As retailers face new challenges and pressures in a multichannel world, Drapers rounds up the emerging tech innovations helping retailers gear up their operations for the future.
As shoppers become more demanding and the competition in retail grows ever fiercer, operations directors face a battle to stay on top of the game and ahead of the curve. Retailers are upgrading their operations to fit their systems to a multichannel world. These transformations can be relatively small, or can require an entire rethink of whole aspects of the business, and investment is essential for those looking to set themselves up for the future.
Much of the innovation is happening in digital systems, as traditionally bricks-and-mortar retailers are enhancing operations to compete with pureplay competitors. The key is to be quick, agile and adaptable, and the technologies on the rise focus on enablement, precision and making things easier for both consumers and retailers. Retailers are having to adapt and bring technology into the heart of their businesses, facilitating digital innovation in operations and beyond. Here, Drapers takes a look at the emerging technologies and practices currently causing a stir.
A sensor-based technology, RFID (radio frequency identification) comes in the form of tags that can be read electronically from long distances, and is increasingly being implemented in warehouses and on the shop floor to help multichannel retailers build super-accurate inventories.
The tags are read 50 times faster than traditional barcodes and, once items are tagged in the system, they can be remotely tracked, whether in warehouses, during transit or in store. Randy Dunn, director at Tyco Retail North America, the company behind RFID systems for brands including Lululemon, estimates that RFID inventory accuracy can be as high as 98%, compared with 70% in traditional barcode systems.
“The premise is that with really accurate information about your inventory, and where it’s at, you can make much better decisions as a retail operator and you can make much better promises to shoppers,” explains Dunn. “The more retailers saw their competition as being from pureplay digital retailers, the more they realised that being precise and being disciplined in how they ran their operations became an imperative.”
Lululemon and River Island are among those to have already embraced the technology’s potential, and River Island is set to have RFID systems fully implemented in its stores by November.
River Island’s chief information officer Doug Gardner believes the technology holds huge potential for multichannel retailers: “RFID now seems to be emerging from being quite futuristic and expensive to being very affordable and having quite a big impact on operations. With multichannel pressures, knowing exactly where your inventory is and having incredibly accurate stock levels is becoming very important.”
As consumers become more demanding with their delivery expectations, retailers must turn to increasingly innovative systems and processes to satisfy the customer and improve fulfilment. One technology emerging is geolocation delivery, which uses geolocation tracking technology to directly deliver parcels to the customer’s location via courier.
This move towards an “Uber-style” delivery system builds an incredibly personalised, customer-centric system, where items can be tracked in great detail, with accuracy, efficiency and convenience that are beneficial for consumer and retailers alike. Parcels are delivered to customers whatever their location – at work, out for lunch, in a park near the office – as the tracking features in mobile phones mean couriers can arrive at a precise location.
“We’re already moving beyond the two-hour delivery slots that seem to hold premium appeal for demanding online customers,” comments Anusha Couttigane, senior fashion analyst at Kantar Retail. “By improving fulfilment, retailers can significantly cut the costs of storage and logistics. The ultimate aim is to eradicate the days of missing a delivery because there’s no one to sign for it. With this in mind, you could find methodologies such as pick-up lockers becoming redundant.”
Zalando recently began trialling a geolocation delivery service in the Belgian cities of Brussels, Ghent and Antwerp – it paired with delivery company Parcify to deliver packages with the help of geolocation tracking on customers’ smartphones.
Open architecture systems
Technology evolves at an incredibly fast rate, and to benefit from the latest developments, retailers must make sure their systems are set up in a way that enables the easy adoption of new technologies. Having an open architecture system means that retailers can trial the newest technology on their digital systems and benefit from the latest tech advances at speed, as data can be shared seamlessly and quickly.
Where retailers used to rely on large technology companies for their digital operations, there has been a recent surge in the use of open-source software – made via cloud platforms such as Microsoft Azure, Amazon or Google. As this kind of technology continues to grow in popularity, having a system in place that encourages easy testing is essential.
River Island’s Gardner explains: “None of the cool new pieces of tech are any good unless you can adopt them relatively quickly. They come up very quickly and the period from something good emerging to becoming a phenomenon globally can be a matter of weeks.
“For retailers, the key is being able to provide any necessary data to these third parties for these great pieces of technology to do what they need to. What we’re building is an architecture that allows all of our relevant data to sit in places and formats that are very easy for us to get data out if we want to start working with these technologies.”
Gardner says River Island has redesigned its digital systems to ensure new technologies can be plugged in and tested with relative ease. “We’re developing a base technology with these micro-services that makes it easy to plug something into our site,” he says. “So instead of a lot of deep plumbing, it’s layered in a way that you can plug something in and unplug it again in a relatively simple way.”
It is this speedy access that allows retailers to innovate and test new digital developments, and take advantage with the latest new technology.
“If we build the architecture to be able to move rapidly on the digital side and apply what we learn to our physical stores, we feel that will give us a huge advantage over pureplay retailers,” says Gardner.
Leveraging consumer technologies such as iPhones and Android phones within operational services looks set to become big news for retail operations, in a move away from dedicated devices. Using consumer devices to, for example, allow shop staff check stock levels in a store room or warehouse operatives to list inventory, is much cheaper than buying in specialist equipment and could potentially free up budget. Not only that, but the familiar technology is much easier to use, and time not spent developing devices can fuel innovation in other areas.
As technology moves away from being dominated by large-scale vendors, this could drive a shift of retailers using these more readily available devices, says Mark Collin, head of retail, Europe for creative technology consultancy firm ThoughtWorks.
“Historically, retailers have tended to choose very expensive proprietary devices, and with them come expensive, specific handheld devices,” he explains. “Our approach to that is to use open-source and web technology, and we actually choose to use consumer devices, because they are the lowest cost, the easiest to acquire and the easiest to replace.
“In projects with Morrisons in the UK and [retail group] Metro in Germany, we actually halved the total budget that they had set aside by using open and web-based technology and consumer devices.”
John Lewis is another retailer making use of consumer devices in a more consume-facing position. Its “partner devices” are portable tablets that allow employees to perform a series of actions from the shop floor, including checking stock levels and product specifications.
Drapers Operations Forum will take place on the 8 June at The Bloomsbury Hotel in London.
Four tech innovations to future-proof your operations