a time of physical distancing

Few would argue that COVID-19 is not a global crisis on the same scale as those mentioned above, and great change will be affected by it. COVID is likely to be an engine for major change not only because of its major economic consequences but because of its social implications too.

Video conferencing application, Zoom, has seen an increase in new users of 30x year-over-year, as the platform has become a social tool as well as a business one during lockdown. Speaking of business tools, Microsoft’s team collaboration programme, teams, has had 12 million new users since COVID-19, as businesses get to grips with remote work. Even the physical world of exercise is being supported by digital technology, as applications such as Strava and Peloton have exploded in popularity.

All of these illustrate a major trend of the response to COVID-19 crisis, which has seen digital technology used to bridge the physical distance that is enforced on many worldwide.

Retail’s digital shift – accelerated  

To focus on retail, the story is the same, with there being both an economic and a social impact for brands to navigate. The financial impact of COVID-19 has been huge for retailers, with sales dropping by as much as 70%. This has left almost all brick-and-mortar retailers looking at negative cash flow as a result of closed stores. But even when they reopen, consumer confidence and low foot traffic will still be a concern. Brands will need to find ways to engage with their customers and serve their needs in new ways, as well as to adapt operating models to deal with the major financial strain.

The trend of people relying on and embracing digital channels during this crisis could not be truer in the retail industry. Since becoming the only sales channel available in many categories, eCommerce has soared during the pandemic, with increases of 25-80% depending on the country and industry. Whilst eCommerce is by no means ‘new’, the coronavirus has certainly accelerated its use and numbers are expected to remain higher than before even after the pandemic is over.

Leveraging physical stores in a digital world

This change presents some challenges for brick-and-mortar stores. Even though most brands will have seen an increase in their online sales, stores are still the backbone of retail. But with reduced foot traffic and increased competition from online, stores may need to adapt to stay competitive. Like many trends that have seen sudden surges in popularity during the crisis, the means to do this already exist, but they have suddenly become far more significant.

What are some examples of retail innovations likely to be accelerated by COVID-19?

Retail digital transformation

These developments are just one side of an ongoing digital transformation in retail, that is now more important than ever for retailers to get right. Retailers need the visibility, stock accuracy and item-level data to not only reliably serve customers across channels, but to reduce costs and improve business efficiencies in a challenging economic climate. Some retailers are ahead of the game in this regard and will more than likely absorb the impact of the crisis better than others.

Technologies like RFID, the IoT and advanced analytics modules are driving this digital transformation and creating more agile and resilient operating models. Whilst the current situation in retail is bleak, brands coming out of the other side are likely to be more resilient in the long term, as well as more accessible and seamless for customers across channels.

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Retail's New Normal

Webinar

Apparel Retail’s New Normal: COVID-19 Impact and Future Trends

Now stores are facing new social distancing guidelines, the formula for customer experience has changed. With reduced foot traffic and higher levels of eCommerce, the digital evolution of the retail store is now or never.  Join us on the 16th of June as we dive into the physical and digital transformations behind retail’s ‘new normal’.

Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.
Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.

Apparel Retail’s New Normal: COVID-19 Impact and Future Trends

16th June 4 pm BST / 11 am EDT 

As apparel retail begins to get back to its feet, how are retailers preparing in the short-term, and what lasting effects will there be? The pandemic will cause the rapid acceleration of ongoing changes in the industry, and entirely new ones that could never have been expected.

Now stores are facing new social distancing guidelines, the formula for customer experience has changed. With reduced foot traffic and higher levels of eCommerce, the digital evolution of the retail store is now or never.  Join us on the 16th of June as we dive into the physical and digital transformations behind retail’s ‘new normal’.

 

This webinar will cover:

  • The impact of the COVID-19 crisis on the apparel retail industry
  • How retailers are adapting retail stores to social distancing measures
  • How a shift in the balance between eCommerce and brick-and-mortar is driving retailers to adopt digital-enabled stores
  • How retailers can utilise digital and analytics to optimise operations and solve key challenges

Data by nature: Why eCommerce analytics are steps ahead

Online retailing not only created a new way of shopping, but it also changed the game when it comes to tracking and analysing the shopping journey. There is almost nothing that is not being evaluated while surfing the webshop. Digital-heat-maps of individual online sessions are analysed, showing every click and scroll through the online store. Every possible KPI is monitored: Conversion rate, click-through rate, average order value, the relation between new and returning visitors, bounce rate and retention to name a few. The really powerful thing about this is that analysis is always followed by action, to improve both the effectiveness of the webshop and the experience of its customers.

Data by design? Time for brick and mortar to take some lessons

Naturally, eCommerce has a significant advantage when it comes to analytics, a digital channel is always going to produce more data. Brick-and-mortar stores need to adapt to compete however, and technology is trying to bridge this gap between the physical and digital. Some of the more hardware-heavy options include AI-powered cameras, smart shelves or even aisle-roaming robots.

While hardware-intensive solutions like customer-tracking smart cameras are available, with the right software supporting it, a technology that simply tracks products (such as RFID) and leverages the IoT (Internet of Things) can revolutionise analytics for stores. These technologies and their supporting platforms are a big driver of ‘Digital transformation’ which delivers the analytics and data that brick-and-mortar stores are desperate for.

Here are 3 lessons from eCommerce for improving analytics in retail stores….

The need for real-time data

For years, brick-and-mortar retailers have been complaining about imprecise stock-figures and unreliable historical data. Unhappy with its purchasing decisions based on last year’s sales figures, retailers would prefer to have real-time data and inventories that allow for reliable and economically viable decisions. After all, it is important to avoid high-security stocks in order to reduce capital tie-up.

But why do we actually have this problem? Are the data points offered by the ERP systems not enough? Unfortunately not – it is not unusual that the ERP system shows higher stock than actually available on the sales floor. This so-called “ghost stock” is the cause for various problems in sales, e.g. the ERP system says a certain article, for example, a red skirt in size S, is in stock, but in reality, it is not. It can neither be sold nor refilled from the central warehouse – a classical out-of-stock situation. Or vice-versa, the ERP displays a lower inventory level than is actually available. The reason for these deviations is insufficient accuracy in individual processes that dangerously sum up over time.

Today’s intelligent article management is based on three pillars: fast, RFID-based article identification on item-level, tracking of every movement in real-time and proactive analysis with concrete recommendations for actions to take for the sales personnel. This is the foundation for optimum customer service and efficient processes.

What does real-time data mean for Brick and Mortar Stores?

  • High Stock accuracy
  • Increases product availability of the shop floor from accurate replenishment
  • Allows for convenient omnichannel services like click-and-collect
  • Equips store staff with up-to-the-minute stock information – allowing them to assist customers better

Meaningful KPIs in the store

When measuring KPIs, the practical benefits for retailers are paramount. Three areas of data in the store can be distinguished:

KPIs for Store performance

 

Inventory Accuracy

Whether five or 800 stores, KPIs for measuring inventory accuracy are significant for every retailer and still represent one of the main challenges in today’s business. Retailers, on average, can actually make accurate statements on just about 75% of their inventory (based on SKU level). However, this is not enough to meet customers’ expectations for omnichannel services. Therefore, inventory transparency and corresponding KPIs are essential for retailers´ success.

 

Product availability

Product availability on the sales floor, also known as on-floor availability, is the second central parameter. Initially, it is less about the exact position and more about the fact that the articles are on the sales floor – after all, only items that are actually available can be sold. This key figure can be combined with an alert system that makes sure not to fall short of the defined minimum availability. Complementary to classical ERP-systems, RFID-based merchandise management takes the data granularity to the next level, by knowing exactly at each moment in time if products are really on the salesfloor or still lingering in the backroom of a store.

Detego RFID Software Dashboard

KPIs for individual product & campaign performance

 

Product dwell-time on salesfloor

Having data on item level, store managers are also given important information on the dwell times of articles on the sales floor. This information is more valuable than simple sales data, as it tells us the average time individual products spend on the sales floor before being sold. This can be used to gauge whether products are performing & corresponding with the sales plan. Common recommendations made from this data include moving items do a different location on the salesfloor (i.e. adjusting the planogram)  or relocating excess inventory to another store – both of these measures reduce profit-sapping inventory bloat and end-of-season markdowns.

 

Fitting room conversion rate

One of the most famous KPIs in e-commerce is the conversion rate that describes the ratio between purchases and website visitors and also provides information on certain items that were already in the shopping cart, but for some reason have not been purchased in the end. Specifically, this aspect was incredibly difficult to measure in the store for a long time but can now be measured in fitting rooms using IoT and RFID technologies. This provides meaningful insights into how many, and above all, which articles does a customer take into the fitting room and which one does she/he actually buy?

Detego Reports - Fitting Room Conversions

KPIs on customer engagement and service quality

On an operational side, KPIs can also be used to manage service quality. We’ve already covered product-availability and stock accuracy, which affect the customer just as much as the store with out-of-stocks or unavailable sizes being all-too-common pain points. The replenishment rate provides another angle to combat this, as it shows how quickly articles are replenished on the sales floor.  On the other hand, the fitting room response time describes how quickly sales personnel handle customer requests coming from the fitting room. The KPI “Conversion rate per campaign” shows the success of a campaign and if campaign-specific countermeasures are necessary.

Turning data into actions

The final lesson brick-and-mortar retail should learn from the webshop? Turning data into actions. Since nobody needs a data graveyard, any analysis needs the goal of creating immediate actions to improve. Today’s systems help the management team as well as the store personnel with concrete and automated recommendations for actions to take. This saves time in the decision-making process, unburdens the sales personnel, and enables them to do the right things at the right time.

KPIs should be suitable for everyday business use. Presented visually and self-explanatory, they need to be linked to clear recommendations for actions to take. This frees up store personnel time and provides a data-driven way of optimization. Examples range from simple in-store replenishment advice, i.e. “The minimum stock for article #47699-0010 has been reached – please refill three pieces” to more advanced topics, e.g. to choose a different placement in the store for a specific article when the dwell time on the sales floor is too high compared to other stores. Advanced systems can even utilise AI and Machine learning to automate and refine certain processes, like adjusting store planograms and creating optimal pick paths when replenishing stock.

Detego Instore Edition Refill Advice

Conclusion

Brick-and-mortar retail needs support and an update to the toolbox when it comes to analysis and measures. Not only does the sales personnel benefit from intelligent recommendations for action, but the management team also gains efficient control mechanisms across the entire store network. Decisions are made based on real-time data and therefore allow timely action. Ultimately, the end customer is pleased about a first-class service, which – thanks to the individual and informed advice through the sales personnel – even exceeds the standards of the online retail.

Webinar

Item-level Reporting from
Source-to-Store

Register for this webinar where we outline the impact of digitisation on supply chain analytics and operational efficiency. Covering the wealth of item-level data unlocked by RFID, the presentation will explain the new KPI’s available for modern supply chains and their impact on retail operations.

What is in-store fulfilment?  

In-store fulfilment, also known as ship-from-store, is an Omnichannel retail strategy that essentially involves utilising retail stores as miniature distribution centres. This allows eCommerce orders to be fulfilled and shipped to customers from either the primary DC or a nearby store. Having multiple options for fulfilment available means retailers can take some pressure off DC’s and offer customers more stock and faster delivery by utilising nearby stores.

Detego Ship-from-store

Could ship-from-store be a viable strategy during the COVID-19 pandemic?

The use of in-store fulfilment and ‘mini DC’s’ has been steadily growing for years, due to both the continued growth of eCommerce as well as the inherent business benefits listed below. In the current climate of COVID-19, with stores closed and the immediate-future uncertain, leveraging closed stores as DC’s could potentially help alleviate the increased pressure on eCommerce operations and help brands achieve business continuity during this time. The practicality of this will vary between brands and even countries, but its possible a reduced small team of staff could run as an effective warehouse during the coming months.

What are the advantages of using stores as miniature Distribution Centres?

  • Takes some pressure off DC’s, meaning a brand can handle increasing eCommerce orders without needing to invest in additional DC’s
  • Reduces shipping costs by moving distribution points closer to destination
  • Increases delivery speed as orders are shipped from nearby stores
  • Idle inventory that is sitting in stores can instead be sold through eCommerce – increases margins by preventing seasonal mark-downs.
  • Ship-from-store is an effective and profitable way to prevent inventory stockpiling up at the wrong locations
  • Retailers can offer customers more products i.e. not just inventory available at the DC
  • Alternative ‘mini-DC’s’ offer fulfilment options if the primary DC is temporarily shut down or disrupted.
  • Leverages staff during slow periods for stores or if stores are temporarily closed
  • Offers more products/sizes to customers (see figure below)
Product availability increase from ship from store

What is required to leverage stores as DC’s?

Whilst the benefits are huge, getting in-store fulfilment right is a fine balance and requires a certain amount of technology and digital integration across the supply chain. Retailers who attempt to offer ship-from-store (or any omnichannel capability) without these prerequisites will struggle. According to the Accenture study ‘Transforming Modern Retail’, Survey respondents that offer ship-from-store claimed that 31 percent of such orders triggered a split shipment, a result of not having the right foundations in place.
So, what do retailers need in order to utilise in-store fulfilment?

  1. Inventory Visibility – First and foremost, for cooperation across and between shopping channels, (i.e. for eCommerce to leverage inventory outside of their primary DC) brands need to have inventory visibility across their supply chain and stores. This view of stock needs to be unified between all channels and be as up to date as possible in order to achieve a ‘single point of truth’ for a brands merchandise.
  2. High Stock AccuracyHaving visibility over all of a brands merchandise is a start, but if this information is not highly accurate, cross-channel initiatives like this one will be fairly ineffective. Retail store inventories can be as low as 70% accurate when it comes to item-level product information. If this is the baseline for ship-from-store, it will result in either split shipments or cancelled orders – resulting in high costs and disappointed customers. For Omnichannel options like this, accuracy needs to be near 99% to confidently offer advanced purchasing options to customers.
  3. Investment in StoresTo facilitate in-store fulfilment a certain amount of investment needs to be made for stores. This may involve slightly altering the layout of a store, or hiring extra staff, depending on the business. More crucially, investment may need to be made in technology to achieve the accurate inventory visibility required to offer ship-from-store. This may include advanced inventory management technology like RFID.
  4. Maintained Store Inventory levelsOnce this is in place and retailers are utilising in-store fulfilment, care needs to be taken to maintain the balance of store inventory between stock available to be used for eCommerce fulfilment and stock that is available for sale in the store. This is a fine balance to maximise sales between both channels. Retailers must ensure ship-from-store orders do not cause out-of-stocks for the brick-and-mortar store that is fulfilling them.
Challenges of offering ship-from-store

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Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
What does the future of apparel retail stores look like after COVID-19 and beyond?
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.

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.

Want to learn more?

Retail's New Normal

Apparel Retail’s New Normal: COVID-19 Impact and Future Trends

Webinar

Now stores are facing new social distancing guidelines, the formula for customer experience has changed. With reduced foot traffic and higher levels of eCommerce, the digital evolution of the retail store is now or never.  Join us on the 16th of June as we dive into the physical and digital transformations behind retail’s ‘new normal’.

Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.
Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.

Radio frequency identification (RFID) has had a fairly long road to adoption in the retail industry. Leading the way on this journey has often been large tier 1 retailers, either investing and experimenting with the technology in-house or partnering with early RFID specialists like Detego.

However, in the more settled retail RFID industry of today, implementing the technology is a different prospect. Here’s 4 reasons why there’s never been a better time for small and medium retailers to reap the benefits of RFID:

1) RFID has Lowered in Cost

 

Naturally, price point is a huge factor in choosing to implement a new technology for retailers of any size. Like most technologies, RFID was at its most expensive when it was new, but over time has become more and more affordable. This drop in cost is mostly down to the price of RFID tags themselves decreasing significantly. In the early 2000s, tags cost up to $0.75 (Approx. £0.50) whereas these days the average cost is between 3 to 8 cents (so around £0.05).

Developments in hardware and software also make a difference to the price point of RFID projects. For small and medium sized retailers, in particular, the need for only a single handheld reader per store, new hardware like mobile RFID label printers, and the availability of modular cloud-based SaaS solutions can lower the initial investment required to get started with the technology. This combination of industry progress makes leaner, more affordable RFID solutions a reality.

Handheld RFID reader performing a stock take

2) The Established RFID Industry Presents Less Risk and Better Knowledge Application

 

In the early days, RFID projects presented something of a risk. Bigger brands have the resources and personnel for (often in-house) ‘trial and error’ projects, but smaller organisations do not. Now that Retail RFID is an established sub-industry, retailers no longer have to go it alone and have far more options in terms of vendors, partners and solutions. This often means no steep learning curves and more stable and effective digital transformations. In other words, it’s now known what works and what doesn’t work for RFID in the retail industry.

 

How has RFID become more feasible for retailers over time?

  • Expanded and established use cases
  • Project stability
  • Securing return of investment
  • Easy and less expensive implementation

3) RFID Implementation has Become Easier

 

Historically, implementation has always been a barrier to entry for RFID. This is because adopting RFID is a fairly transformative project, meaning you have to make significant changes to see the significant benefits. Unfortunately, these changes have looked too daunting for many a retailer, especially for smaller brands who don’t have the resources to spare on long projects or clunky transformations. In recent years however, established RFID solutions offer more of a ‘plug and play’ experience.

 

How has RFID implementation changed for retailers?

  • Out-of-the-box solutions
  • Cloud-hosted platforms
  • Smart shield
  • Able to print and encode labels on-site

4) Scalable Solutions are the Perfect Platform for Smaller Retailers to Unlock the Value of RFID

 

As well as easier implementation, scalable SaaS solutions are now common practise, making RFID projects easier to manage and develop over time. A scalable solution means retailers don’t have to jump straight into the deep end. This makes the technology far more accessible for retailers of all sizes, but perhaps particularly for smaller sized retailer who have a limited technology budget and need to invest over time.

Scalable solutions, like the Detego platform, often focus on core deliverable KPI’s like inventory accuracy and product availability in stores. This is because they provide immediate ROI as well as being the key foundation for many of RFID’s other use cases. One of the main benefits of scalable RFID for smaller retailers is the quickly established ROI can fund the additional investment needed to scale the solution, providing a much easier route to full adoption.

Here’s an example of what a scalable in-store RFID solution (The Detego Store platform) looks like:

An example of a scalable RFID solution: Divided into features

Putting It All Together – What an RFID Project Should look Like for a Smaller Retailer.

So, a smaller retailer  can take advantage of RFID with only a single handheld reader per store and a lean cloud-hosted RFID solution run through a mobile application. Other than the initial change in production to introduce source-tagging (adding RFID labels at the factory) implementation for such a solution is very minimal. The result of this would be rapid increase in stock accuracy, product availability and a subsequent increase in sales. This type of project provides an almost immediate return of investment, the retailer could then choose to scale and advance their solution at any point or stay with what they have and benefit from a leaner, better managed inventory.

Summary

Not only has the technology matured, including tags, hardware and software, but RFID use cases, best-practise and implantation strategies have now been firmly established. Additionally, the RFID sector is now an established market in its own right, meaning smaller enterprises don’t have to go it alone. By using established and experienced specialist partners, retailers can skip the learning curves and go straight to reaping the benefits of RFID.

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Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
What does the future of apparel retail stores look like after COVID-19 and beyond?
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.

Summary of Reiss and Detego’s UK project

 

Luxury high-street brand, Reiss, has been operating in the UK for almost 50 years with 160 stores globally. Their reputation for quality and service is what sets them apart, and they recognised that in the modern environment, serving their customers to the highest possible standard requires strong digital foundations.

To achieve this, Reiss has initially implemented the Detego platform across its 50 UK stores. Digitising their view of stock as well as increasing their stock accuracy across all stores were priorities, as these would provide an important baseline for future projects as well as allowing them to continue to serve their customers with a high level of service.

The rollout was completed in 8 months and has since seen results of 99% stock accuracy in stores and a consequent 4% uplift in sales.

 

The Challenge:

Responding to shifting customer expectations, Reiss looked to begin a ‘digital transformation’ of their inventory to secure stock accuracy, efficiency and stock visibility for their growing omnichannel portfolio.

The Solution:

Reiss began RFID tagging individual products at source, giving every item a unique digital ID that is readable via radio waves from several feet away. They then implemented Detego’s cloud-hosted inventory management software across their store network to digitise store processes with fast and efficient RFID methods. This meant they could perform accurate, daily stocktakes of their stores, rather than doing a just a few each year.

The Result:

Reiss saw their stock accuracy increase to 99% in their stores with a 4% sales uplift as a direct result of this. Additionally, they now have a complete and accurate digital view of stock across their store network. Not only does this mean Reiss staff know exactly what is in their stores at all times, but it is a solid foundation for future expansion into the digital arena.

4% Increase in Sales

99% Stock accuracy

Reiss store

The Steps to RFID success

Best Practise Implementation

Detego worked alongside Reiss to understand their business goals and implement a phased approach to the use of RFID. An initial pilot project involving 5 stores allowed Reiss to understand the implications on process change whilst proving the business case to their stakeholders. Following that, an efficient rollout of the remaining UK stores was enabled by our professional services team and cloud-hosted solution. Reiss chose to focus on the fundamentals of stock accuracy and product availability for their customers first. This allows them to set the foundations for new services and feature additions following the success of this initial implementation.

Transforming stock takes

With the application live in stores, Reiss staff now perform stock takes daily, rather than a handful of times a year. This can be done due to the speed and ease of a Detego stocktake. Because RFID reads can be done without direct line of sight and at a distance of several feet, Reiss staff can do a cycle count of their entire stores in around 30 minutes. Naturally, daily stock takes will drive accuracy but the fact that the Detego stocktake removes human error and is displayed on a user-friendly mobile app means Reiss achieve near-perfect levels of inventory accuracy.

‘The use of the Detego app has really improved our daily processes. Having a stock take every day as opposed to only twice a year really streamlines the accuracy of our stock file and the replenishment process.’

Giorgio Leone-Mazza, Reiss Store Manager

Stock accuracy

As a result of implementing the Detego platform, Reiss now have on average 98% inventory accuracy in their stores. This has a huge impact on Reiss and their customers. Reiss stores’ backroom inventories are very lean and they replenish directly from their central DC. Having an accurate view of stock is crucial in such a system, as inaccuracies mean incorrect replenishment which in turn creates out-of-stocks and unsatisfied customers. With accuracy close to a 100%, Reiss can be confident that their merchandise is leveraged with total precision.

With very few inaccuracies, customers are rarely disappointed by items being unavailable and they can continue to serve their clientele with the same level of service that they’ve been renowned for almost 50 years.

Reiss’ merchandise itself is their second most valuable asset, behind only their customers, so it is important to leverage it as effectively as possible. Having an accurate view of stock is the only place to start this and ensures that they can prevent end-of-season markdowns as a result of ‘losing’ stock for a season due to inaccuracy.

‘We scan every day, giving us the accuracy of the exact stock we have in the store, in roughly 35 minutes’

Manisha Hassan, Reiss Store Manager

The road to Omnichannel

One of Reiss’ main long-term goals for their technology investments was to offer a top-class omnichannel experience, opening up more inventory for their customers to choose from and utilising their stores as miniature distribution centres. Having a highly accurate view of stock is a non-negotiable requirement to offering good omnichannel services, inaccurate stock means inaccurate omnichannel. With an accuracy of near 99%, Reiss will be able to deliver services like click and collect and ship-from-store with confidence.

Reiss’ merchandise itself is their second most valuable asset, behind only their customers, so it is important to leverage it as effectively as possible. Having an accurate view of stock is the only place to start this and ensures that they can prevent end-of-season markdowns as a result of ‘losing’ stock for a season due to inaccuracy.

‘The RFID project at Reiss has focussed on simplicity, driving accuracy very early in the cycle, using software as the base level.’

Martin Schofield, CEO of Retail 247

Reiss RFID with Detego

Did we spark your interest?

(For an introduction to combining AI and RFID see this article)

When it comes to using Artificial intelligence (AI) and Radio Frequency Identification (RFID) in retail for process optimisation, the majority of use cases involve management or ‘HQ’ level decision making. These include automating functions such as store planograms and stock optimisation between stores.

However, AI can also impact retail on a much more micro and everyday level, actively assisting store staff in one of their most common daily routines –stock replenishment.

Using RFID and the information it collects from stock reads, we can produce AI pick lists to optimise and guide staff through the replenishment process. Not only are we combining RFID technology and AI algorithms to produce these pick lists, but existing RFID processes are already assisting staff. When you put all this together, replenishment become a walk in the park.

Let’s start at the beginning…

RFID-based Stocktake and Replenishment – The backbone of modern stock management

With RFID, store staff can do regular (often daily) cycle counts of the entire store quickly and easily. This is simply done by walking around the backroom and salesfloor with a handheld reader that counts items that are several feet away, using radio frequency. An RFID application or software, like the Detego platform, will then compare the actual stock levels of the shop floor with the desired counts (i.e., planogram), and tell staff exactly what needs to be replenished from the backroom.

Stock Take and Replenishment

So far, what has just been described has been entirely RFID-based and is the standard process for RFID in retail. This is already far easier and more accurate than traditional methods, not to mention the actual effect of the technology like higher stock accuracy and product availability. But why stop there?

Taking it one step further – AI pick lists for ‘mapping’ the perfect replenishment path

Normally, even with the support of RFID, the store staff are then left to fulfil replenishment by themselves, using the list provided by the application. These pick lists are often only sorted by product features such as name or price. Because back rooms can be quite large in bigger stores, or densely packed in smaller ones, the staff’s ‘pick path’ can be incredibly sporadic. This is made even worse in the case of new staff who don’t know the layout of the backroom by heart, or even experienced staff if stock has simply been moved around and updated with the start of a new season.

Current Pick Paths

By utilising new tag localisation techniques, it is now possible to locate where items are in the backroom in relation to each other. This is done during the regular RFID stocktakes that are already taking place, utilising data mining and machine learning pipelines without any need for additional hardware or specialist tags. Using this information, we can create automated AI pick-paths that, using a mobile application, guide staff through replenishment and present the most efficient order to collect items in.

AI Pick Paths

The above example is designed to present the quickest possible replenishment route for staff, so is solely using items’ distance from one another to calculate a pick list. However, AI pick lists can process the replenishment list in a number of ways, depending on what the store wants to focus on.

Replenishment paths could take additional factors such as product value or expiry date into account, alongside the location of the items. It would then look for items that fit this rule and are nearby one another in the backroom. For example, a pick list targeting on-floor-availability would group nearby items that are running low on the sales floor, so that these items are refilled first to speed up the replenishment process whilst also combatting loss of sales from out of stocks.

Benefits of AI-pick lists

Did we spark your interest?

Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
What does the future of apparel retail stores look like after COVID-19 and beyond?
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.

Webinar Recording: Combining AI and RFID Taking Retail Inventory to the Next Level

 

Artificial intelligence (AI) is becoming increasingly utilised within the retail industry. One of the main challenges with the technology is having enough relevant data to be utilised or ‘fed into’ an AI system. With Radio Frequency Identification (RFID) providing huge amounts of accurate item-level data for merchandise, the two are a match made in heaven.

This webinar cover AI’s applications for stock optimisation and how machine-learning can ensure products are always in the right place at the right time, including:

  • AI-driven, automated planograms for optimised product availability
  • Visual merchandising and ‘Money mapping’ in stores to monitor and increase sales.
  • How RFID stock-takes and AI pick-lists combine to make replenishment faster and more accurate than ever
  • How machine learning smart fitting rooms are bringing accurate cross-selling into the physical store
  • Using AI for demand prediction and stock optimisation across store networks

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?

Item-level data and the 3 key building blocks to supply chain optimisation - visibility, traceability, and accountability
What does the future of apparel retail stores look like after COVID-19 and beyond?
The RFID retail SaaS platform provider, with offices in the UK, Europe and CIS, are bolstering their global reach with associates dedicated to the US market.