With the rise of omnichannel commerce, retailers are taking a more customer-centric approach to their business operations. The now “always online” consumer demands a more personalized shopping experience extending from their mobile phone to brick-and-mortar stores. But delivering a 21st century storefront requires advanced back-end technology where effectiveness begins and ends with the quality of the retailer's product information.
Regardless of whether consumers shop online or in-store, the expectations for on-time, accurate fulfillment are the same. To deliver a seamless digital-to-physical, otherwise known as phygital, shopping experience, retailers must be able to see and accurately sell their inventory down to the last item, for every color and size variation, every time. This means that a retailer doesn’t just need to know it has 10 pairs of Levi’s jeans in-stock. It must know it has 10 pairs of “312 Shaping Slim Women’s Jeans”, in the slate freeze color, size 30 waist and 32 length in its Atlanta location, so it can accurately reflect the product’s availability and order fulfillment options online.
Digital Transformation & Customization in Retail
Advanced technologies, like radio frequency identification (RFID) and two-dimensional barcodes, provide the foundation for the product visibility and supply chain transparency needed for brands to deliver a curated, preference-oriented shopping experience to consumers. But every retailer’s journey with digitization looks a bit different.
Many retailers, like Macy’s and Walmart, use radio frequency identification (RFID), leveraging GS1 standards for product identification, to monitor the movement of items from material sourcing to the manufacturing plant, and eventually to the end consumer. With this technology that uses radio waves to identify objects, Macy’s enhances demand forecasting and adjusts procurement decisions for its mini distribution centers, and Walmart ensures online inventory accuracy from suppliers.
Others, like Decathlon and Chanel, take the tech a step further. Decathlon uses RFID to provide a mobile checkout app so shoppers can avoid long queues. Meanwhile, Chanel, in partnership with Fetch, offers RFID-enabled “fitting rooms” that give consumers a unique try-on experience where they can preview the “Chanel lifestyle” without even entering a dressing room.
Another form of technology gaining traction in personalizing retail is two-dimensional or 2D barcodes, commonly seen as QR codes. When used in accordance with industry standards, these barcodes can provide highly detailed product information to help retailers improve their inventory visibility, sustainability initiatives and product recall processes. Retailers can also share highly detailed information on product attributes with consumers so they can make better purchasing decisions, leading to increased brand loyalty.
Gabriella Hearst is one of many brands using QR codes to improve the product information available to its consumers today, including the product’s materials, production processes and recycling instructions. Others, however, are using the technology to create unique customer experiences and ensure brand trust. For example, Adidas added QR codes to a certain sneaker line to give runners exclusive access to its in-house Spotify playlists, while Gucci is combating the influx of counterfeit luxury items by using QR codes to validate consumer purchases.
An initiative called Sunrise 2027, being coordinated by GS1 US and industry, will soon take the industry’s initial interest in this form of 2D barcode a step further. 2D barcodes will replace traditional UPC barcodes allowing brands and retailers to keep up with customer preferences, share pertinent product information, validate purchases, and create consumer experiences and promotions, while also scanning at point-of-sale – eliminating the need for multiple data carriers that take up package real estate.
Barriers to Digital Transformation and How to Overcome Them
While the retail industry has made strides towards digitization and offering accurate and personalized phygital experiences, a few barriers still stand in the way of widespread implementation. One of the biggest is the prevalence of paper-based record keeping systems, and a lack of personnel to oversee the transition. Another is that modernizing legacy systems can prove to be a complicated task, and senior management may feel that the risk to support the digital transition outweighs the benefits.
To begin their digital transformation, organizations must:
● Ensure internal alignment: Change happens from the top down, and digital transformation will fail every time if the entire organization is not working towards it.
● Invest in innovation: Place strategic importance on the investments needed to enable technology. The initial hassle of modernizing legacy systems will be worth it when brands can capitalize on AI advancements that create time and monetary savings for your organization.
● Standardize your data: Data collection alone is not enough. Organizations risk wasting time and resources if the data feeding into new systems is not consistently collected and structured in machine-readable and interoperable ways.
● Collaborate: Fostering external partnerships is critical to success. By working with people across company lines, you can facilitate more streamlined data sharing, gain access to more in-depth information and accelerate your transition time.
Retailers must adapt and become digitally mature to stay competitive and ensure consumers’ brand loyalty. We are still in the early stages of this process. RFID and 2D barcodes are just stepping stones to the next phase of retail digitization, which will largely be driven by artificial intelligence and automation. In the next three to five years, Gartner predicts that we will see an increase in the adoption of digital supply chain technologies, as well as technologies that improve human decision making, but successfully integrating this type of technology again depends on an organization’s data quality and back-end technology. Through digital transformation, retailers can innovate in-line with customer expectations, remain competitive in digital marketplaces, and more easily integrate with the industry’s latest ground-breaking technologies.