Need to constantly push sustainable innovation
Retailers have to keep pushing their businesses forward in a sustainable manner through constant innovation and the adoption of technology that boosts service to the customer if they are to succeed in the future.
This was an underlying theme from the various theatre presentations delivered at the recent Retail Technology Show in London’s Olympia that brought together both the retail and technology industries in a celebratory-like atmosphere despite the ongoing challenging economic backdrop.
During his keynote Peter Cowgill, chairman of The Fragrance Shop and former CEO of JD Sports, told a packed main theatre: “You can’t stand still or become complacent. There have been many retailers who have failed and it’s a result of a lack of agility, flexibility and innovation. Success today is great to enjoy for a short period of time but there will be challenges [ahead].”
Among the ways he pushed forward at JD Sports were: “being analytical” and understanding the target consumer; negotiating hard to stock the key brands; and acquiring business including in the US. “It was a journey of continuous development. We never rested on our laurels and we innovated where we could,” says Cowgill.
Mindset of innovation
This mindset can be tough to initiate in a business and to achieve success Paul Wilkinson, product leader at Deliveroo, suggests: “You’ve got to give innovation space and carve out time for people to work on it…and you’ve got to stay close to the business and understand its problems. Lots of retailers set up trendy offices – and then closed them quietly. At Tesco we had our Lab on the main campus.”
He also suggests retailers recognise that innovation has to be “prioritised ruthlessly” because few projects will ultimately succeed. There should be an understanding of whether an innovation will genuinely benefit the wider business and not merely satisfy the whims of technologists in the organisation.
This is recognised by John Mildinhall, head of data science for retail, digital & technology at Marks & Spencer, who is working on myriad projects using AI and data science including intelligent sales probes that produce as many as 250,000 forecasts for M&S stores each week, which involves looking at anomalies in the data. This has helped improve sales by 1-2%.
Further investigations involve creating content and generative imagery – including photos and videos – for M&S ranges. This could potentially extend into helping the actual design of relevant products. However, as with all AI projects, Mildinhall says great care has to be taken in order not to put customer trust at risk.
Boosting customer experience
For Cowgill and JD Sports one of the key innovations they focused on was around the speed of service to customers with queue-busting technology adopted, which involved tablets that could take payments and also help speed-up retrieval of items from the stock rooms. “If you’ve stock that’s not well retrievable then it’s a problem,” he suggests.
Using technology to boost customer service in-store is very much at the heart of the StorIQ solution (that was bought by Cegid last year), which empowers store managers by bringing the many apps they invariably need to use in the store through a single interface.
Amy Bastow, MD of StorIQ, says: “The store team experience drives customer experience. If you make things simple for them then it can save time in-store and this helps them give a better experience to shoppers.”
The company has been working with PVH, which operates the Tommy Hilfiger and Calvin Klein brands, and have brought together 21 apps and dashboards and eliminated the need for email between stores and head office for communicating operational activity in-store.
Robert Newstead, director of retail operations for Northern Europe at PVH, says the technology has: reduced the time spent on non-customer-facing activity; transformed head office support for store operations; and helped push knowledge onto the shop-floor for training, sharing tips and self-support for managers.
These solutions are delivered via mobile devices that are playing increasingly important roles in stores but Alan Holcroft, country manager at Cegid, suggests a barrier to the wider use of such devices for the likes of payments and check-out is not so much a result of the cost of the technology but is down to the design of the physical stores that still largely adhere to traditional customer service methods involving fixed tills on counters.
Costs of tech falling
Costs had historically been a hurdle to the adoption of RFID but that has fallen away over recent years as unit costs of tags have dropped. What has not changed, according to Dean Frew, group CTO at SML Group, is that the primary driver of adoption of the technology is for inventory management. The typical accuracy of stock moves from 60% to 98% with RFID, which helps with the likes of markdowns, shrinkage and the movement of goods across channels.
What has changed is the increased focus on retailers also using RFID for improving the customer experience. Frew says self-checkouts, smart dressing rooms and click & collect can all be implemented more efficiently with RFID technology and deliver a better experience
in-store. He cites a major fashion retailer that is looking to use the technology for a RFID-powered self-checkout that will potentially provide a solution to its ongoing challenge of long queues in its stores by giving 100% accuracy on the readings of a basket of goods.
Dealing with the returns headache
RFID can also help with returns, including eradicating the increasing problem of returns fraud, which is something Kevin Davis, former head of logistics at Marks & Spencer, will no doubt be very knowledgeable about. He suggests the complexity of returns is driven by the fact “it is one of the few areas of retail that touches all parts of the company”.
“Managing the accounting and the efficiency of it is so complex. It can get pushed under the carpet. Business units own segments of the products’ journey but for returns there needs to be one owner. The more touch-points in a business then the more complex is returns,” he explains.
Davis says we are now seeing RMS (Returns Management Systems) coming onto the market that bring the problem into a central hub and includes integration into all the carrier companies systems. “It’s a partnership and retailers need to sync with the carrier management systems. It will never be sorted until retailers engage with them,” he adds.
This collaboration with suppliers has very much been a focus for Amy McNamara, head of operations at Boohoo Group, who says the company works with 20 carriers and only recently has it been using the relevant data from them to help it forecast levels of returns.
“The big learning has been to find what data we have and analyse it. We’ve a big Business Intelligence (BI) team mainly looking at internal data. We can go bigger on collaborations with data,” she says, adding that collaboration is also being undertaken to help Boohoo with its ongoing sustainability journey.
Reinventing the supply chain and business
To help with this important initiative the company is breaking down its supply chain in order for it to better understand all the end-to-end processes. This has brought into ever sharper focus the area of sourcing and the company has been working on all potential opportunities avenues including vertical integration and buying more goods from suppliers nearer the UK.
Sustainability was a key theme at the Retail Technology Show this year with Mary Portas, founder of the Portas Agency, suggesting: “Technology undoubtedly has the potential for destruction or creativity. What it did during Covid-19 for the community and creativity in businesses was extraordinary. What it’s done for small, innovative businesses has been incredible.”
However, she is a strong advocate for retailers to use technology to help them “do good” in the world for the environment as well as for diversity. “Some businesses say we’re going to do well in the world and become part of the kindness economy,” she says, pointing to the likes of Aesop and Patagonia who are delivering profits while operating businesses that are fully conscious of their impact on the environment. They are not running organisations based on simply selling as much “stuff” as possible.
Sustainability and the environment are very much at the heart of the business Julia Reynolds, founder of Rey House Clothing, is currently building. To avoid the waste that has been inherent in the fashion industry she is using technology to create better fitted clothes for older women.
Using AI and data science she is working with academics to scan women’s bodies, which involves measuring as many as 300 data points. The plan is to then feed this knowledge up-stream into the design and manufacturing stages so unsuitable products are not produced in the first place.
Alignments to help ESG
As well as building a business on environmentally sustainable foundations retailers can be helped to fulfil the ‘Social’ aspect of ESG by aligning themselves with organisations such as micro-payments charity Pennies. It enables shoppers to add a small donation to retailers’ chosen charities at the point of sale – whether in-store or online.
Alison Hutchinson, CEO of Pennies, says: “The solution makes it as simple as possible to click and donate. Every second there’s a click. Covid-19 was a worry but over that period we grew 5% year-on-year. Last year was 17% up and this year it’s up 40%.”
She says this is partly because more retailers now work with Pennies and also the public’s understanding that charities have been in crisis of late. “People have not been doing as many direct debits so our micro donations enable people to make donations another way,” says Hutchinson.
Jonathon Swaine, MD of pubs at Shepherd Neame, has been working with Pennies for some years and says it is seamless for retailers to join: “The team are well resourced to make it happen. They help your integration into the apps through an API. To implement it is seamless. For multi-site operators it helps bind people together, especially if their charity partners are involved. It also helps team engagement, which helps drive more sales, and there’s a sense of mission and purpose.”
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