From the Principal’s Office
As we prepare for the holiday shopping season and for the NRF Big Show we wish you all a happy holiday and a healthy, happy, and prosperous new year.
Bob Amster – Principal, RTG
The importance of real-time information processing in unified commerce
We have all grown accustomed to the concept of real-time processing in retailing from a step we now take for granted: credit card authorization. Well, retail is changing at a dramatic rate by comparison to when credit authorization first hit the market and the need for real-time processing of many types of transactions in retail has become evident. Real-time processing is a necessity of unified commerce.
Inventory availability is required to support concepts like:
- The ‘endless aisle’: What is the SKU-level inventory in each location right now?
- Buy-online/Pick-up in store: Can I direct my online customer to the store of his/her preference to pick up this product in the desired color and size?
Real-time Geofencing is required to support Location-based Services: Where in my store is that loyal customer that just walked in, and what can I offer him/her that I have already determined through the mysteries of artificial intelligence, is his/her preference?
Real-time POS & Loyalty: Has the customer standing at the checkout just reached the threshold of purchases that entitles him/her to a bonus offering?
Real-time Price-change Management capabilities to support dynamic pricing: Can I change product pricing dynamically to adjust for current supply-and-demand and promotions?
Real-time Electronic Shelf labels and RFID data to minimize stock-outs: Can I send directives to store associates to replenish an area of a store with specific items to reduce or eliminate stock-outs?
Real-time inventory transactions to support Mobile Messaging: Can I push messages to opt-in customers the minute specific products are received in store?
All these processes require real-time information and real-time action. While the industry pundits and publications talk about it incessantly, many retail companies are not yet capable, though some may have it on their roadmap. But undeniably, they will all have to implement it, and sooner rather than later.
The ERP software solutions in the marketplace are pressured to provide real time capability and most are already well on their way to offering a suite of applications that speak to each other in real time. However, businesses face a challenge when some of the business functions on which a retailer relies – such as third-party logistics services, or an eCommerce platform – lie outside the boundary of these software suites. If we agree with all of the preceding arguments for real-time communication and action, then we must agree that communication between internal and external applications also, must be conducted in real time, or they become the weak link in the chain. Fortunately, technology provides the path to accomplishing all this. The reality is that many retailers are not yet there. Are you?
The roadmap to full-real-time processing (where necessary) varies with the level of maturity of a retailer’s systems. While most of the leaders have already reached that state, others may be running some applications in real time while other modules depend on ‘batch’ or scheduled interfaces between mixed systems, and yet a third group may just be running their POS in real time and that’s it. The options to reaching the goal vary also.
One option is the dreaded rip-and-replace approach, wherein the retailer completely replaces the disjointed parts that make up the total portfolio of applications and replaces everything with a single-source or multiple-source set of real-time-ready applications. This option is costlier, more disruptive to the business, riskier, but once implemented successfully, more efficient.
The other option is to plan, and methodically replace some or all of the old ‘batch’ applications with current, API-capable applications. APIs are application program interfaces that enable applications to interface with each other in real-time by allowing the external applications to read and update their databases in real time, thus tightly coupling modules from different external software-or-services providers.
In either case, the planning and strategy come first, the evaluation and selection of the appropriate solutions come next, and the installation and thorough testing come (over time), just before implementation.
Are you ready?
What are we seeing?
Consolidation, M&A
In the months since our Newsletter of August 2017, a number of consolidations and acquisitions have taken place. Here is a recap of the notables.
Perfumania filed for Chapter XI bankruptcy protection in August. To close stores.
Toys R Us timing was perfect, stuck the manufacturers with the biggest bills of the year.
Aerosoles will close stores, concentrate on eCommerce and wholesale distribution.
Staples was formally acquired by Sycamore partners and will sell its stores.
Office Depot acquired IT Services company CompuCom for $1.1B.
Ace Hardware purchase pure-play The Grommet.
Emerging Technology
A new development in subscription replenishment is the use of AI to tell the customer when it’s time to re-order. Boxed.com will be testing this initiative with B2B customers. The use of AI to predict replenishment of frequently-used products (think cleaning, personal care, pet food, etc.) is the next evolutionary step in eCommerce.
Augmented Reality (AR) is being deployed as a test in some retail environments. Click here to see what Tilly’s are piloting.
Robotics you say? Hirebotics is renting robots at an hourly rate that may be significantly less than what a retailer has to pay a warehouse or fulfillment center worker.
In an inventive extension of omni-channel retailing, Nordstrom is launching Reserve Online, Try In store. According to Chain Store Age: “Nordstrom is rolling out its Reserve Online & Try In-store service to approximately 40 stores across the country. As the program’s name implies, the service allows customers to select items online and try them on in person at their nearest Nordstrom store.” Once they’ve got you into the store, you’ll buy more…
AI used for interviewing prospective employees. Goldman Sachs and Unilever tried them. Click here for a brief review.
An Australian company – 360 Mall – will be launching a product that provides 360º experiential reality to online shoppers as if they were inside the store. Don’t know if it will stick…
Restaurant in China uses facial recognition to allow patrons to pay for their meals, according to an article in Chain Store Age.
Google’s Pixel Buds! What if retailers equipped their store associates in high-tourist stores these babies to translate a foreign customer’s foreign language into English so that associate could better help the tourist customer?
Robots are a new technology emerging in the retail landscape. The devices are being trialed a merchandise pickers in warehouses (Amazon, Walmart, Boxed), as inventory scanners on the retail floor (Walmart), and even as greeters in stores and malls (Lowes, Westfield Mall). These devices are good at repetitive tasks and their wages are fixed. Humans still have to execute and carry the ball where the robots leave off.
Amazon Key is a new application of existing technology to enable in-home delivery for those who purchase a specialized Amazon device. The technology now has a name: Conversational Commerce (we needed another category of technology). This one belongs under the Wait-and-See category, below, also.
Facial Recognition is yet another emerging technology with multiple applications including authorization/validation like the Apple touch ID, but with a face, or for assessing customer reactions in a store environment, and more to come. Of course, with the latter, there are privacy issues to be addressed.
The Smart Home – using a combination of artificial intelligence, machine learning and voice recognition, companies like Amazon, Comcast, Google, and Apple will be bringing the ability for consumers’ own appliances and other devise to anticipate when they will be in need of certain products (or even services).
Wait and See
Amazon (see above) belongs in this category. We will have to wait and see how much of the online-customer population is going to want the delivery people to walk into their home in their absence, to deliver a package.
Another Amazon story (AmazonGo) will open its first cashier-less store. While Amazon claims that it works and they will open, this writer remains skeptical. Wait and see.
On the bright side
Home Depot set a record $28 B announced in August for the period ended in July.
TJX Companies rose 6% for the quarter ended in July according to a Chain Store Age article.
Coach net income nearly doubled on a sales decline of 1.8%.
Ross Stores reported an 8% increase in overall sales and 15% increase in EPS as reported by Fierce Retail. [Click here.]
Costco turned in a good performance in August. Some companies know how to do it right.
Five Below also impressed with big numbers.
Restoration Hardware “Crushes earnings.”
What’s new with us?
Visual Retailing – We are actively looking for retailers to pilot this visual merchandising software application. This SaaS solution enables retailers to deliver concise and consistent standards to their stores to ensure that the brand image and the nuances of the product offerings are accurately represented in every store. The software can be used as early in the process as design, to planning and buying, through merchandising to operations, to develop these concepts and then to communicate clear visual merchandising directives to every store under the company umbrella. The software has been successfully deployed at mark & Spencer, VF, Preca Brummel, Italy and others. We would be happy to work with you. Contact us regarding your interest.
We are working with Overheer Systems, an ITL company, to run item-level RFID proof-of-concept projects. Overheer offers a unique suite of SaaS applications – Reflect RFID – to deploy RFID and reap the benefits of this technology with minimal impact on existing system and processes. In today’s omni-channel environment, inventory accuracy is paramount in maintaining customer satisfaction and RFID delivers that and more. Through its association with ITL, Overheer Systems is now also able to deliver RFID tags in addition to the software, RFID scanners, and RFID printers/encoders. The proof of concept can be implemented at a single store with a limited range of product, in order to validate assumptions built into the business case. We are excited to have the opportunity to work with retailers wishing to develop and prove the case for RFID and are actively seeking retailers who want to engage in a proof of concept.
We continue to be enthusiastic about Theatro. The Theatro Communicator is a wearable, hands-free, voice-activated, Wi-F-based device designed with the hourly retail employee in mind. This smaller-than-a-credit-card device enables store-operations personnel to use a voice-controlled interface to call for back-up, check inventory, locate a manager, or simply communicate with a team member – enabling them to do more, heads-up/hands-free. The Product is already fully deployed at Cabela’s and The Container Store, rolling out at Fry Electronics, and being piloted at numerous other well-known retailers. As evidenced by Google’s Home, Amazon’s Echo and Alexa, and on-board automobile technology, voice activation is an effective, emerging technology. Call us to discuss how we can help you pilot this unparalleled product.
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