How Fashion Retailers Are Using Technology to Get Ahead in Business
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Technology in Fashion Report How fashion retailers are using technology to get ahead in business IN ASSOCIATION WITH IN ASSOCIATION WITH Contents Foreword page 3 Torex foreword page 4 Avery Dennison foreword page 5 Chapter 1: Introduction page 6 Chapter 2: Multichannel retail, ecommerce and the impact on store systems page 8 Chapter 3: CRM and customer insight page 12 Chapter 4: Supporting international expansion page 15 Chapter 5: Analytics – merchandising, pricing and allocation decisions page 18 Chapter 6: Product lifecycles and the supply chain page 21 Chapter 7: Digital marketing and PR page 25 Chapter 8: The human element page 27 2 IN ASSOCIATION WITH Innovation on trend Drapers has tracked the growing acceptance of technology and desire to innovate by fashion retail companies over the past decade. Ecommerce, internationalisation and increasingly tech-savvy consumers are just three of the trends we’ve written about that are focusing attention on IT. Earlier this year, Drapers set out to investigate just how important technology is becoming to fashion retailers. We wanted to know where their pain points are, and which technologies they and their customers believe can strengthen their businesses and propositions. The project kicked off with a survey of our readers on Drapers’ website. With 165 responses, the results were compelling, and supported much of what we were hearing anecdotally. From there we ran a roundtable alongside our sponsors, Torex and Avery Dennison, which enabled us to talk through some of the results with a group of fashion retailers. It’s clear that many companies recognise that technology is crucial to providing what their customers want, whether it be bringing new trends to market faster, better stock availability, cross channel services or more personalised and relevant marketing. And it’s also true that many of the issues to do with adopting new technology are common to our readers, whether they be global fashion brands, or single store independents. So, as the final part of the project, we have turned all the research – as well as information on many examples of innovation we have collected recently – into this report. Highlighting the most interesting trends in how fashion businesses are using technology, the report is designed to inspire retailers, large and small, to take their businesses to the next level. We hope it sparks your imagination. Joanna Perry, Special Projects Editor, Drapers 3 IN ASSOCIATION WITH A word from our sponsors Fashion, as an industry, is continually evolving. The only certainty about it is the perpetual fascination that drives millions of shoppers to engage with attention grabbing brands and snap up the latest must-have item. To understand and appeal to their potential customers, fashion retailers must innovate, meet consumer needs and convert them into buyers. This is where technology comes into its own to empower staff and deliver the compelling brand experience. People don’t just buy in-store nowadays; shoppers have transformed into intelligent consumers increasingly comfortable with being able to flip between the physical and real world without differentiating between the expanding number of channels. The importance of social media and discussion forums means that brands need to be monitoring their online presence to get closer to their customers and leverage peer-to-peer recommendations. Fashion retailers now recognise the importance of technology and the need to keep up with these changes, but where is the investment best focused? Most retailers already have an online presence yet cross-channel transactions are typically clunky and disjointed. Knowing the customer and predicting their preferences and buying patterns and then delivering a good and consistent shopping experience however and wherever they want to shop is the key to the future of good fashion retailing. Audiences and brands are now global too. How can retailers take advantage of new markets without being restricted by technology that cannot scale to meet these demands? Servicing online retail with stock and central processes, developing effective franchise and partner relationships and facing challenges of different payment methods, tax and legal environments all need to be addressed. In this report, we examine how fashion retailers can use technology more effectively to capture the ever important spend. We also go beyond, to look at next-generation technology that is being adopted today by market leaders, developing the fashion retail technology standards of the future. Helen Slaven, Vice-President Retail, Torex 4 IN ASSOCIATION WITH A word from our sponsors Avery Dennison Retail Branding and Information Solutions (RBIS) is pleased to partner with Drapers on this important report investigating the increasingly dynamic role that technology plays in the retail fashion industry today. It is evident from the findings of this report that the consumer is now leading our industry in driving the rapid adoption of new technology at retail. Although fashion retailers have always recognised the important role that technology plays, it is more critical today for the industry to move faster and more efficiently to serve today’s digitally-enabled consumer base. In today’s complex global economy, every retailer must seek ways to leverage technology in order to ensure that they are differentiated, on trend, and optimising their operations while keeping pace with the consumer’s use of digital connectivity. To do so, fashion retailers must seek partners that understand the complexity of the evolving technology landscape and help them build intelligent solutions that will elevate their brand appeal while delivering innovative technology solutions to accelerate their operational performance. With over 115 locations in 50 countries, Avery Dennison RBIS delivers intelligent, creative, and sustainable solutions to our customers around the world. We lead the market with innovative technology solutions that enhance branding and leverage RFID to improve inventory visibility and loss prevention. Many thanks to Drapers for their continued thought-leadership in the industry and on this exciting topic, and to Avery Dennison’s James Stafford, Market Development Manager – Europe, and Pete Moylan, RFID Development Manager – Europe, who were able to join the roundtable discussion and share insights on this important topic. Graham Diamond, Vice-President and General Manager Commercial Apparel Solutions Europe, Avery Dennison 5 IN ASSOCIATION WITH 1. Introduction The past decade has really seen the fashion retail industry awaken to the possibilities of technology. And at a time when businesses in the sector face pressures from rising input costs, a depressed consumer outlook and fierce competition from all directions, innovation has proved crucial in creating compelling customer propositions and realistic cost bases. The results of our survey among readers provides great insight into the changing attitude towards technology, and the developments retailers feel can really make a difference to their businesses. Positive outlook Nearly three quarters of the 165 people who took part in the survey have a positive attitude towards technology within their business (see pie chart below). In particular, 22% believe that it allows them to differentiate themselves from competitors with their customer proposition. What is your company’s attitude towards IT and technology? 13% 22% It is a Technology allows us necessary to stay ahead of the evil competition with our customer proposition 14% We invest in IT when it’s crucial, but only ever adopt proven technology 27% Technology has become 22% more crucial to our We must have business as it has grown a flexible IT platform to stay competitive And when we asked about the importance of technology to the whole fashion retail industry, the results were even more striking (see pie chart overleaf). Asked to choose between one of five state- ments, only 6% said technology is becoming less important to the industry. 21% were quite positive, saying it’s more important as it plays a part in dealing with the pressures on the sector. But the majority – 69% – were very positive, saying it’s crucial to optimising profitability and meeting customer expectations. If traditionally the role that technology has played in fashion retail has largely been a back office one – finance, merchandising or supply chain systems – then the internet and multichannel retailing trend means that this is no longer the case. More and more of the technology being deployed directly » 6 IN ASSOCIATION WITH « touches the customer; whether it is independent retailers launching a website, or high street chains deploying iPads in their stores. In the following chapters, we explore how both customer-facing and back office technology is evolving, and what the trends are in how retailers are using it. At the same time, in chapter 7, we review the many ways that retailers are using systems that they don’t themselves control – particu- larly for marketing and customer service purposes using social media platforms. And last, but by no means least, in the final chapter we think about how the adoption of tech- nology that’s currently taking place in the industry is changing both the role of technical staff within fashion businesses, and also leading to technology touching many more job roles and types of staff. Fashion retailers are starting to appreciate that technology is not just a cost, it can help them win more sales, better manage their margins and develop better relationships with their customers. Is technology becoming more or less important in the fashion retail industry? 2% Less important. Product and marketing is where 4% fashion businesses Less important. compete Margins are too tight for technical 5% innovation The same 21% 69% More important. More important. Technology plays a part Technology is crucial in dealing with the to optimise profitability pressures on the sector and meet customer expectations 7 IN ASSOCIATION WITH 2. Multichannel retail, ecommerce and the impact on store systems The internet has dramatically changed how fashion businesses connect with their customers, promote themselves and compete.