When talking “Analytics”, retailers address online shops, but forget their top-sellers: the physical stores

We’re excited to have Uwe Hennig, CEO of Detego, share more about how retailers can counter an analytical imbalance between their online shops and physical brick and mortar stores. Detego is an Impinj partner and a leader in business intelligence for fashion retailers.

In fashion retail, still more than 80 percent of the total revenue is made in brick-and-mortar stores, and only 20 percent from online retailing.1 Despite this fact, reports about consumer behaviour and how they interact with the merchandise are mainly focused on web shops and most resellers do not have in-store KPIs to give them valuable insights into their store business. Uwe Hennig explains how fashion retailers might counter this analytical imbalance between online and offline retailing.

Key Performance Indicators (KPIs) are an important management tool for any business-driven entity. Ultimately, the business areas that account for the most revenue should also be the focus for analyses regarding optimisation and future growth potential. However, in the omnichannel environment, the analytical focus is still largely on the online channel, even though for most fashion brands, physical stores drive far more sales than any web store. Online KPIs (such as conversion rate, cost-per-click, bounce rate, etc.) are evaluated by experts using analytics software on a daily basis in order to reach the desired goal – the optimisation of the web store.

Why the imbalance?

Web shops often go that much further in terms of search engine optimisation (SEO) and optimal presentation of merchandise. They also use complex algorithms to replace the physical sales staff and to influence consumers with virtual sales psychology: for example, making recommendations, such as “Customers that were interested in this product also bought these products”. All these efforts and expenses are measured in terms of marketing effectiveness. After all, they have to pay off in the end. In web shops, tracking and measuring is easy, since customers not only leave a trace, but also their individual profiles. Physical stores lack this kind of analytical transparency and the information that’s needed in order to efficiently manage and optimise the business.

How to bring the same level of analytical transparency from online retailing into physical stores

With an increasing number of collections in ever shorter time frames, fashion retailers have to put in an enormous amount of marketing effort to promote campaigns and bring customers into their stores. Therefore, it’s only rational to implement common measures of performance as well in the store, such as:

  1. What is the conversion rate per campaign (Marketing Effectiveness)?
  2. What kind of cross-selling offers are well received by customers and which are not?
  3. What is the bounce rate – abandonment in the fitting room?
  4. Which articles of a specific campaign are actively moved?
  5. What is the level of service quality from the sales personnel?

These factors, originally from the world of online retailing, also represent valuable KPIs for in-store operations. Findings and effects are totally new to the fashion retail industry, but make perfect sense. Retailers gain a transparent view on various aspects: for instance, what articles, or combinations of articles, are being taken to the fitting room; and what articles remain untouched by the customer. From this information, retailers learn how to optimise their presentation of merchandise on the sales floor and how to get more cross-selling opportunities – even when no sales people are available at that moment.

Meaningful reports require good data

In order to create meaningful dashboards, a satisfactory database is required. It´s self-explanatory that the higher the quality of the data, the higher the quality of the reports. In omni-channel retailing, for valuable data, you really need to monitor article inventory at the item-level, in real-time. With inventory accuracy approaching 100 percent - without the need for manual scanning – retailers are finally equipped with data quality that provides the basis for reliable information and meaningful reports. Having real-time information on total stocks at item-level for all stores (including franchise partners) offers another advantage: customers, or sales personnel, no longer have to look for items since the exact whereabouts of an article can be displayed on a mobile device (like a tablet PC, or smartphone), or terminal. Articles can even be located, at any time, thanks to the integration of fixed readers in a store’s ceiling. Real-time information displayed on tablet PCs allows staff to answer consumers’ questions about sought-after articles. It also means being able to make reservations throughout the entire store network and to ensure availability commitments are met – and that´s essential for omnichannel retailing.

“Analysis of the web store provides valuable insights into customer behaviour and enables an optimal assortment policy. That is exactly what retailers need in the physical store too.”
-Uwe Henning, CEO at Detego

Enhanced services for customers

The digital store’s analytical insights provide great opportunities for individual customer service too. Touchscreen displays in the fitting room can allow the customer to instantly check on article availability and check for other sizes. If the article is out-of-stock in a particular store, information showing where else it’s still available is displayed. The customer can also make reservations, so they can pick up the article in a chosen store later, or get the article delivered to their home address.

In addition, customers can press the “call-for-assistance” button in a fitting room, in order to get further help from sales personnel (e.g. to get a similar article, or the same article, in a different colour). These digital functions enable stores to capitalise on their core strength: that is, individual service. This newly gained level of service can also be evaluated as service quality. Analytical insights enable new possibilities, such as optimisation of article availability, automatic replenishment, as well as better customer service. They also support store staff in their role as an adviser. Tablet PCs can recognise any article thanks to an automatic article identification process and give recommendations on other items, as well as accessories, which may complete the look and promote cross-selling. This recommendation function (e.g. “Customers who bought/ were interested in this article also bought/ were interested in these articles”) is well-known among web stores, who have long since used the process to tempt customers to buy more. So why not to use it in the store as well?

If these services could be rated by consumers in the physical store, just like in the online store, they’d be sure to get the highest rating possible.

For more information on real-time analytics and omnichannel retailing solutions from Detego, please visit www.detego.com

The views and opinions expressed in this article are those of the author. These views and opinions do not necessarily represent those of Impinj, staff, and/or any/all contributors to this site. 

1 source: Bundesverband des Deutschen Textileinzelhandels in „BTE-Pressemitteilung zum Textilumsatz 2015“ - wwww.bte.de / Federal Assocation of German Fashion Retail
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About the Author

Uwe Hennig, CEO of Detego, Guest Author

For more than 20 years, Uwe Hennig has been working in the supply chain and mobility software market. In his professional leadership roles, he’s successfully taken on the distribution and marketing strategies of international companies active in mobility as well logistics, both in international and national companies. Looking at the specific problems customers were facing in their markets, Hennig helped them to increase the efficiency of their processes, improve end-customer satisfaction, cut costs and improve market share. As the CEO of Detego since January 2015, he works to assist international fashion brand manufacturers and retail companies operating around the world to implement their omni-channel strategies. His professional career path has allowed him to develop an understanding for markets and people in Europe, the Middle East, Africa, the US, Taiwan and China.

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