Reimagining Retail: Leveraging Standards to Future-Proof Your Business
Historically, changes in retail have happened slowly. However, today, the retail industry is taking a new shape at a rapid pace. As Matthew Shay, CEO of the National Retail Federation said in an April interview with NPR, "Before, things happened over a generation; now they're happening overnight."
If the concurrent store closures and chapter 11 filings during the first half of the year are any indication, the retail industry of tomorrow will de-emphasize physical real estate and embrace the overall shopper experience. As a result, retail companies are exploring not only new technological advances, such as smart mirrors and artificial intelligence, but they are also reimagining the shopping experience by designing new cutting-edge store concepts that effectively blend the digital and physical worlds.
But first things first. Before adding futuristic features to give consumers the wow experiences they crave, how can retailers perfect current offerings such as BOPIS (buy online, pickup in store)? What can be done to improve the quality and consistency of the data available for consumption online? In the post-omnichannel marketplace, retail companies that have agile supply chains — based on interoperable standards — can move quickly and more effectively provide consumers with positive, memorable experiences.
Let’s explore how the new retail paradigm is unfolding and how the industry can align its supply chain systems to deliver the right product (or the right product information) at the right time.
Retailers are currently evaluating where they fit into the overall lifestyle of today’s consumer. In an effort to tap into the culture of digital natives — a rising massive buying generation that values experiences — retailers are exploring key store differentiators. This includes piloting smart fitting rooms, for example, that are equipped with interactive mirrors that provide instant access to product reviews and accessory recommendations. In the near future, we could very well be running to a convenience store with no checkout counters, or seeking curated personalized shopping experiences at a pure-play e-tailer’s physical showroom.
Experts have said that the new retail era is one anchored in “augmented retail,” a blend of the digital and physical allowing a shopper to shift seamlessly between the two realms. If this is the goal, the retail industry is not yet perceived this way by consumers. Recent Accenture research found only 11 percent of consumers strongly agree that retailers are effectively converging digital, mobile, social and traditional channels.
To effectively meet the task of becoming experiential, inventory management also needs to be reimagined along with the concept of the store. Retailers will be seeking more convenient, efficient fulfillment options, and item-level inventory visibility will be essential to successfully getting the right product quickly into the consumer’s hands. Item-level RFID implementation will be a necessity to track merchandise in real time not just for consumers, but for employees looking to find these products in stores, fulfillment centers or distribution centers. With RFID, retailers can communicate more effectively with their manufacturers, facilitating faster reordering, demand planning, forecasting and, if necessary, drop shipping to achieve the agility needed in fast-paced retail environments.
Rise of the “nonstore”
In February, the NRF predicted that nonstore sales would grow 8 percent to 12 percent in 2017, compared with a projected 3.7 percent to 4.2 percent growth rate for the retail industry as a whole. The Commerce Department reported online and nonstore sales were up 11.4 percent in March, compared with March 2016 sales.
If consumers are going to the store less, they need complete and accurate product information online to adequately substitute the experience of being able to look at, feel, or try on their prospective purchases. The prioritization of product data quality is a must, as the consequences of inaccurate data are felt throughout the supply chain, and the growth of e-commerce will only exacerbate this problem. Brand owners are more focused than ever on providing their retail trading partners with consistent, standards-based extended product images and data attributes — which include more detailed product information (beyond just color and size), such as care instructions, collar type, lining material, and other attributes that give consumers a better view of that product.
Using a more automated and collaborative approach, supply chain partners can gather and present product images and data attributes in an accurate and consistent way, persistent throughout the consumer’s experience and regardless of where the final transaction occurs. Retailers and manufacturers are working to solve this challenge by leveraging the GS1 System of Standards, which has been used globally for more than 40 years to automatically and accurately identify, capture and share product, service and location information. This supports global supply chain visibility and efficiency so that anyone who wants any particular product information can understand it, no matter who or where they are.
It will ultimately be the companies that reorient their supply chain strategies with the consumer at the center that effectively secure a spot in retail’s brave new world. Trying to apply traditional tactics will prove to be futile, as frictionless, converged commerce becomes the new normal. Systems based on standards can remove roadblocks in trading partner communications and help retail companies evolve with the consumer.
Michelle Covey is vice president of apparel and general merchandise at GS1 US and leads the GS1 US Apparel and General Merchandise Initiative.