The last two years have seen dramatic changes in the retailer-vendor relationship. Supply chain shortages caused by the pandemic are still reverberating throughout retail operations.
While the online channel unsurprisingly grew in response to imposed lockdowns, the less-popular hybrid shopping model known as “click and collect,” also gained tremendous momentum.
Retail Pro’s customer ACFC was able to make BOPIS a reality early on in the pandemic thanks to Prism’s data integration and total inventory visibility.
And, although shopping has returned to pre-COVID routines, supply chain issues remain. Here are some ways retailers are handling post-pandemic challenges.
The Product Journey to the Customer
Dropship is more popular. Published statistics show that the global dropshipping market is forecast to reach $196.78 billion in 2022, a substantial increase of 23.7 percent from 2021.
That number is expected to continue to rise, reaching $243.42 billion next year.
The uptick in retailers needing to fulfill online orders during the past two years is a big reason for the dropship surge.
Retail Pro’s ability to streamline inventory visibility across all channels and give retailers a single view makes it easier for them to reduce the margin of error in fulfilling online orders.
Retailers Expanding Retailer-Vendor Relationship
Retailers have expanded their footprint to include marketplaces such as Amazon and Alibaba, as well as social platforms including Tik Tok and Instagram.
Miniso’s UK branch was able to experiment easily with selling on Amazon in the face of tough challenges brought on by COVID with Retail Pro Prism, opening their understanding of future operations possibilities
In fact, TikTok has been experimenting with shoppable ads and shoppable livestreams indicate its readiness to compete for retailers’ attention with Instagram and Facebook.
That has boosted brand awareness not only for the retailer, but also for the supplier. As product demand increases, however, shortages sometimes occur.
Expanding selection through third-party relationships. Some large retailers, notably Lands End, Hudson’s Bay and Anthropologie have begun their own marketplaces.
Those retailers feature channels on their websites that allow select third-party brands to sell products directly to their customers. It increases selection while letting the retailer avoid increasing the number of vendor relationships they must manage.
Automation of Operations
Increasing workflow automation. Reducing or eliminating the manual creation of reports regarding orders, stock levels, and sales trends, and automating that process can accelerate the receipt of information regarding potential stock shortages.
That is particularly helpful when earmarking stock for in-store purchases; for ecommerce order fulfillment and for pickup by click and collect customers.
Automation reduces errors and makes data collection more efficient. Retailer Saleem Fabrics was able to automate their inventory to lessen challenges brought on during COVID with the help of their Retail Pro Business Partners at System Plus and Retail Pro’s software plugin capabilities.
The best supplier-buyer relationships require collaboration. Retailers and their suppliers must be committed to the long-term pursuit of value.
Working with Retail Pro and our partners means a retailer has engaged support and help to take any steps necessary for the sorts of modernizing changes in operations mentioned above.
Together, retailers and their partners are employing innovative solutions to offer joint opportunities to create and retain significant value.
Non-fungible tokens (NFTs) are becoming a bigger part of the fashion landscape. In so doing, they are also becoming a substantial part of retail.
An NFT is a unique, “bespoke” item that by its very nature fits right into the fashion world.
To put it in terms of physical collecting: anyone can buy a Givenchy dress. But only one person can own a bespoke version (like Megan Markle).
An NFT is registered on a blockchain, which is used to record ownership of an asset. Limited-edition, unique digital fashion items are purchased, and buyers receive “1 of 1” certificates of ownership – adding a level of exclusivity that has long been the hallmark of fashion culture.
NFTs and brand loyalty
NFTs can also be integrated successfully into loyalty programs. With NFTs, fashion brands can give customers tokens for enticements, including yearly access to new products, discounts, admission to exclusive events and private communities.
For example, Dolce & Gabbana debuted its NFT collection, Collezione Genesi, which has physical, digital, and experiential value.
The NFT holder receives the physical, fitted version of Dress from a Dream, an original signed sketch, and a custom digital recreation of the dress—in addition to two-year access to Dolce & Gabbana Alta Moda, Alta Sartoria, and Alta Gioielleria couture events in Italy.
In that way, the customer is encouraged to continue engaging with the brand.
Hype and controversy
The strategy to market NFTs with products can be wildly lucrative.
For instance, Adidas made its first NFT drop, Into the Metaverse, of 30,000 NFTs, priced at $800 each. The drop sold out almost immediately, and generated more than $23 million in sales.
But not everyone is gung-ho over NFTs. Much of the controversy surrounds the carbon footprint of NFTs.
They are supported by blockchain technology, which is extremely energy-intensive. The cryptocurrencies used to buy and sell NFTs generate millions of tons of planet-heating carbon dioxide emissions.
Others argue against NFTs because they are part of a new, unregulated market – and those types of markets, in general, have a greater propensity to harm the environment.
Digital opportunities around NFTs
But NFTs and cryptocurrencies are offering retailers entry into new markets. Some shoppers don’t have access to bank accounts or credit cards—and others simply don’t want them.
Those customers can now make electronic transactions with cryptocurrency.
According to Statista, the number of blockchain wallet users is increasing dramatically: From roughly 69 million in February 2021 to 81 million a year later. Benefits include superior payment security, lower transaction fees, and speedier transactions.
Those well-known luxury brands and others are forging into the “metaverse,” expanding their retail channels. And retailers see that brand expansion into NFTs offers a way not only to expand sales but also to increase revenue receipts via cryptocurrencies.
Sustainability means serious business to a new generation of customers.
Business sustainability is far more than using recycled plastic in shopping bags or motion-sensing lighting.
It’s not a feel-good buzzword. Rather, it’s a way of doing business that considers the effect companies have on the environment or society.
Sustainability – from Millennials & Gen Z to Mainstream
For Millennials and Gen Z customers, sustainability includes reusability.
Thrifting or “resale marketing,” is popular with this group, and the secondhand market, including clothing retailers such as Poshmark and ThredUp, is thriving.
The similar concept of “circular fashion” considers the entire lifecycle of a garment, from how it’s made to ensuring its durability so it can ultimately be passed to several owners.
Established brands are joining the party; for example, Patagonia’s “Worn Wear” program offers credits toward new items when customers trade-in gear.
With Millennials representing $600 billion in spending power and Gen Z at $140 billion, their preference to shop sustainably can’t be ignored.
Increased appetite for sustainability
Not every product can be reused, however, so looking at responsible, “green” ways of manufacturing continues to be important.
What has changed, however, is that customers are more willing to pay for sustainable products. For example, last July, a survey from First Insight and Wharton’s Baker Retailing Center of more than 1,000 U.S. consumers found 68 percent of them willing to pay more for sustainable products, up from 58 percent from a survey taken in 2019.
That’s a compelling argument for retailers to create, source, and sell more sustainable goods.
Sustainability and cost incentives
Sustainability aligns with business goals as well – and though many small and midsize retails are leading the charge, it’s not solely the purview of smaller companies.
A great example is “Amazon Day” when the behemoth retailer packages into one weekly delivery, chosen by the customer. That’s a huge savings in gas costs for Amazon, while it reduces environmental pollution.
In addition, Amazon has committed to produce 100,000 electric vehicle delivery vans for Amazon through 2024.
Brick and mortar retailers that provided enhanced delivery and customer pickup services might consider reducing the resulting carbon footprint by bundling packages for customers, which will consolidate the number of delivery/pick up trips.
Employees and sustainability goals
Finally, companies that embrace sustainability as a key purpose may be better positioned that their competitors to attract motivated, skilled workers that drive financial success.
Everyone likes to rally around a common goal, and employees with shared purpose are likely to be more satisfied at work – and happy employees are great ambassadors for your business.
It was a long time coming: Retailers have for many years positioned themselves with the technology and supply chains to become not simply multichannel, but omnichannel.
Whether shopping through an app, their computers or by walking through the door, customers are shopping again.
As a result of COVID, consumer behavior has changed, with e-commerce gaining steadily in popularity. During the pandemic, online buying increased by leaps and bounds: A survey from PYMNTS found that roughly 36% of consumers were buying goods online in the second half of 2020, up from 29% in mid-April when most brick-and-mortar stores were locked down.
The Statista Digital Market Outlook reports that total revenue from e-commerce in the United States came to $431.6 billion in 2020, and estimates that by 2025, revenue will rise to $563.4 billion.
Combine that with the U.S. Census Bureau’s findings that consumers spent $211.5 billion online during the second quarter of 2020– a 31.8% increase quarter-over-quarter–and it’s clear that shoppers have embraced the convenience of e-commerce.
Embracing Digital Sales
While COVID-19 propelled brick and mortar retailers to get creative with their approach to sales, it was the catalyst for some shoppers to take their business digital.
According to a March 2020 consumer survey by Statista, nine percent of U.S. consumers bought a product online for the first time ever due to physical distancing and quarantine mandates during the pandemic.
And although brick and mortar retailers may have long had online components to their shopping experiences, COVID-19 forced many to try to integrate them into the in-store experience, including buy online, pick up in-store offerings and curbside pick-up.
For some retailers, omnichannel operations were assembled quickly as a way to keep revenue coming.
Now, as retailers are reopened and slowly lengthening their hours of operation, they have the time and experience to make adjustments for the long-haul, rather than just meeting the needs of the moment.
To standardize operations and make them scalable, retailers will need to optimize use of their technology. The Retail Pro Prism POS and retail management software acts as a platform for unifying data across channels and helps retailers manage omnichannel tasks in-store, including curbside pickup and order management.
Mobile POS for curbside shopping
With the web-based Retail Pro Prism software, retailers get full POS functionality on the mobile device of their choice and integrated EFT to complete the transaction where it began – whether on the salesfloor or sidewalk.
Retailers with using Retail Pro Prism POS on mobile devices can be ready at any time and in any place to take credit or debit card payment for items, and the shopper can stay outside.
mPOS systems can also be used for curbside pickup, a solution crafted out of necessity but now — without a doubt– certain to stay. The ease of convenience of curbside pickup is not lost on anyone who has ever done errands with a toddler.
Order management & data visibility across channels
Around the globe, people have changed their shopping habits in response to COVID, and retailers are needing to streamline order management across channels.
In Vietnam, more customers are shopping online and ACFC as the market leader is doing its best to bring a convenient shopping experience to its customers by launching the company’s eCommerce platform, Magento, as part of its New Retail program.
ACFC has more than 200 stores in major city centers across the country, and it plans to expand soon to 250. It is the exclusive retailer of well-known brands including Nike, Gap, Banana Republic, Tommy Hilfiger, Calvin Klein, Levi’s, Old Navy, Mango, Dune London, Cotton: On, Typo, Owndays, Parfois, Mothercare, Fitflop, OVS and French Connection.
With service from their Retail Pro Business Partner, LBC International, ACFC has successfully integrated Retail Pro Prism with the company’s eCommerce platform, helping the retailer satisfy the increased demands of shoppers who prefer to buy online and pickup in-store through the interface between the two systems.
“With data integrated between Retail Pro Prism and our ecommerce, it is easy to keep track of inventory and display online whether an item is out of stock or ready to be picked up, resulting in less frazzled associates and happier customers,” commented Vo Thi Phi Phuong, Managing Director at ACFC.
“When customers buy and pay on the eCommerce website, that order information is sent to Retail Pro Prism at the store, and the goods will be picked and packed, ready for customers to collect. The transaction data is also being captured, so stores will collect data on which styles are popular, which will influence product orders in the future,” explained Ms. Vo. An omnichannel retail strategy strengthens the customer experience and provides more avenues for shoppers––whether it is on mobile, web or in physical stores.
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About Pinnaca Retail & IT Solutions
Founded in 2015, Pinnaca Retail & IT Solutions is a family-run business offering retail solutions, specialist management consultancy and IT services. Our company is UK based, with offices in London, and a client base across the globe.
We work with all levels of business to define and develop strategies focused on our clients’ needs and objectives. Our tailored solutions are developed and optimised to fulfil your key business demands.
Over time we have added to our 20 years’ experience in the field and built up a team of experts, with a wide range of experience and in-depth knowledge, who are eager to help your business succeed and grow.
About DataScan Retail Systems
Datascan Retail Systems are a leading UK and European supplier of solutions to the retail sector, from small businesses through to mid-tier and international enterprises. We have vast experience in the analysis and design of retail IT and the implementation of EPOS and Stock Control Systems and provide all the services required to plan, implement and maintain an effective Retail Management System. We are committed to match the Retail Pro System to the exact needs of the retailer, utilising our development, training and help desk teams.
RIOT is turning traditional RFID solutions for retail on their head with RIOT Insight. Insight is RIOT’s real-time inventory accuracy service offered as a simple but powerful add-on to a retailer’s existing systems. 100% inventory accuracy to support Omni-channel is now yours on demand.
PAR Technology Corporation provides industry leading software and hardware solutions that are always there when you need them but never in your way.
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Combining leading technology with the richest data, Loqate provides several solutions to help bring businesses across the globe closer to their customers:
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Augmented reality – once associated with the wearing of clunky glasses and feeling disoriented – is finally coming of age. By teaming up with social media, brands have successfully implemented AR to allow prospective customers to virtually “try before they buy.”
Augmented Reality goes social
The social media platform Snapchat may have pioneered it, but Facebook, Instagram, Pinterest and TikTok quickly followed with their own lenses, filters and effects. And retailers from Target to Gucci have realized its value not only for entertainment and brand awareness, but also for selling products.
Stuck at home and bored, would-be shoppers wiled away the hours with AR filters and lenses available on social media. Advertisers soon took notice of how filters and lenses could be used for virtual try-on and other experiences.
Seeing how that pair of Gucci sneakers is as easy as pointing a cell phone camera at your feet. And experimenting with makeup is much less messy using Sephora’s Snapchat lens.
Developments in AR
While the technology has improved greatly recently, there are still some limitations.
For example, while a customer can visualize just how stylin’ those kicks will be, AR can’t size the shoes. That’s unfortunate, because returns are a huge sore spot for retailers, particularly those selling apparel. The issue is that today’s cameras depth perception can’t accurately determine size.
Once AR technology improves enough to reliably size clothing, demand will likely skyrocket; currently, Snapchat says it has 200M daily AR users. That could translate into millions in revenue.
Social shopping to drive in-store traffic
Well-established brands such as Sephora have the best of both virtual and physical commerce. Using Snapchat, customers can take and share pictures of themselves trying on new makeup styles.
Social shopping lets the customer’s friends weigh in on the buying decision, and the product can be purchased directly through the app.
But the experience online helps to drive in-store traffic as well. Creating a fun, memorable AR experience on a social network helps customers remember the brand, which can prompt them to visit it in-person.
Those companies become “top of mind” for particular types of products. In addition, social shopping apps can promote store events and are effective for location-based marketing as well.
Snapchat’s “ephemeral” nature helps create a sense of urgency and builds a sense of exclusivity. Today’s Generation X shoppers in particular crave exclusivity and limited-time offerings.
AR can attract the “right” buyers by providing an engaging customer experience on social media platforms. That interactivity can benefit a brick-and-mortar channel as well, by bringing attention to the brand as an innovator willing to meet customers’ needs in person as well as virtually.
Today’s customers are looking for a seamless purchasing experience, whether that’s in-store, online, or a combination of both. But the so-called “last mile” — the time it takes for a shipment to reach a customer —can be a thorn in the side of a retailer. Enter in-store fulfillment.
Benefits of in-store fulfillment
Mounting shipping costs are costly for retailers who are reluctant to pass them along to customers who are looking for the best price for every item, as well as free shipping.
By offering in-store fulfillment, the delivery process can be seamless as customers choose from curbside delivery, click and collect, and buy online/return in-store options.
Employees can address customer requests in real-time, monitor inventory, and deliver attentive service.
In-store fulfillment means retailers no longer have to route products exclusively to a warehouse.
Nordstrom and Kohl’s are excellent examples of putting the strategy into practice.
They can fulfill orders from the store closest to the customer’s location, leveraging their stores as fulfillment centers and shipping orders directly to customers, reducing costs and speeding up deliveries.
Ship-from-store, ship-to-store, and in-store pickup can then be handled with one solution that optimizes in-store inventory usage and reduces the time and cost for fulfilling online orders.
Perhaps the most daunting part of the process is getting a 360° view of inventory by connecting data from e-commerce sales with in-store transactions.
Determining the correct timing for syncing online data and orders with in-store POS is vital; solutions can be configured to sync data at any interval, including real-time, hourly, nightly, or at other intervals that make sense for a retailer’s operations and network capacity.
If syncing lags, inventory can fall behind, and there’s a risk of selling out of products that have already been committed to online orders.
With seamlessly connected channels, shoppers can buy products online and pick them up in the store that same day.
Store associates can receive pick lists to select and package the products ordered online.
Selecting off-the-shelf products increases inventory turn and decreases the duplication that comes with holding a separate online order inventory.
In-store fulfillment completes the frictionless purchasing experience.
Customers get quick, free delivery — often receiving their items even faster than ordering online.
Retailers, in turn, move inventory more rapidly, helping to maintain price stability.
Both shoppers and retailers benefit from a more efficient customer experience.
Direct to consumer (DTC) products have been wildly popular in the past few years, and as they slowly infiltrate big box retailers’ shelves, brands such as Casper, Harry’s and Bonobos are gaining more attention and getting an even bigger sales boost.
But traditional retailers are learning from them as well.
For the biggest retailers, partnering with DTC has been mutually beneficial. Walmart bought men’s fashion retailer Bonobos in 2017 for $310 million. Target is partnering with Harry’s to sell the well-made, discount-priced razors in stores, as well as Casper mattresses — which can also be found in top-tier stores such as Nordstrom’s.
Part of the draw of those and many other DTC brands is their popularity: They will drive customers into stores and online. Forging partnerships with newer, more sought-after brands helps retailers attract and create relationships with a new segment of shoppers who may not have otherwise shopped with them.
In addition, what big retailers such as Walmart, Target and Nordstrom’s can gain from well-established DTC brands is digital expertise. These products have successfully launched and sold products online with no physical stores. They are marketing powerhouses, and big box stores are learning from their strategies, particularly for their own private-label merchandise. For example, Target’s partnership with Harry’s spurred it to step up its men’s grooming selection by expanding its own Goodfellow & Co’s offering to more than 30 products. (Target is clearly focusing on the segment and rounding out its offerings by also incorporating Ulta Beauty shops this year into 100 locations this year.)
What these relationships mean for consumers is that brands and retailers are becoming more attuned to the future of shopping. Customers are fluid in how they want to shop: One day they may opt for a personal, immersive experience at Sephora and the next they’ll order lipstick online. Convenience is a driving force, but it doesn’t always mean ecommerce. Sometimes, convenience is the ease of being able to go to a physical location and try on, inspect, and ask questions.
Successful retail has always meant providing what customers want, when they want it. Today’s technology merely widens the possibilities, and requires retailers to be intuitive and flexible.
It’s a retail conundrum: Foot traffic in malls is decreasing, and brick and mortar stores are losing ground to ecommerce – yet shoppers still want to visit stores to touch and try out products before buying.
To capture more sales and remain relevant to shoppers, big box stores are thinking out of the box and partnering with popular name-brand product manufacturers.
Bringing Apple to you at Target
Target recently announced it will double the size of Apple’s footprint in 17 locations, expanding offerings in stores and online. In addition, Target team members will receive specialized training from Apple.
The retail behemoth has also partnered with Ulta Beauty to open 1,000-square-foot beauty shops, which will be staffed with Target employees who have been trained by the beauty retailer.
Notably, Ulta also provides customers with many services such as in-store hair salons, which drive considerable foot traffic: Salon customers reportedly make twice as many trips to an Ulta Beauty store as those who do not use those services.
And Target isn’t the only big box store looking to pretty itself up: Kohl’s will open 200 “Sephora at Kohl’s” locations this fall, with at least 850 locations planned by 2023. The cosmetics retailer will launch on Kohl’s website in 2022, offering more than 100 beauty brands, some of which are exclusive to Sephora.
Products across price points
The beauty segment is notable because America’s department store makeup counters have historically been the place to purchase upper-end cosmetics.
The American beauty counter is iconic.
However, they’ve gradually been losing popularity as shoppers prefer to visit specialized retailers – such as Ulta and Sephora – which can provide a more extensive variety of products at different price points.
However, by collaborating with those same cosmetics retailers as well as be increasing their in-store footprint, department stores could win back many of those customers.
Department stores are using the popularity of brands such as Apple, Sephora and Ulta to lure customers back into their stores.
Once inside, the customers can be tempted to continue shopping for other products.
In a way, department stores function like mini-malls: From motor oil to bikinis to wrapping paper, these stores have it all.
The tough part today is getting the shoppers to come into the store.
The addition of top brand names will help provide the visibility needed to get shoppers in the automatic door.
One of the big reveals during the past 13 months is that people need (and want) to shop, and that e-commerce filled that desire both for necessities and luxuries.
Small, neighborhood businesses with no online presence had the toughest time surviving, while online stores with brand recognition — ironically, often due to a brick-and-mortar presence — fared the best.
Most strikingly, big, traditional shopping mall “anchor” stores felt the sting of greatly reduced foot traffic, while also enjoying a significant uptick in e-commerce revenue.
For example, Nordstrom forecasts sales to increase more than 25% this year, with digital accounting for roughly half of all revenue. Malls have been losing foot traffic for years. Moody’s industry research arm Real Estate Solutions (REIS) forecasts that malls vacancy rates will reach 14.6% by the end of the year as retailers regroup post-pandemic and reconsider their store locations.
Brick & mortar format shift
And yet, customers consistently report enjoying an in-person shopping experience. Nothing truly can replace an experience of being able to touch and feel merchandise.
A case in point is the venerable Macy’s department store, a 162-year-old retail institution, which announced a year ago it would be closing 125 stores in “lower-end” malls during the next three years.
Macy’s strategy was to focus on locations with stronger sales as well as online operations. Then came lockdown and the pandemic era, and as shoppers tried to avoid malls, stores found ways to adapt.
Macy’s mall exodus is not unique; Dillard’s, J.C.Penney, Kohl’s, and Belk are also reportedly looking at freestanding and strip center locations.
Nordstrom, too, has been successful with its small format stores and intends to continue expanding those outlets along with its digital presence as part of its “Closer to You” long-term growth strategy.
Small stores, customer-forward strategies
According to reports, the stores will have full-service and possibly self-checkouts as well as same-day deliveries.
In addition, they will offer “buy-on line, pick-up in store” or “click and collect” service, which often comes with curbside pickup.
Such smaller stores are embracing the concept of offering a curated product selection, a characteristic more often associated with luxury stores. It provides these large retailers an opportunity to be flexible, react more quickly to buying trends and become more relevant to today’s clientele.
By showing a willingness to experiment with innovative merchandising ideas, these prominent retailers may not only rediscover their place in the industry, but also once again become leaders.
Retail Pro International (RPI) is a global leader in retail management software that is recognized world-wide for rich functionality, multi-national capabilities, and unparalleled flexibility. For over 35 years, RPI has innovated retail software solutions to help retailers optimize business operations and have more time to focus on what really matters - cultivating customer engagement and capitalizing on retail's trends. Retail Pro is the chosen software platform for omni-channel strategy by retailers in 130+ countries.