Technology evangelists perpetually proclaim the next wave of retail disruption. But do retailers need more disruption? Hasn’t Covid, the fall of malls, and the proliferation of new marketplaces been enough? Rather than instilling even more anxiety about keeping up with disruption, 2024 offers an opportunity to weave tech innovations together to optimize operations and deliver personalized shopping experiences.
In a missed opportunity moment, Kohl’s had the green light to deploy RFID in all stores back in 2014, but it never happened. Its inability to access store level inventory data resulted in Kohl’s 2022 operating loss of $302 million. If that’s not a cautionary tech tale, what is?
Retail tech use cases support seamless shopping experiences across channels and platforms with predictive tools to match up sourcing and demand, deliver business intelligence through dashboards in real time, and enhance the consumer journey. Resistance to tech applications is a nonstarter; getting it right is the challenge. Let’s look at how several leading brands are implementing tech to drive sales, optimize operations, and improve the customer experience.
RFID Optimization
Naturally, all retailers strive for efficiencies in every aspect of their operations. From sourcing and inventory logistics to loss prevention, merchandising, and store operations, optimization is key to staying competitive. Clearly AI has a growing role in these functions. But integrating the right AI and bringing on AI experts poses challenges, especially with the best talent to manage it.
RFID is a prime example of how AI unlocks significant benefits. Levi’s Kristen L’Orange, VP Global Direct to Consumer Omnichannel Productivity, describes the enormous value of RFID across much of their operations. She says that with a greatly reduced infrastructure investment today, in part due to the innovation of “virtual walls” or “shielding,” RFID can deliver a significant ROI in just a short time. L’Orange says she can’t imagine executing omnichannel successfully without RFID. “With the turn of a switch, Levi’s can now see what went into the dressing room, what was not purchased, what sizes are missing from the floor, what is in the back room.” She describes the power of real-time visibility of all inventory via a dashboard giving Levi’s a view of where the stock is and how product is moving around the store. Home office merchandisers are now freed up to use their expertise for field execution since everything from displays to inventory levels can be optimized.
PacSun’s Shirly Gao echoes a similar testimonial. As Chief Information Officer, she oversees the retailer’s RFID implementation which results in significant labor benefits. By reducing the task of counting inventory, PacSun stores are reducing labor costs with a significant ROI or are reallocating staff to shopper-facing roles. She reports improvement in sales and an enhanced customer experience. Both retailers also describe pronounced shrink reduction based on data capture of what is actually delivered to each location along with what inventory moves out the front versus the back doors.
Last year Uniqlo’s Fifth Avenue Flagship pioneered frictionless checkout enabled by Avery Dennison RFID. Merchandise is piled into in gleaming bins and the complete order is logged in and priced in under a second. Each RFID tag also contains 2D bar codes and standard scans for extended inventory tracking and backup to any issues.
Personalization
In the battle for authenticity and relevance, retailers are using tech to deliver personalized, human connections with personalized customer recognition and relevant ad curated experiences. Saks CEO Marc Metrick says online customers benefit from personalized product colors based on purchase history and the context in which products are presented. Linda Li, head of marketing, H&M Americas is focused on Gen Z customers customizing the in-store experience with Spotify playlists.
GenAI is clearly the shiny new thing. Mattew Kaness, CEO GoodwillFinds Ecommerce says big data has been rebranded as AI adding the industry has completed a shift from product-oriented to customer-oriented; from supply-driven to demand-driven. “Nothing proves this out more than the rise of marketplaces the last decade — from the international giants (Amazon, eBay, Rakuten) to the niche brands of re-commerce and live selling,” says Kaness.
Footnote: Kohl’s Misstep
Here’s a case of what happens when there’s no foresight, which is required to adopt tech before it’s too late. Recent reports of Kohl’s turning a profit in fiscal year 2023 after record losses demonstrates how retailers can become sidetracked when not focusing on the basics. Kohl’s is playing catch-up to implement data technology to track inventory in omnichannel operations. In a missed opportunity moment, Kohl’s had the green light to deploy RFID in all stores back in 2014, but it never happened. Its inability to access store level inventory data resulted in Kohl’s 2022 operating loss of $302 million. If that’s not a cautionary tech tale, what is?
