Investment in ecommerce has become a primary focus for apparel retailers

Investment in ecommerce has become a primary focus for apparel retailers

The growth of e-commerce and m-commerce is on the rise but retailers still need to do more to better meet consumer expectations online, according to experts at Retail's 'Big Show', the National Retail Federation's 104th Annual Convention & Expo that took place in New York this week.

Investment in e-commerce has become a primary focus for the majority of apparel retailers in recent years, both to compete more effectively and to try and meet the ever-changing needs and demands of the consumer.

And, not surprisingly, a steady flow of new and more powerful tools is launching onto the market to help retailers better understand consumer demand, reduce excess inventory, improve promotional effectiveness, and precisely optimise product availability across every SKU and store.

UK department store retailer Debenhams, for example, used the NRF expo to reveal its new partnership with business-to-business solutions firm Inovis to help it achieve operational improvements through Global Data Synchronization (GDS).

"In today's increasingly competitive retail environment, ensuring accurate product information is crucial for industry leaders like Debenhams," said Sean Feeney, president and CEO of Inovis.

Indeed, high-fashion footwear designer Chinese Laundry this week revealed how it is reaping the rewards of integrating the Celerant Command POS Retail Management Platform. Since implementation, the brand has experienced a 31% increase in electronic conversions, a 54% increase in mobile commerce sales, 50% more productive search pages, and an 18% boost to page load times.

Behaviour lag
Yet despite the implementation of such new systems, there is still room for improvement. According to Mike Flanagan, founder and CEO of apparel industry consultancy Clothesource, relatively few clothes are sold through transactional websites. In the two most developed markets for apparel internet sales - the UK and Korea - shoppers in 2014 got about 17% of their clothing from an online order. In most other developed countries, even less.

"It is amazing how insignificant the internet is on the garment trade," he wrote on just-style this week. "While every clothing brand and retailer uses the web for moving, receiving and monitoring information, relatively few clothes are sold this way."

This is a view shared by technology and consulting firm IBM, which believes that while consumers are growing more enthusiastic about online shopping and digital interaction with retailers, their actual behaviour lags behind.

Findings from a study released at the NRF event indicate that consumer expectations are not being met, and that there are clear opportunities for retailers to close the gap and create new loyalty.

The IBM Institute for Business Value study analysed four years of survey data from over 110,000 consumers in 19 countries. It found that consumers are now very comfortable with combining digital and physical elements in their buying process. However, while the study found that 43% of consumers said they prefer to shop online, only 29% actually made their last purchase online.

In some product categories such as youth apparel, there is a nearly 20 point gap between the percentage of people that say they enjoy shopping online and the percentage of people who actually made their last purchase online in those categories. This signals that retailers need to do more to meet consumer expectations online.

"With consumers switching seamlessly from online to the store it might appear that retailers have finally struck the right balance, but IBM's study identifies a significant gap between what shoppers want from retailers and what they are getting today," said Sarah Diamond, general manager, IBM Global Business Services.

"Retailers may not be doing enough to meet consumer expectations shaped by digital experiences outside of retail - from location-based services to preference-based apps. The good news is that this gap also indicates the potential of growth for retailers who can meet those consumer expectations."

IBM highlighted a number of customer requirements it thinks retailers need to take into account:

  • High on the list is a mandate for inventory visibility. As consumer expectations for product fulfilment are shaped by online shopping experiences, out-of-stock situations are becoming less acceptable.
  • A growing number of consumers said it's important that retailers offer personalised promotions, particularly if they are presented on demand.
  • The study found that sales associates ranked last on the list of trusted resources consumers access for product knowledge - yet another sign that their role is changing.
  • Retailers should prioritise empowering their sales associates with tools to monitor inventory and offer promotions instead of focusing only on general product information.

Tracking technology
One retail technology trend that was picked up at the Big Show was that of radio-frequency identification (RFID) tagging: the wireless use of electromagnetic fields to transfer data.

Companies such as Avery Dennison, Checkpoint and Tyco Retail Solutions were eager to show their latest technology, and a session hosted by RFID Journal founder Mark Roberti included Pam Sweeney, Macy's senior VP of logistics systems; and Joe Granato, the director of operations and global initiatives at Lululemon Athletica, who both outlined the benefits of using RFID tagging.

Roberti said: "Some retailers are moving quickly, and RFID solution providers are enhancing their products to make deployments more scalable. That often means making them easier for store employees to use, or reducing the need for employees to do things differently. While some retailers are pushing the technology to new heights, a lot of others are worrying that they are behind and are looking to catch up."

Tyco Retail Solutions unveiled a new version of its TrueVue software platform at the show, which can link to closed-circuit television cameras to show what was happening when shrinkage occurred. Tyco also showed a new, low-profile Sensormatic RFID solution for fitting rooms that can track merchandise in the room, then compare what is sold with what is returned to inventory, to better understand product fit, quality and/or style issues.

The message appears to be clear, that with the growth of mobile technology and omni-channel retailing, today's retailers and brand owners are being challenged to think about the new overall consumer experience. As consumer expectations continue to grow now, more than ever, inventory accuracy and visibility has become a business imperative.

The rise of HENRYs
Another theme discussed at this year's event included the growth of the luxury market.

A session on 'The Changing World of Luxury Retailing' considered the way luxury has morphed from two or three archetypal customers to its current state. It discussed the rise of millennials - technology savvy shoppers aged between 13 and 30 - and how to reach HENRYs - 'High Earners Not Rich Yet' now, in order to help build relationships for the long term.

According to Unity Marketing, in the US there are roughly 21.6m HENRY households, and 2.9m ultras. The former have a base income of $100,000, and the latter at least $250,000.

Beyond this, however, there is an opportunity to reach those that want the lifestyle but can't make the investment.

Matthew Woolsey, executive vice president of Barneys New York, told attendees that millennials are "very naturally" luxury customers. This, he suggested, is not necessarily about having money to spend, but rather an identification with the idea of themes like story, authenticity and heritage. As such, he said, personalisation efforts "have to be about more than how you deliver a discount coupon. It has to be about story - it has to be about engagement".

And once again returning to the issue of better meeting consumer expectations online, David Selinger, CEO and co-founder of RichRelevance told the panel that with 82% of millennials more likely to make a purchase decision using their mobile phone, the way retailers engage at the point of interaction has to change.