Tag: Store

2020 has been an incredibly difficult year for people, countries, and businesses. We have covered the effects of COVID-19 on retail in great detail, so let’s begin to look ahead at 2021 and what the key trends are likely to be in the increasingly-familiar ‘new normal’ and beyond. Starting with a key priority for retailers both for now and next year: Reducing labour costs in stores.

With the financial impact of this year, as well as the reduced sales in brick-and-mortar stores as more customers opt to shop online, retailers need to cut costs in innovative ways to stay profitable. Cutting costs negatively, by getting rid of staff or stores or putting pressure on employees over scheduling, time theft etc all harm staff, customers, and sales. However, there is a more positive or proactive way to achieve this – improving store processes by implementing technology in stores. In this article, we’ll cover where these improvements can be made and where RFID, in particular, can allow retailers to drastically lower labour costs.

Before we get into what technology can do to cut labour costs across the board, let’s first establish why other forms of cost-cutting should only ever be a last resort for retailers, and even then are unlikely to produce positive results. To do that its helpful to establish the difference between optimising costs and cutting costs.

Optimising – not spending on excess staff or stores that are not needed (very rare)

Cutting – getting rid of staff or entire stores that are required as a cost-saving measure.

When it comes to large or global retailers with hundreds of stores, cutting labour costs at scale by reducing staff falls almost always into the latter category.

But this can have huge repercussions on a stores performance and their ability to serve customers. According to RetailDive a study of one apparel chain found that they were only achieving 85-95% of their potential sales due to its staffing levels. According to a separate report from Massachusetts Institute of Technology, 6% of all possible retail sales are lost because of lack of service, as customers are unable to locate help.

In short, cutting labour costs by reducing staff in stores simply doesn’t pay. So, what are the more positive and proactive ways retailers can cut labour costs in stores without harming staff, customers, or profits?

When looking at the most staff-intensive areas of a store, you have to start with the checkout. While it does vary depending on the category, with grocery being particularly prevalent, cashiers and point-of-sale are a huge drain of staff and therefore a large source of labour cost. But removing staff from this area without offering any alternatives is not effective as long ques scare away customers and hurt sales. So, the options to reduce costs associated with the checkout are:

.

Offer self-service checkouts

It may seem like a no-brainer, and for some retailers it is. Since there is no need for a cashier at every register, one employee can easily monitor 6-10 self-service registers which free up staff to be available elsewhere in the store. However, outside of the food industry, self-service hasn’t really taken off mostly due to the higher price points of items making checkout theft a much bigger concern, in these cases, there is often also a need for staff to remove things like security tags (more on this later).

.

Implement technology at PoS that makes the checkout process faster

The other option that is available instead of or in tandem with self-checkouts is improving PoS technology to make it faster and more efficient, reducing the number of cashiers needed. Popular European food retailers, Aldi, who was described by CNN as a ‘brutally efficient grocery chain’ have barcodes all over their products, making their cashiers infamously fast. But for many retailers and sectors, this isn’t feasible, so what is the other option? An RFID tag can achieve the same purpose as the radio frequency it emits can be read at any angle. Even better, every item can be scanned/read at the same time! Having RFID-enabled checkouts can not only massively cut queue times but also reduce labour costs by having fewer staffed checkouts per store.

Loss prevention is a key principle for most stores. When you are trying to maximise revenue, losing stock and sales eats into profits and makes thin margins even thinner. Naturally, the majority of retailers have systems and technology implemented to combat shoplifting in stores, with the most common being ‘hard’ security tags that need to be removed by staff before passing through the store’s EAS gates. But these tags come with a hidden cost: it’s estimated that a single security tag costs around $0.30 in labour costs to add and remove from each item. Added to the cost of tags themselves this can add up fast, particularly in sectors like apparel where this is done for every item. But since not having loss prevention in place is just as costly, what are the alternatives? RFID tags can be used with EAS gates, and provide a more cost-effective option. They are the ‘soft’ version of such security measures meaning they do not need to be removed before leaving the stores but are slightly less durable. If we are keeping score here, using RFID instead of hard tags have the following advantages:

• The tags themselves are cheaper
• They are tagged at source, meaning store staff don’t need to do it
• They do not need to be removed by staff, as once confirmed as purchased by the PoS, they simply do not set off the EAS gate
• They are multi-functional, meaning that tags can be used for stock management, PoS and loss prevention

Finally, let’s move away from daily processes and labour costs and look at something that (most) retailers only do a handful of times a year but at great cost: The full store stocktake or cycle count. The cycle count is a necessary evil to know exactly what is in retailers stores to maintain stock accuracy and optimise working capital. However, without supporting technology these stocktakes are big undertakings – which is why they are done so rarely. Larger retailers often use third-parties to perform these stocktakes, which cost around $2000 per store (depending on size). When you do this for an entire store network – the costs add up fast.

The best alternative to this? Implement RFID in stores, meaning staff can regularly perform RFID stocktakes on a weekly or even daily basis. This removes the cost of the annual stocktakes, but are you just replacing it with the cost of RFID itself? The reason this works financially is the long list of benefits you gain from using RFID, most notably an increase in sales and a reduction in running costs (both from reduced labour and less running capital). This is not just us saying so as the list of retailers who use of RFID has grown hugely and more and more retailers are choosing to adopt the technology.

As we look to round off what has been an incredibly disrupting year with the all-important holiday season, how is the retail industry likely to fair? Will the usually busy holiday season provide some much-needed relief to retailers feeling the pinch of a tough year, or will sales and profits continue to struggle? We analyse the figures and identify the key trends that will rule this year’s holiday season.

In terms of general outlook, the majority of experts are predicting the coming season to be positive in general, but with less growth compared to previous years. ICSC and CBRE both predict less than 2% growth in sales for the period, compared to the average of 4.1% we typically see in the holiday season. Considering the economic and social disruption of the past year this lower than normal increase is to be expected, but ultimately will cap off what has been several months of steady growth in both the UK and the US. If we look at consumer polls, the outlook is similar, with a survey from Maybe* finding that its ‘Christmas as usual’ for 71% meaning they plan on spending the same as in ‘normal’ years.  But the way customers, and indeed retailers, go about this holiday season looks to be very different from previous years.

Let’s take a look at some of the key trends for the upcoming holiday season:

Black Friday is the event that kicks off the holiday season, typically meaning high discounts, crammed shop floors and long ques outside of stores. Due to the realities of the pandemic many retailers have extended their Black Friday offerings to cover several days or even weeks, in an attempt to prevent overcrowding in stores. COVID may have moved the starting line of the season altogether however with prime day, typically taking place in July, pushed back to earlier in October. If ever there was a retailer big enough to move the needle by themselves, it was Amazon – and several retailers in the US including Target and Walmart launched their own deals at the same time to compete with the online giant. Customers will be keen to take advantage of these deals this year more than ever, and according to AlixPartners, 49% of consumers plan to start their holiday shopping by Halloween or earlier in the US, and in the UK Maybe*’s survey found that 65% of respondents have already started their Christmas shopping this year.

‘The season will ultimately cap off what has been several months of steady growth in both the UK and the US.’

‘COVID may have moved the starting line of the season altogether however…’

‘eCommerce sales (are predicted to) grow between 25-35% year-on-year, compared to 14.7% in 2019.’

‘Retailers hoping to make the most of the period will need to focus on ensuring safety and customer confidence in their stores’

‘it seems many retailers are planning on discounting deeper and earlier this year’

‘online channels have been, at least temporarily, promoted from supporting operations to the heart of the business.’

‘80% of shoppers expect to increase their use of these services over the next six months’

Omnichannel retailing, offering customers a unified and convenient experience across and between shopping channels, has exploded back into relevance this year. For those in the industry, it might feel like it’s been around for ages – and it has. So long in fact that omnichannel grew into a buzzword that was thrown around relentlessly to the point that the term was declared ‘dead’ by many. The reports of Omnichannel’s death have been greatly exaggerated, however, with the ability to serve customers across multiple channels becoming a life raft for many retailers this year. While the conditions faced this year will be once-in-a-lifetime, many of the effects and trends may be long-term.

In short, omnichannel is the perfect connection and interplay between a brand’s physical and digital channels. A pie in the sky omnichannel experience is one where the differences or barriers between shopping in-store, online or on a brands app do not exist. You can check a physical stores stock levels on an app, the webshop remembers what you purchased in-store and uses it to recommend you more relevant products and so on. More grounded and familiar examples of this type of retailing are services like click-and-collect (Buy-online-pick-up-in-store) or ship-from-store (buy-online-ship-from-store).

Omnichannel was born from the need for (traditionally) brick-and-mortar brands to compete with online shopping. When retailers tried (and failed) to compete with established eCommerce giants such as Amazon or ASOS by simply launching webshops of their own (Multichannel retailing), they took it one step further. Rather than beat the likes of Amazon at their own game, retailers began doing something Amazon (at the time at least) couldn’t do – leveraging both their physical and digital channels, not in tandem but in unison. For this to work the connection between these channels should be as seamless as possible, so that it stops being the brand’s online experience bleeding into the physical, or vice versa, and it simply becomes the single brand experience.

This move towards omnichannel can come from both directions, as in recent years we have seen pure-play eCommerce brands expand into stores. Amazon for example is building futuristic stores which use customers’ existing amazon accounts instead of checkouts, and are filled with advanced retail technology, blurring the line between physical and digital. Not only is this a unique example of an omnichannel offering but it shows the fact that an omnichannel approach is not just for brick-and-mortar retailers trying to stay competitive, even the ‘disruptor’ e-tailers are repositioning to an omnichannel offering.

The effect of COVID-19 on retail has been well reported so we won’t delve into that here. The key conditions for the relevance of omnichannel are the huge spike in eCommerce and customers reluctance to return to stores. A report from Nosto claims at the height of lockdowns online channels spiked 66%, and a separate report from Klarna found that 71% of shoppers are putting off doing their Christmas shopping in-store this year due to COVID concerns. Whilst brick-and-mortar sales struggling or stopping entirely was bad news for any retailer, brands that have more advanced digital and omnichannel capabilities have weathered the storm far better. They have done this by being flexible and serving the customer wherever is more convenient and comfortable for them. Whilst for many this is online for others it is a mixture of both. This is where the interplay between channels with services like curbside can make a real impact.

As stores have re-opened, many customers want to purchase products from their local stores but are still cautious about fully returning to in-store shopping. Buy-online-pick-up-from-store (BOPIS) offers a convenient and safe solution to these concerns. Customers can check online what stock their local store has available; purchase items online and then collect from the store the same day. This offers a convenient and contact-free alternative to shopping in-store, with Curbside pickup the same concept except customer don’t even have to enter the store. According to customer surveys, 80% of shoppers expect to increase their use of these services over the next six months, and 85% have already significantly increased their use of curbside since the year began. Whilst the initial spike in demand for these services was due to COVID-19, as customers grow accustomed to the convenience, the demand for BOPIS will continue well beyond the pandemic.

On the other side of the omnichannel coin, we’ve seen many retailers absorb the eCommerce bump through the use of ship-from-store. Simply put, ship-from-store involves fulfilling online orders using store stock, effectively leveraging stores as miniature distribution centres. The benefits of this under normal circumstances are already significant, such as cutting down on last-mile fulfilment and offering customers more stock. During the pandemic, however, ship-from-store was a lifesaver for many, allowing brands to not only capitalise on increased online orders but to leverage quiet or even closed stores to prevent unsold inventory piling up. Two of the largest retailers in the USA have been betting heavily on ship-from-store this year, not only as a way to ride the wave of the pandemic but to even compete with the power of Amazon. Walmart expanded their ship-from-store capabilities to 2,500 locations earlier in the year, whilst target reported fulfilling 90% of their online orders from store cutting the cost of fulfilment by 30% and overseeing 100% increase in digital sales YoY.

The key question is of course, how temporary is this change? As things start to get better around the world, will brands who have bent over backwards to reposition to the ‘new normal’ only find themselves at a loss if things completely revert back to normal? While the drastic increases to eCommerce will fall off a certain extent, in the long-term it will remain higher than pre-pandemic levels. The report from Nosto suggests that this is now levelling off to an average increase of 7%. Not only does this mean the business case for omnichannel services is still stronger than it was at the start of the year, but as customers have relied on services like online and curbside out of necessity, in the future they will continue to demand it of a preference for convenience.

Not finding the right product in the right size is a pain point all too common when shopping in stores. How many times have you not purchased something from a store simply because it wasn’t available, or you couldn’t find it in your size? Use of the Detego replenishment feature improves the availability of products in stores to over 95%. Product availability means having at least one of each product on the sales floor ready to purchase at all times – down to each specific size and colour. So, this means that customers looking for a particular product have at least a 95% chance of finding what they’re looking for, increasing both sales and customer satisfaction.

All stores will have processes for replenishment. It’s a core operational function for retailers that’s vital to maintain sales and keep stores running. Like many operational processes, however, there is great variance in how effective a stores replenishment might be. The two key factors to look at are the accuracy and the timeliness of replenishment. If stock information is incorrect, then any replenishment list created from it will be inaccurate, meaning items that aren’t available on the sales floor are not replenished and therefore can’t be sold. Similarly, if items aren’t replenished in a timely manner, then they will be unavailable to purchase even though they are sat in the backroom of the very same store!

The Detego platform delivers reliable and accurate replenishment through the use of the Detego mobile application and goes hand-in-hand with the application’s stocktake feature. With the 99% accurate view of both the backroom and the salesfloor achieved by performing daily stocktakes, the Detego replenishment feature compares the inventory on the sales floor to either the store’s planograms or the ruleset of inventory for the store. It then lists all the products that need to be replenished from the backroom on to the salesfloor – providing staff with a pick list. Stores may also have additional capabilities for replenishment depending on which features they have enabled.

Let’s explore the different options for replenishment with the Detego platform:

After an associate completes a full RFID stocktake, the Detego platform has an accurate view of the items on the sales floor and in the backrooms. It then creates replenishment advice to ensure that products either out-of-stock or running low on the sales floor are moved there from the backroom to maintain a high On-Floor Availability (OFA).

1. The Detego platform uses the results of the latest stocktake and creates a list of items that need replenishing from the backroom to the sales floor.
2. Staff use a hand-held reader with the mobile app to see the replenishment advice.
3. As staff move an item to the sales floor, they confirm the transfer by swiping on the mobile app.

With an integrated Point of Sales (POS) system, the Detego platform can update the replenishment advice whenever an item is sold. This ensures that the item is replaced on the sales floor if there is stock available in a backroom.

1. When an item is sold, the Detego platform checks if that product is now out-of-stock or below the set thresholds.
2. If this is true, a notification about the need to replenish the article is sent.
3. Staff use a hand-held reader with the mobile app to see the replenishment advice.
4. As staff move an item to the sales floor, they confirm the transfer by swiping on the mobile app.

Discover how retail RFID is changing the industry for good. This eBook will guide you through the top 10 needs identified by retailers to ensure sustainable success in the modern environment. Explore the common challenges preventing retailers from achieving their goals and learn how applying smart RFID-based solutions delivers consistently good results.

What is in the eBook?

The retail industry is currently ruled by change. The digital age has seen a huge growth in competition from e-commerce and a rapid shift in consumer preferences. This shift has altered the industry greatly with modern ‘omnichannel’ customers demanding to shop where they want, how they want and when they want. Delivering such an experience is a challenge, one that requires brick-and-mortar retailers to change.

In this eBook, we analyse the top 10 needs identified by retailers to ensure sustainable success in the modern environment. Within each of these needs, we identify the challenges often preventing retailers from achieving them, and how applying smart RFID-based solutions can deliver consistently good results.

Improving key metrics in stores

Delivering to customers with retail RFID

Optimising supply chains from source to store with automated processes

Protecting brands and products from theft, counterfeits and the grey market.

Why is having a high stock accuracy in stores so important?

Stock accuracy for stores has become a core KPI for retailers. At the most basic level its vital for maintaining the availability of products on the salesfloor and preventing out of stocks which in turn increases sales – our customer, Reiss, increases sales by 4% by increasing their stock accuracy. Stores without such accurate inventory must compensate to maintain sales, so they will often carry excess stock to prevent out of stocks and lost sales. Increasing stock accuracy in such cases results in a significant reduction in inventory size, reducing working capital by as much as 30%.

When you look at more advanced retail trends, like the increasing connection between online and offline – high stock is simply non-negotiable. Offering online customers real-time store stock information naturally requires the retailer to know exactly what is in stock, and advanced services like buy-online-pick-up-in-store (BOPIS) built off of poor stock accuracy are destined to fail.

The Detego stocktake in action

Our customers, fashion retailer Reiss, implemented the Detego platform in their 50 UK stores. They moved from doing 2-3 cycle counts a year to a stocktake every day. The result was an average store stock accuracy of 98%, and a resulting 4% uplift in sales.

Types of stocktake with the Detego platform

Partial Stocktake

A Partial stocktake checks a subset of inventory, for example, a category of items, such as footwear, or a specific product. Partial stocktakes are useful if there is not time to perform a full stocktake, or if there are issues to resolve with certain types of stock. Partial stocktakes are useful in the following situations:

• A full stocktake would take too long to complete in the time available

• A full stocktake has highlighted issues with a particular item or location that need further investigation

• A full stocktake for large stores would be complex and difficult to manage, so it’s more efficient to check individual locations separately

Explanation of Smart Shield

The Detego Smart Shield in Action

The Smart Shield feature makes a massive difference for retailers undergoing RFID store rollouts at scale. These benefits include:

• Determines the location of individual items, with no need for physical shielding between separate stock locations
• Help optimise other processes and features, such as stock replenishment advice
• Allows for faster roll-out and reduces up-front costs, as no physical shielding is required

A Detego customer utilising Smart Shield recently rolled-out the platform in record speed, achieving 100 stores per month and with a stock accuracy of greater than 98%. This speed of implementation is far beyond anything seen before Smart Shield and allows retailers to get up and running quickly to unlock the benefits of the platform, driving an instant return on investment throughout their store network. By achieving high stock accuracy and on-floor availability in stores, Detego customers typically see between 3-10% revenue increase per store.