Omni-channel branding calls for fast, accurate and integrative stock management systems - 27/07/2017
A lot of market experts are forecasting massive global growth for RFID (Radio Frequency Identification) systems. In this blog post, I explain why the ‘need for speed’ in today’s fashion markets, combined with the growth of omnichannel branding, gives us good reason to take these forecasts seriously. In a second blog post following this one, I will share three vital ways in which we at Century Europe can help you to get in step with these developments in a way that matches your current systems, practices and business goals.
RFID is inevitable
Wherever you look, RFID systems are gaining ground. Market researchers estimated the global RFID market value at USD 12,6 billion in 2016 and tell us it will reach USD 24,5 billion by 2020 – that’s nearly 100% growth in just four years. The market’s compound annual growth rate (CAGR) is expected to hover around an impressive 15%. The advance of IoT solutions (Internet of Things), and the many measuring and sensing functionalities involved in that, will account for a large share of this growth.
In the apparel market, RFID solutions aimed at more effective loss prevention and stock management, are clearly picking up speed. Many companies, especially larger ones, are watching the biggest retailers, Inditex and Decathlon in Europe – a pioneer when it comes to RFID – and Walmart in the US: the moves they make are likely to be followed by others, on the assumption that the risks and opportunities will have been carefully weighed.
Many smaller apparel firms are stepping ahead with RFID
At the same time, however, we are seeing quite a large number of small to medium-sized apparel companies jump ahead with RFID pilots and try-outs – and successfully, too. With the speed of fashion increasing all the time and more and more customers wanting on-demand and on-trend delivery, these companies have to be fast, proactive, dynamic. They’re looking for ‘smart replenishment’ solutions: the right stock in the right stores at the right moment. These small companies may lack the resources of the large players, but they are increasingly compensating for that by using new technologies. And because they are small, they can test and implement those technologies a lot more easily and quickly. The risk is lower, the consequences of errors far smaller. Also, they are less tied up in investments in other systems.
RFID benefits small companies are tapping into
With that in mind, we are seeing our smaller and medium-sized apparel accounts benefiting from RFID in at least four exciting ways:
- Increased sales through smarter, faster stock management
- Increased margin, as a result of getting products to the shop while they are on-trend (thereby avoiding the discount trap)
- Reduced cost, as RFID labelling involves less manual labour than other stock management systems
- Increased employee engagement, for instance by raising your stock-taking frequency from, say once every six months to once every week, which makes staff more aware of sales trends and more eager to boost performance
Let me give you an example of how smart stock replenishment can affect sales. Say you have shops in southern and northern Spain. Because of climate differences – a phenomenon most European apparel chains have to deal with – your stores in southern Spain run out of the latest T-shirts in spring, while up north nobody is even thinking about T-shirts yet. Your RFID system gives you real-time insight into these flows, so that you can ship the T-shirts lying around unsold up north down south in time to sell them for the maximum price while they are still in demand.
A seamless omnichannel customer experience calls for integrative systems
In today’s apparel market, benefits like the ones I mentioned above are becoming more and more vital. They can support you in keeping up with fashion’s tremendous ‘need for speed’, while also answering to the needs of another important trend in apparel: omnichannel branding. Today’s consumers expect a ‘seamless’, personalised shopping experience. And they expect apparel brands to make use of the available technologies to give them that experience: from in-shop technologies like digital changing rooms and interactive mirrors to online branding when they are at home with their laptops or on the fly with their mobile devices. Customer experience is key and it is changing store design requirements. For example, some stores may want a wide open, spacious and inviting entrance – without the clutter of detection gates and scanners. This is where overhead RFID readers can provide a solution, offering accurate reading at a good distance that leaves shoppers unhindered. Other brands may prefer doors and gates and narrow aisles, offering a more intimate and exclusive shopping experience.
A lot of recent surveys, like this one, tell us that omnichannel shoppers spend more money than consumers who shop only online or only offline. This means that in order to keep up with the market, you have to have an ‘omnichannel’ strategy that integrates cross-media sales and marketing activities with your shop activities, stock management and supply chain setup. Speed, accuracy, agility and a unified, systematic approach are essential ingredients. Apparelsearch.com, an online fashion directory and blog, has put it this way, ‘Vertically integrated channels and faster fashion are merging to reshape the industry faster than some apparel retailers are able to respond. How retailers overcome these challenges will be the key differentiator between those who are winning and losing market share.’
In my view, this makes omnichannel branding and RFID a perfect match.