Item Intelligence & The Shopper’s Journey

Posted November 17, 2014

resizedContentImage_d821bcf03fdae34493c861ad38e638b7For brick and mortar retailers to stay competitive in today’s ever-changing retail landscape, they must begin to use powerful in-store technologies that enable the management of store inventory assets, the creation of engaging digital customer experiences, and the collection of valuable data.

Engaging customer experiences can be implemented at all steps of the buying journey. While the traditional shopper’s journey has followed a path of go, search, learn, try, buy and get, the shift to omni-channel retailing and the rise of mobile device shopping has allowed each shopper’s journey to become unique and personal. Because of this, retailers must now integrate digital experiences into physical locations, keeping customers engaged while shopping in store and enabling the collection of data, much like the data collected when customers visit an eCommerce website. To do this, retailers must introduce Item Intelligence into their business strategy.

Item Intelligence gives real-time visibility into item location, identity and authenticity, providing retailers, for the first time, with in-store data that can be leveraged when making important business decisions. The Impinj Platform, a foundational RFID-based system that provides wireless connectivity with items, provides this Item Intelligence. The platform comprises the world’s most comprehensive and widely adopted RFID product set, including gateways, stationary readers, tag chips, reader chips, and software.

This paper explores how Item Intelligence enables data collection at all potential steps of a buyer’s journey, and highlights the types of engaging customer experiences that can be integrated into physical retail spaces.

Why Item Intelligence?

As measured by the unit-volume of tags consumed, the retail industry, and more particularly apparel retail, leads other industries’ use of Item Intelligence by a wide margin. In contrast to earlier RFID rollouts by retailers, which focused on limited use cases based on pallet tagging to optimize the supply chain, today’s RFID-based Item Intelligence solutions are driving compelling value by focusing on item-level tagging.

Retailers broadly recognize that they can generate compelling returns by tagging individual items and by leveraging the resultant Item Intelligence to increase sales, not simply reduce supply-chain costs. These item-tagging use cases enable retailers to better leverage inventory and address the growing opportunities and threats posed by online retailing. Comparing revenue growth rates between traditional retailers with physical storefronts and those with solely an online presence demonstrates the value that traditional retailers can gain by implementing Item Intelligence solutions.

Most retailers begin their move to Item Intelligence using handheld RFID readers which we believe can improve their inventory accuracy to greater than 90% when performing inventory counts every week or two. Retailers can further improve inventory accuracy and automation by using item intelligence gateways which require no human operator, are always on and provide very broad coverage.

Finally, retailers can use this infrastructure to implement in-store experiences that bring physical store locations into the digital age, delight customers and collect data that drives business decisions.

The Retailer’s Advantage

Retailers, including Macy’s, American Apparel, Kohl’s and Zara, have deployed readers and tagged items to leverage their existing assets and develop competitive advantage through:

  • Reduced Out-of-Stocks and Markdowns. Accurate and timely Item Intelligence can help retailers increase revenue by avoiding out-of-stocks and end-of-season markdowns of overstocked items.
  • Omni-channel Fulfillment. Most retailers with physical storefronts also offer sales via an online channel. To provide their customers a seamless shopping experience, these retailers would like to offer various delivery options for items purchased online. This so-called omni-channel fulfillment includes delivery to a customer’s home from a distribution center or from a local store, or holding items for customer pick-up in store. Making in-store items available for sale online requires accurate, real-time inventory information that can be uniquely provided by an Item Intelligence system. Omni-channel retailers will leverage Item Intelligence to convert their stores and in-store inventory into strategic assets by transforming them into virtual fulfillment centers housing distributed inventory.
  • Enhanced Shopping Experience. By using the accurate, real-time inventory and location information provided by our Item Intelligence platform, retailers can enhance their customers’ shopping experience. For example, a retailer can notify customers via a kiosk whether their desired items are in stock and, if so, where those items are located, even if the items have been placed in the wrong location by a prior shopper. If the desired items are out of stock, the retailer can suggest suitable in-stock alternatives along with their locations, thereby increasing customer satisfaction and eliminating the scavenger-hunt element of a shopping trip.
  • Loss Identification and Prevention. By providing accurate, real-time location of all items within a store, our Item Intelligence platform can enable loss-prevention systems that deter theft by sounding alarms. Because systems using item intelligence can also provide the identity of a stolen item (which legacy systems cannot), the store’s inventory management system can be updated to accurately reflect the quantity of items on hand. Loss identification is important because otherwise when theft occurs, retailers lose the value of the stolen item plus the value of lost sales due to subsequent out-of-stock conditions indirectly caused by the theft.
  • Automated Checkout. Item Intelligence can enable speedy, accurate, bulk identification of purchased items at checkout, benefiting retailers by reducing time, personnel and space at check out.

The Shopper’s Journey

With inventory accuracy achieved by way of item intelligence, retailers can begin to implement enhanced shopping experiences at all points of the shopper’s journey. The shopping journey consists of the following steps:

  • Go
  • Search
  • Learn
  • Try
  • Buy
  • Get

Each step of this journey is a chance for retailers to connect with customers in new and exciting ways, all while collecting valuable data that drives better business decisions.

Go

When a customer visits a retailer’s website, their clickstream is captured, giving the retailer the ability to provide the customer with personalized experiences in the future. These experiences, influenced by browsing behaviors and purchases, include welcoming the customer back to the website, product recommendations based on items looked at, retained items in the shopping cart, and special promotions or discounts. Similar in-store experiences can be created with the implementation of the right technology.

Item Intelligence plays a complementary role in the suite of technologies needed to create personalized, welcoming experiences as loyal customers enter a store. According to Retail Systems Research’s (RSR) Store Research survey, 33% of shoppers would like retailers to bring more of the digital experience into stores. Whether identifying and connecting with a customer via an RFID-enabled item like a membership card, or with another technology such as Wi-Fi or Bluetooth, a custom greeting engages the customer at the start of a shopping trip, allowing the retailer to push out special offers based on the customer’s interests or shopping history. If the retailer is using Item Intelligence to manage inventory, a customer’s arrival can trigger an employee to quickly collect items in the customer’s online shopping cart and place them in a reserved dressing room. The customer can then be alerted that a fitting room is reserved for them. These in-store experiences, while mimicking those done digitally, can be more impactful since the customer will have the items in hand and may convert right on the spot.

The data stream from these types of experiences can include information on the effectiveness of a loyalty program, web shopping to in-store purchasing conversion rates, how often customers visit a store and what departments and products they interact with most, and how customers travel through the store.

Search

Traditionally, items are merchandised on the sales floor based on brand, product attributes, or product category. Sales staff may know where an item belongs, but may not always be able to find it—a product may have been placed on a wrong fixture, left in a dressing room, or already purchased (but not yet reflected in store inventory counts). All of these inventory issues can lead to lost sales and poor customer experiences.

Item Intelligence collected through gateways, like the always-on Impinj xArray gateway, enables both store staff and customers to easily identify if an item is in stock and where it’s located. Item location data allows retailers to share store inventory information online, giving customers confidence that if they see an item is in-stock at a physical location near them, they will be able to purchase it in-store.

Similar to clickstream data, retailers can also gain insights into how customers think about and search for products, letting them make smarter buying and merchandising decisions. Data includes:

  • Search terms
  • Search sequences
  • Search frequency compared to conversion rates
  • Most searched for items

Learn

When shopping online, customers can easily access detailed product information that provides features and benefits, and assists them in making an informed buying decisions. Price Waterhouse Cooper’s US Multichannel Shopping Survey found one third of respondents said they preferred to research clothing online.This could be due to the fact that in-store experiences are generally limited to information listed on hangtags or sales staff knowledge. However, with the high turnover rates generally experienced on the sales floor, employees knowledgeable on all product features might not always be available. RFID-enabled smart shelves with displays allow retailers to set up information areas where customers can get on-demand product information and customer reviews. According to the Pew Research Internet Project, 28% of cell owners used their phone while inside a store to look up reviews of a product to help decide if they should purchase it or not. When a product is removed from a smart shelf, the tag’s removal triggers a display to show product information, available sizes and colors, price, cross-sell suggestions, and customer reviews leveraged from the website, bringing the digital experience in-store and away from the customer’s mobile device.

Item Intelligence collected from these displays can measure which items are interacted with frequently, and how those interactions drive conversion. Retailers can also test different methods of displaying information and reviews, helping to determine what information best drives sales, and which products are researched the most. These displays can also be used to show sales and promotion information to customers based on the products they are researching, as well as related items the customer may be interested in and where they are located.

Try

With the rise of online shopping, brick and mortar locations have remained competitive in one area: getting products in the hands of customers. Item Intelligence provides additional opportunities to improve customer in-store experiences while the customer is with the product. Gateways placed at fitting room entrances read tagged items and can trigger various engaging customer experiences, from displaying product information on in-room displays, to suggesting cross-sells and related items based on items in stock, to allowing the customer to request different sizes or color be brought to the room, to alerting the staff to ready items for purchase in a showroom situation. All of these implementations make the fitting room a more digital experience, keep the customer engaged, and drive sales.

By tagging all items, retailers can track how products move through their space. Item Intelligence shows which items are taken into a fitting room, which are left behind, and which make it to the point of sale. For the first time, retailers can look at fitting room conversion rate data, and identify which products aren’t converting after being tried on. If trends begin to develop, retailers will be able to identify which products have fit issues and adjust their merchandising plans and buys accordingly.

The fitting room is also a great place to test upsell performance. Recommendations can include products that are often tried on or sold together, as well as small accessories that are easy to grab and don’t need to be brought back into the fitting room.

Buy

Purchasing items online is easy. Shoppers collect items in their digital shopping cart, where the items remain until purchased or removed. Some online stores even offer 1-click check out, making the buying process fast and stress-free. In-store purchasing isn’t as easy. Customers must carry items with them while shopping, wait in line until a sales associate is available, and pay for their items by cash, card, or check before they leave. In busier times, this process can take a while.

Item Intelligence at point of sale (POS) stations not only streamlines the buying process and reduces the amount of time customers spend in line, but also enables data collection and constant inventory updates. Self-checkout kiosks with RFID readers tally up items before the shopper arrives, eliminating the need to scan each item. Once an item is purchased, the tag’s ID can be removed from the store’s inventory, marking it purchased. If using an electronic article surveillance (EAS) system, marking the item as purchased would deactivate the tag, allowing the customer to leave the store without triggering an alarm.

Using this system for EAS also allows the retailer to know what items have walked out of the store. Thus, retailers would know what items need to be restocked to the sales floor due to shrinkage, keeping inventory accuracy levels high.

Get

A big difference between shopping online and in store is what happens after you purchase items. While in-store shoppers get to leave with their purchased items immediately, online shoppers must wait for items to ship. Some online retailers have multiple distribution centers located around the world, making fulfillment quick, easy, and fast. Brick and mortar retailers using always-on inventory can begin to think of their store locations as mini distribution centers.

With a clear view of what’s in stock at each store, a retailer can ship items to a customer from their nearest location, reducing shipping time and freight costs. Retailers can also make inventory information customer accessible. With always-on gateways monitoring inventory, a customer can trust that if a retailer says an item is in stock, it will be when they arrive. This system will also allow retailers to collect data on omni-channel conversion, helping them understand how online and in-store retailing works together.

Conclusion

Using Item Intelligence to achieve inventory accuracy and connect with customers enables retailers to create digitally-enhanced shopping experiences at all points of a customer’s shopping journey: go, search, learn, try, buy and get. With the implementation of a platform-based Item Intelligence solution, retailers can begin to collect valuable item-level data at each step of this journey, giving them the information they need to make informed business decisions.

Author: Larry Arnstein – VP, Business Development with Impinj

 

Filed under: White Paper
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