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Retail 2020: The Year of Transformation 2 FOREWORD POWERED BY

The times, they

are a-changin’... Because it’s not just a sweater Avery Dennison’s head of RFID Market Development, At Avery Dennison we see technology Apparel Uwe Hennig discusses the significant shifts as a way to create a world that can be better connected, better harmonized that have occurred in retail. and more in-sync.

A world where digital ID technologies PPAREL RETAILERS HAVE And all this information needs to be introduce greater accountability, seen incredible transforma- easily accessible – at their fingertips. authenticity, visibility and integrity to tions over the past 10 to 15 Being a data-driven company apparel lifecycles. years,A and even more has been accel- does not mean just hoarding erated by the COVID-19 pandemic. masses of data, it means antici- A world where a sweater can tell you its When you look back at the retail pating needs, collecting informa- origin story. From start to end. And all landscape of, let’s say, 2005, you tion in real-time, and analysing points in between. quickly realise how massive that it to present it back to custom- change has been: back then the ers at a time and place they are retailer was in the driver’s seat. most receptive to it. Data can also Customers could only shop on the help you develop digital micro- Made Possible high street or purchase through fulfilment solutions that are more by Avery Dennison mail orders and printed catalogues. flexible and efficient. This enables eCommerce was in its infancy and you to know how specific products systems were far less complex. are being moved across your value Now online stores are ubiqui- chain, or if a product is a bestseller tous. The high street is merely an in one store and a shelf warmer in option out of many. Customers the other. And you can learn this Uwe Hennig, are no longer passengers, instead, quickly, avoiding margin losses in they have taken over the driv- an era where brands launch six to RFID Market Development, eight collections Apparel, EMEA, per year. , India You just need to make the most of Some things, on it. Undoubtedly the retail industry the other hand, aren’t a-changin’. has gone through seismic changes.” At the end of the “ day, you still want er’s seat. And it’s up to you, the to please your customers, and get a retailer, to avoid becoming a pas- good return on investment. Digital senger and to instead become the Identity technologies and the Internet map that leads the customer to the of Things (IoT) can help you achieve right destination. both. They enable you to maximise So, what do today’s powerful cus- the consumer experience so that your tomers want, and what do you need brand can anticipate, rather than fol- to guide them in the right direc- low, your customers’ needs. tion? It is something that is avail- It all starts with a simple first step: able everywhere and extremely rare adding digital identifiers to prod- simultaneously: data. Customers ucts, and connecting them to the want to know which products are IoT. In fact, the very first step is even available when and where, how they simpler: checking out the articles in were produced, their ecological foot- this report. I wish you a pleasant and print, how they can be recycled… insightful read! ■ rfid.averydennison.com/apparel 4 INNOVATION POWERED BY INNOVATION POWERED BY 5

Australia, time to innovate 6one5 Retail Consulting Group director Bill Rooney believes it’s time for local retailers to reap the rewards of tech transformation.

ETAIL IS BECOMING divided least 70% of Australian retail busi- radio waves and receive signals world including Zara, H&M, Uniqlo, of replenishment. Its RFID-equipped Bilbao store between the digital champi- nesses as traditional analog busi- back from the RFID tag. Nike, Adidas and Target. Put simply, out of ons and the legacy laggards. nesses currently. Used in the industry, they It has been less widely imple- stocks and theft can be was selling more than four old RCOVID-19 has simply reduced the Meanwhile, Amazon is driving can take the form of large tags that mented in Australia’s billion dollar immediately identified time span to be digitally enabled customer experience via an R&D are removed at the checkout, right fashion retail industry, due to the and resolved. sites combined even though it from five years to two years. spend of US$22.62 billion per annum through to the new chip the size of cost of tags and readers and lack of Retailers can now “operated on less space and 20% Survival and success will depend with approximately US$13 billion a dust grain that are permanently computer processing capacity. have accurate stock- on retailers’ digital and analytical spent on IT. sewn into the garment. However, with the cost shrinking takes completed in four less inventory. capabilities, utilised to improve the To put this into perspective, the One of the perennial issues for dramatically in the past few years – to six weeks and at the customer experience, attract new business has had several thousand retailers is excessive stock, which nor- from US$3 a tag to now less than 20 same time use scanners tactically to In an interview last year, Inditex customers and drive down costs. engineers working on artificial mally eventuates as a result of poor cents – the potential for Australian identify out of stocks on the shop floor. chairman Pablo Isla said the busi- Not having this capability is like intelligence for the last seven years. demand planning, ineffective use retailers is now ripe. This technology is available to ness model relied on low inventory analog phones (traditional retailers) For the purpose of this report, we of analytics to predict sell-through The goal is the right stock in the all sized retailers and where stock and quick sell-through. having to compete against smart will focus on how digitised inventory and minimise margin shrinkage and right place at the right time, and this issues are present. It is one of the At the time, its RFID-equipped phones (digital enabled retailers). can assist the retail metamorphosis inventory visibility problems. cannot be achieved without RFID easiest and quickest ways to start Bilbao store was selling more than They will not be in the game and required to survive 2020 and beyond. This is especially prevalent in the which provides an accurate view of resolving these complex issues. four old sites combined even though we all know what happened to Nokia Radio Frequency Identification fashion industry. stock in store, in the stock room, in Zara’s parent company Inditex for it operated on less space and 20% and Blackberry’s phone businesses – (RFID) refers to a wireless system There is nothing more frustrating transit and in the warehouse. example, has reported it has been less inventory. they went from number one to obliv- comprised of two components: tags for a consumer to visit a store and be In Copenhagen, I watched a sales- able to reduce stock-in-trade by 5%. The retail industry is digitising ion overnight. and readers. told a specific item is out of stock. person using a scanner to stocktake This is equal to $113 million cash like many other industries, the ques- In my experience as a fashion The reader is a device that has This problem has already been the ground floor of a Zara store in flow improvement based on stock tion is are you a smart (phone) or an retail consultant, I would classify at one or more antennas that emit solved by the largest retailers in the half an hour for the specific purpose levels at 31 January 2020. analog laggard (phone)? ■ 6 INVENTORY POWERED BY INVENTORY POWERED BY 7

Future Forward: 2020 and beyond Having pivoted its inventory management during COVID-19, Australian womenswear chain Kookai is now exploring RFID. By Assia Benmedjdoub

HEN ROB CROMB and search and merchandising solu- “Australian styles often feature “Now that our factories are back to Danielle Vagner launched tion decreasing search exit rates, in their top 10 best sellers every running at full capacity, we are able Kookai Australia in 1990, increasing search conversion and week and in an effort to align the to produce our next activewear col- Wthe brand’s trajectory was predicted overall site conversion. collections and improve processes, lection out of our own factory in Fiji, to be a typical one. It has also transitioned to a global there will be a lot more Australian and in turn we’ve now got a local sup- Under a franchise agreement with digital marketing platform, allowing product and styles ranged into plier should any issues arise again the French founders, the pair could it to enhance CX via personalised their seasonal collections. in future.” scale its Australian operations and communication through in-store “Now that our Fiji and In fact, Vagner-Cromb says long- sell back to . and digital behaviour. manufacturing facilities are pro- term disruption caused by COVID- Instead in 2017, Cromb struck a This will continue through to ducing collections for both regions 19 will force retailers to digitise deal with Vivarte to purchase its stock on hand, Vagner-Cromb says. globally, our factories are almost and reorganise their entire supply global network and bring the brand’s “We are currently looking into at full capacity with the increased chains, from production to post. 235 stores under a united vision. RFID technology to digitise our quantities we’re now producing. “Our New Zealand online store With its own factories in Fiji inventory, to increase our stock “We are in the process of expand- was previously fulfilling orders and Sri Lanka, Kookai Australia control not only on the shop floor ing our current facilities and also from one of our New Zealand bou- now produces collections for both but throughout manufacturing in exploring other poten- regions globally through shared our own factories. tial locations across the infrastructure. “We expect this to have huge world that make sense We have since increased our Global brand manager Bianca benefits to our business and to our for us logistically and Vagner-Cromb says COVID-19 has customers, by ensuring we have the geographically.” online allocations to 30%-40% amplified this strict focus on inven- right product, at the right time, in Kookai has also dab- tory, as channels diversify. the right store, all the time.” bled in on-demand local of our collection from 20% “We have seen huge growth in “Our priority for our sales assis- manufacturing dur- “which has definitely contributed our eCommerce channel this year,” tants is our customers, and by digi- ing the pandemic, with she says. tising the stock receipting process success. As its Fiji and to our growth in sales. “Given the lockdowns and shopping we can eliminate the need for man- Sri Lankan factories restrictions over the last few months ual counting of deliveries, leaving endured lockdowns, it was able to tiques, however when they went and customers’ reluctance to physi- our sales assistants free to put the source a Melbourne-based manu- into lockdown we had to quickly cally be in stores, I do think it’s going focus back on the customers rather facturer to produce its new active- transition the fulfilment to our to change the way customers shop in than administration. wear line. Australian 3PL,” she explains. the future, and with this in mind we “Ensuring the new stock can be Kookai Active launched as an “This means our NZ customers will continue to heavily invest and placed on the shop floor or displayed online exclusive in May, along with now have access to a much larger focus on this area of our business. online as soon as possible is critical, a small loungewear capsule collec- collection with overnight delivery “As online is trending signifi- and by digitising the stock receipting tion featuring trackies, shorts and and we have seen huge growth in cantly up on last year, we have since process this can be done quickly and sweaters. This was extended in our New Zealand online sales increased our online allocations to with more accuracy than in the past.” August due to consumer demand. since.” 30%-40% of our collection from 20% This will grow in importance as “We were introduced to a As retailers continue to grapple which has definitely contributed to the brand continues to evolve its Melbourne-based manufacturer with the challenges presented by our growth in sales.” global and regional collections. by one of our local fabric suppliers COVID-19, Vagner-Cromb says With its online business trend- “Throughout the year we’ve been and were able to work with them nimble and tech-first strategies ing significantly up year on year, the testing the Australian collection in on our first activewear collection, will be key. Melbourne-headquartered brand has and we’ve had an amazing which in turn helped us get this “We want to ensure we have the made a number of tech investments. response to our fashion and basics collection to market quite quickly,” right product at the right time in the This includes an eCommerce from consumers,” Vagner-Cromb says. Vagner-Cromb explains. right store all the time.” ■ 8 TECHNOLOGY POWERED BY TECHNOLOGY POWERED BY 9

One step ahead

CEO John King reports that Investment in technology is becoming a improvements in managing inven- critical component to staying ahead in 2020. tory levels saw inventory down 26% to $256 million at the end of FY20, By Assia Benmedjdoub representing a significant achieve- ment compared to FY19. HEN TIMES GET tough, the An example of this has been the abil- King adds that the rapid growth tough get upgrading. ity to turn locations on or off for ful- in online sales accelerated during According to CB Insights, filment based on the data. 2020, particularly during the period Wa market intelligence platform “This has been more prevalent of store closures. analysing tech funding deals, the over the last six months during dif- “Online sales grew by 98.8% in retail industry is experiencing ferent stages of lockdown,” Lenton 2020 compared to the prior year. unprecedented levels of technology says. “For instance, if we had a par- “During the past two years, Myer investment. ticular focus on full priced items, the has undertaken significant improve- Its State of Retail report found location with the suitable stock mix ments to the website including financing increased nearly 60% to would be enabled, with locations enhancing infrastructure and peak $3.7 billion in 2019, as retailers rec- that may have had a higher volume of capacity and improved search and ognised the need to invest in sys- sale product being less of a focus. We check out functionality. tems to improve productivity and didn’t want to send staff into store “Together with improved fulfilment, profitability. to pick orders at locations where the these enhancements have under- It was at this time Myer expanded volume wasn’t there.” pinned the significant growth in sales its use of RFID technology across This strategy has also extended to as well as a 50 basis point improvement stores in Victoria and Sydney, clock- stock visibility for in-store shopping. ing a reduction in cycle time and “For those shoppers going into associated labour costs by over 80% store, we have seen less browsing Together with improved and 100% pickup accuracy. and more buying intent and solu- fulfilment, these enhancements Based on increased retail invest- tions such as our store to door, ments such as these, CB Insights where a customer can make a pur- have underpinned the predicts retailers in 2020 to chase there and then even if the “significant growth in sales become smarter, results-driven and store didn’t have the size or style equipped with new ways to match they were looking for, with the as well as a 50 basis point supply and demand. items then delivered directly to their For Cue Clothing Co CIO Shane door,” Lenton adds. improvement in conversion. Lenton, investment in IT projects Additional investments this year this year will be crucial to weath- have included video-based stylist in conversion, and an improved gross ering the challenges presented by sessions, which have generated an profit for the online channel.” COVID-19. average of 40 session requests per In August, Myer announced a multi- With a significant store and dig- week, a conversion rate of over 60% year agreement with Australia Post to ital presence across its Cue and and an order value five times the hasten this strategy through ware- Veronika Maine brands, the retail standard. Cue is also expanding its housing and online fulfilment services. group has been expanding its digi- cross border online business, with The move will provide extra capac- tised inventory and unified com- 20 new regions slated for opening in ity to support online growth, partic- merce solutions. the next few months. ularly during peak trading periods, “We have some really exciting “We will continue with our focus with more than 90,000 products to digital transformation initiatives on customer experience and per- be housed at the 26,000sqm facility. launching over the next few months,” sonalisation in 2020,” Lenton says For Myer, the priorities being Lenton says. “We have been focus- of future projects. “This has been accelerated are online and factory ing on unified commerce for some made possible by capitalising on the to customer alongside refocused time now, with key foundations such opportunities created by our unified merchandise. Similarly to Lenton, as single view of customer, endless commerce solution.” King believes 2020 is the time to fast aisle fulfilment and personalisation For Myer, similar upgrades will track technology transformation. seeing us in the best possible posi- be part of a ‘Customer First Covid- “While the Customer First Plan tion to capitalise on multichannel 19 Response Plan’ which has six remains the right plan, it has been retailing.” tenants including efficient factory adapted for the current operating The use of inventory management to customer, simplified business environment and to ensure Myer solutions has been pivotal in navi- processes and accelerated cost can capitalise on all available oppor- gating digital sales during lockdown. reduction. tunities as restrictions are eased.” ■ 10 PARTNERSHIP POWERED BY PARTNERSHIP POWERED BY 11

Partners in profit Catch and Target are a prime example of digital transformation, with a number of integrations in the pipeline. By Imogen Bailey

T WAS THE $230 million acquisi- all channels to existing customers “The partnership allows us to tion that shook up the Wesfarmers and acquiring and retaining new take a wider omnichannel approach, portfolio. online customers. leveraging the physical store net- IAcquiring pureplay eTailer Catch “New channel activation is one work to provide click-and-collect ser- in mid-2019, the business was the element of our broader digital and vices to our 2.3 million customers. first pureplay eCommerce retailer eCommerce strategy and extend- “For Target, this expanded online to join Wesfarmers’ traditional ing our existing partnership with presence comes at an opportune bricks-and-mortar brands. Catch provides a number of benefits time, allowing customers who are And it wasn’t without strategy to both businesses and mostly to our unable to access physical locations that Wesfarmers snapped up the customers. the opportunity to shop the range on rapidly growing eTailer. “For Target, accessing new cus- Catch,” she says. Recognising Catch as, “a leading tomers is the key focus of our par- Before going live with the integra- eCommerce platform with quality ticipation in Catch’s marketplace, tion the businesses had to ensure fulfilment assets,” MD Rob Scott and we think Target’s inclusion as that their systems communicated said the business was looking to a seller on Catch’s marketplace pro- effectively, requiring the support “Catch provided Target with tech across many of the 11,000 Target with both working together to build accelerate Wesfarmers and Kmart vides Catch’s customers with access from multiple teams across both support for the entire process with products available. on the existing integration through Group’s digital and eCommerce to an iconic Australian retailer’s Target and Catch, Scatena explains. our dedicated Catch marketplace “We have been pleased with the special deals, Lederman adds. capabilities. large range of products,” he says. “Like any partnership, we focused onboarding team, working along- level of participation we have seen “Since Catch’s acquisition by Now in 2020, it has made good on Catch Marketplace partner- on ensuring our systems supporting side the development teams, proj- from customers for Target product Wesfarmers, we have worked to that promise: Target is available to ships and category manager Tali product feed, product description, ful- ect management and marketing on the marketplace. build a great relationship with purchase from on the Catch website. Lederman agrees and says that the filment, returns and customer service teams on both sides for a seamless “We are seeing customers partici- Target and are always looking for The benefits from both sides stack partnership has come at an oppor- interfaced with the Catch platform. onboarding experience,” she says. pate across our extensive range and new ways we can add value and build up; Target has access to Catch’s large tune time for Target when many of “This was something that we did While integrated at other levels we think we are offering Catch’s cus- on the relationship. customer base and adds another its customers may not be able to with great collaboration between the and being owned by the same par- tomers with great ranges of value, “We are expanding the Click shop in-store. digital technology, product develop- ent, Targe t operates as a standalone quality and style across apparel, and Collection collaboration to “With a huge ment, commercial, fulfilment and marketplace seller on Catch, mean- home and toys. include Target orders placed on The partnership allows us to take range of products merchandise planning teams across ing that it fulfils all orders from “We are excited by the number Catch, on top of the Catch prod- already avail- both businesses. Catch’s support for Catch itself using its fulfilment net- of customers new to Target that we ucts you can already pick up from a wider omnichannel approach, able on Catch, Target as a marketplace seller has work of distribution centres and have accessed by the marketplace,” Target for greater flexibility for Target’s inclusion been fantastic, and we have thor- stores, Lederman says. he says. our customers. leveraging the physical store network in our market- oughly enjoyed forming and com- “Target has been able to integrate Similarly, Catch is benefitting “We will also have ongoing spe- “to provide click-and-collect services place allows us to missioning our selling partnership an agile fulfilment solution which from Target’s key brands too. cial deals and promotions for Target offer our custom- with them,” he says. includes distribution centres, as “We have had a great response since exclusively on Catch to continually to our 2.3 million customers. ers more variety Lederman adds that the busi- well as fulfilment from stores Target launched on the marketplace. improve our offering for customers in both product nesses used Catch’s existing appli- around Australia. “Through the Target range, we who shop online with Catch,” she says. channel to its digital offering, while selections and brands to give our cation programming interface (API) “Catch customers can also choose have been able to offer our custom- Scatena adds that Catch will help Catch widens its product offering consumers even more reasons to to onboard Target. to collect their Target orders placed ers a wider range of brands such to continue Target’s digital growth. and also gains access to a physical shop with Catch. “With all our marketplace part- on Catch from Target stores across Lego, Fisher-Price, Breville and “As Target continues to improve store network. “The inclusion of Target on Catch’s nerships, Catch offers an open and Australia, offering our customers more giving consumers even more and grow its digital offer and eCom- Target GM of digital Mark Scatena marketplace has provided a fantas- API integration for retailers. more flexibility to shop online and reasons to shop at Catch. merce proposition, sharing best says the integration with Catch helps tic opportunity for collaboration “Working with Target and their in- access their products in the most “We have also seen particular suc- practice and collaboration across the business realise key elements of between Kmart Group businesses, house development teams we were convenient way for them,” she says. cess across a broader range of cat- areas such as fulfilment, digital its digital strategy. allowing both Catch and Target able to utilise the API to integrate their And since going live, Target’s key egories such as kidswear and wom- marketing, technology and data “At Target we have a big focus on to leverage each other’s strongest product content, order management product categories are already sell- enswear,” Lederman says. analytics with Catch will continue accelerating our omnichannel prop- assets across brand, customer expe- and store fulfilment solutions with ing well on Catch, Scatena says. The partnership between the busi- to be an important part of our rela- osition and providing options across rience and product offering. the Catch marketplace SaaS platform. “We have seen pleasing responses nesses is only set to prosper further, tionship,” he says. ■ 12 OMNICHANNEL POWERED BY rfid.averydennison.com/apparel

Digital transformation: Retail The Force Multiplier reinvented Digital transformation that connects the physical Accent Group’s former CIO, Mark Teperson was responsible for and digital retail world, offering full inventory a united inventory strategy across over 500 stores and 18 brand accuracy and richer consumer experiences. With COVID-19 Australia’s shopping habits have changed. websites. He explains how he did it. Australians have historically been slower in adopting e-commerce but the pandemic has caused a seismic shift: they are now shopping online more than ever. Click and Customers were offered click and Collect and Buy Online and Pick Up in Store (BOPIS) are also collect, click and dispatch, endless on the rise, as brands focus on providing a more seamless, aisle and same day delivery. more satisfying and safer customer experience. Enterprise This flexibility is at the core of The wide inventory accuracy and a robust omnichannel strategy Force Multiplier: it captures demand are key to ensure retailers and brands stay ahead of the utilising all inventory supplies to curve and future proof their business. gain benefit. It’s the integration of those two channels – the deep integration – in real time that creates the omnichan- COVID-19 changing habits However… What does this mean? nel experience. Otherwise, a retailer is really just omnichannel is still an emerging concept a retailer with a website. % % in Australia.5 This became even deeper when Lack of inventory visibility retail locations were converted into 41 23 dark stores during lockdown. growth in growth in BOPIS It enabled teams, who were com- online shopping sales in July 2020 1 4 Missed sales pletely safe, to send one person into in April 2020. compared to June. each location to pick and pack online orders and dispatch to customers. It enabled the company to process Australians will increasingly shop Lower margins large volume increases in online + online even after social distancing % % sales with staff safety front of mind. is lifted.3 57 Only 19 Accent Group publicly stated of retail is still of top 250 Retailers with truly omnichannel 2 that average digital sales went offline. retailers profitably experiences will be best positioned Negative brand perception from $250,000 a day pre-COVID to + fulfil omnichannel to benefit from these changes.6 5 between $800,000 and $1.1 million demand. a day during the COVID period. This was a three to four fold HERE IS A real distinction Already, you can see nearly 50% increase in the digital sales space. between what it means to be more traffic coming to the online As an omnichannel retailer, it cre- The transformative power of digital identities an omnichannel retailer and a business than going to stores. ated employment opportunities for Tretailer that just has a website. But it’s combining those two team members and a reliance on in- Full inventory visibility thanks to RFID tagging at source Standard inventory I talk about omnichannel in the things that creates the Force store retail ops teams to support the % accuracy7 context of a Force Multiplier. Multiplier. digital growth. Flexibility to move inventory where the demand is 65 That is, the bringing together of By creating and integrating those It wasn’t about physical or digital, Opportunity to engage with customers beyond POS two very distinct assets that result businesses together, Accent Group it was about how the whole business RFID inventory % accuracy + not in 1 + 1 = 2 but 1 + 1 = 5. uncovered real time access to $130 came together. Develop a consumer centric strategy that provides accurate insights and data 99 Accent Group has more than 500 million worth of inventory across It helped bring down inventory stores and forecasts about 47 million all assets. levels and generated cash while the customer store visits every 12 months. This allowed stores to act as expe- rest of the business was closed. Get in touch for more information Sources On the digital side, there are 18 web- rience centres for customers, as well Omnichannel retail is ultimately 1: Australia Post 2020 eCommerce Industry Report. 2: Retailbiz.com.au. 3: IBISWorld. sites and about 64 million site visits. as distribution centres for product. setting up for success. ■ about our digital ID solutions 4: digitalcommerce360. 5: Australia Omni-Channel Revolution Report. 6: KPMG. 7: Auburn University REPORT POWERED BY

Retail 2020: The Year of Transformation