Inventory Intelligence: Unlocking Omnichannel Retail and the Future of the Store
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Inventory Intelligence: Unlocking Omnichannel Retail and the Future of the Store

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Omnichannel retailing adds the flexibility of cross-channel and mobile shopping to the unique revenue- and loyalty-building capabilities of the face-to-face retail experience. It offers opportunities ...

Omnichannel retailing adds the flexibility of cross-channel and mobile shopping to the unique revenue- and loyalty-building capabilities of the face-to-face retail experience. It offers opportunities to build deeper shopper relationships—or risks ending them, when availability promises go unmet.

Keeping availability promises depends not only on integrated IT systems, but on reliable
inputs and outputs to those systems, across the boundaries of physical locations and technologies, covering both the short and long term. Retailers who succeed at integrating their inventory intelligence for shoppers, associates, and managers can cut costs, accelerate turns, and build revenue by driving high-fidelity information back into the supply chain, aligning it with shopper demand. Retailers who fail will subject omnichannel shoppers to a fragmented retail landscape, marked by jarring,disconnected changes and unreliable information.

Integrated inventory intelligence is essential to deliver on the omnichannel promise.
But even more, it future-prepares retail by eliminating information islands, adapting
quickly to new processes and technologies, and keeping cost and waste low.

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    Inventory Intelligence: Unlocking Omnichannel Retail and the Future of the Store Inventory Intelligence: Unlocking Omnichannel Retail and the Future of the Store Document Transcript

    • Safer. Smarter. Tyco.TMInventoryIntelligenceUnlocking Omni-ChannelRetailing and the Futureof the Store
    • / 2 / Inventory Intelligence / Tyco White Paper“Integrated inventoryintelligence isessential to deliveron the Omni-Channelpromise.”// Executive Summary Omni-Channel retailing adds the flexibilityof cross-channel and mobile shopping tothe unique revenue- and loyalty-buildingcapabilities of the face-to-face retailexperience. It offers opportunities to builddeeper shopper relationships—or risksending them, when availability promisesgo unmet. Keeping availability promises depends notonly on integrated IT systems, but alsoon reliable inputs and outputs to thosesystems, across the boundaries of physicallocations and technologies, covering boththe short and long term. Retailers whosucceed at integrating their inventoryintelligence for shoppers, associates, andmanagers can cut costs, accelerate turns,and build revenue by driving high-fidelityinformation back into the supply chain,aligning it with shopper demand. Retailerswho fail will subject Omni-Channelshoppers to a fragmented retail landscape,marked by jarring, disconnected changesand unreliable information.Retail’s future: many locations,one promiseWhile there is no standard terminology forretail channels, industry experts generallydistinguish three types, which we’ll name:Single Channel retail moves goods,orders,payments, and information to andfrom shoppers along a single path –in-store, catalog, or online. Physical andonline stores, for example, are separateSingle Channel operations supported bythe retailer.Multi-Channel retail dissolves SingleChannel barriers to offer anywhere-to-anywhere purchasing and order fulfillment,with product, promotion, inventory, andcustomer information available within aselling channel and brand. Multi-channelretailing offers shoppers choice andconvenience but does not ensure acoordinated and cohesive customerexperience across the brand.Omni-Channel retail merges physical andonline stores with mobile and socialselling into one seamless experience forthe customer. There is a single view of allavailable inventory, products, promotions,and customers regardless of channel withinthe retail enterprise. Shoppers and retailersinteract simultaneously across alltouch points within the retail brand, not theselling channel. 1,2For years, analysts presented multi-channelas retail’s ultimate goal. So why shouldretailers bother with Omni-Channel now?The answer begins with a single integratedview of the available to promise inventoryacross all locations in the enterprise. Inaddition, is the ability to leverage the uniqueadvantages of the store environmentto serve as a sales location, order fulfillmentsource, and center for personal customerinteraction within the Omni-Channelretail brand.
    • Inventory Intelligence / Tyco White Paper / 3 /predictions, stores remain as relevant todayas when Bainbridge and Le Bon Marchéopened in the 1830’s.Omni-Channel retailing recognizes stores’compelling physical and interpersonaladvantages, and links them to the high-speed world of electronic retailing. But itplaces shoppers, not stores, at the center,extending traditional measurements like in-store sales to include revenue per shopper,measured across all retail channels.Why Stores Still MatterFor shoppers, stores are an escape fromtheir homes and offices into attractive,exciting spaces staffed by pleasant, well-informed people attentive to their needsand preferences. Stores let them browseand learn about multiple categories ofmerchandise, compare them by touch andsmell as well as sight, assemble theminto coordinated outfits or packages, andenjoy them immediately without delays orcharges for shipping.For retailers, stores are a way to engageshoppers face to face, building loyalty,trust, and revenue through expert personalservice, up-selling (wool to cashmere) andcross-selling (a necklace for that sweater—and earrings?). For all the doomsday“Omni-Channelretailingrecognizes stores’compellingphysical andinterpersonaladvantages...”Figure 1: Three ways to organizeretail channels. In Single Channelor traditional retailing, pickupsand orders occur within the samechannel. Multi-Channel (or cross-channel) arrangements alloworders and pickups from anychannel. Omni-Channel retailingallows browsing and orderingfrom any channel, but focuses onincreasing the shopper’s spend—and that means bringing theshopper to the store.Omni-ChannelMultiple ChannelsSingle Channel
    • / 4 / Inventory Intelligence / Tyco White Paperrelationships—explicitly through cross-channel loyalty programs, and implicitlyby building an experience of satisfyingshopping experiences.But the risks are serious, too. Omni-Channel raises shoppers’ expectationswith a promise of availability. Breakingthat promise affects all channels andcompromises the brand. Serious errors—pre-Christmas stockouts, for example—areemotional events, and rebuilding trustis slow when it’s even possible. Theperformance of pioneering efforts by CircuitCity and others lagged expectations, withresults ranging from embarrassing todisastrous.Risks compound when retail salesassociates don’t trust “the system.” Staffmistrust causes hesitant selling, wastestime double-checking inventory, andcommunicates lack of confidence to theshopper. Refunds and returns–essential torecovering trust–are often the weakest link.Why is this still a problem?–the need forintegrated intelligence.Retailers, suppliers, and software providershave been working on cross-channeltechnologies for more than a decade now,Mobile Challenges andOpportunitiesThe advent of mobile and location-basedelectronic commerce is about to makethe retail world even more interesting.Smart phones are often seen as threats,introducing services that allow instant pricecomparisons with online retailers usingbarcodes or even snapshots of an item.But mobile devices also bring opportunitiesinto the store, from location-based “findit” services, in-store navigation servicesto make browsing more efficient, androaming smart terminals that liberate salesassociates from fixed stations to bringinformation and transactions directly toshoppers.Omni-Channel Opportunitiesand RisksOmni-Channel retailing gives storesomnipresence, an advantage onceclaimed exclusively by online merchants.Omnipresence lets stores offer theirmerchandise to shoppers at the momentof interest, and sell it at the momentof decision, all without sacrificingtheir environmental and interpersonaldistinctions and the instant gratificationof in-store pickup. Omni-Channelretailing helps cultivate deep consumerand made considerable progress towardintegrated InformationTechnologies (IT)—but IT integration alone can’t provide theintegrated intelligence that Omni-Channelretail requires.IT organizes, accelerates, and distributesinformation—the way Google Search doesfor information on the Internet. But IT alonecan’t assure the quality of that information,“Omni-Channelraises shoppers’expectationswith a promiseof availability.Breaking thatpromise affectsall channels andcompromisesthe brand.”
    • Inventory Intelligence / Tyco White Paper / 5 /in retail or on Google. That’s why GoogleMaps–where errors matter more than withSearch–uses old-fashioned camera trucks tomake sure it delivers up-to-date informationthat matches the physical world.Omni-Channel retail has the same problem:quality information depends on trustworthy,up-to-date inputs and outputs, not justreprocessed information that was alreadyin electronic form. Timely, accurate inputsand outputs, organized into actionableinformation, make up what we callintegrated intelligence: spanning physicallocations, technologies, and time. Let’stake those one at a time.Integration Across PhysicalLocationsRetail supply chains are vast, efficient,and—considering their complexity—veryaccurate. Supply-chain partners watch theirinputs and outputs carefully, cross-checkingorders, packing lists, manifests, receivingrecords, and warehouse cycle counts, whileelectronic systems like barcode and RFIDhelp them align virtual records with physicalreality. But even the fastest, most accuratesupply chain is at the mercy of poor qualityinformation from retail endpoints.And that’s where information risk sneaksin, from inputs and outputs outside the“walled garden” of integrated supplychains, and especially inside the store:// At the back door, inputs must document a complex array of sizes, styles, colors, and options, and outputs must reflect the same information on returned items.// On the items themselves, inputs and outputs are coded in tags that must be compact, detailed, and tamper-resistant yet easy for store associates to remove.// At the point of sale, systems must capture transaction, loyalty-program, gift card, and coupon data, and help detect, remove, and recirculate tags.// At the front door, inputs and outputs should show real-time store traffic and intercept shoplifters without intruding on the legitimate shopper’s experience.Integration AcrossTechnologiesOn a large scale, technology integrationmeans interoperability and datacompatibility across hardware, operatingsystems, and general-purpose applicationslike Internet browsers—the domain of IT.“Timely, accurateinputs andoutputs, organizedinto actionableinformation,make up whatwe call integratedintelligence…”
    • / 6 / Inventory Intelligence / Tyco White PaperBut integration of retail-specifictechnologies has been slower. Thechallenges may be smaller, but thepressure to drive for compatibility is alsoless intense. Suppliers’ attempts to keeptheir solutions exclusive create needlesslyincompatible hardware, data formats,and information models. Effective Omni-Channel retail needs to overcome suchbarriers to integrate:// Execution, task management, and workflow, so a task like “enter line item” means the same thing on a POS terminal as on a smartphone// User interfaces and reports, so systems give users, the same information in the same way, even when it comes from different sources// Sensors with high-fidelity data, so inputs span sensor technologies, and offer enough detail for shoppers to make meaningful choicesStandards organizations such as theAssociation for RetailTechnology Standards(ARTS) support technology integration, butlow IT investment by the retail industry haskept progress slow.3Integration OverTimeShoppers want item- and location-specificinformation right now; retail executiveswant to track seasonality and long-termtrends by region or market segment.Integration over time requires aggregationover time periods spanning:// Instantaneous availability, location, shipment, and order status: information that answers questions like, “Where is it?”// Short-term aggregation to define events, track cycles, and evaluate locations, to answer manager-level questions like, “What’s happening?”// Long-term analysis to answer strategic questions like, “Where are we headed?”Over any time period, inputs shouldoffer end-to-end visibility across stores,distribution centers, and manufacturersas well as top-to-bottom visibility fromthe retail floor through regional sales anddistribution centers, to the executive suite.Most important, the information collectedshould provide actionable intelligence—with execution support to make thoseactions effective.“Standardsorganizations such asthe Association forRetailTechnologyStandards (ARTS)support technologyintegration, but lowIT investment by theretail industry haskept progress slow.”
    • Inventory Intelligence / Tyco White Paper / 7 /Direct and Indirect Business BenefitsWhat can retailers expect to gain frominvestments in inventory intelligence?First and foremost, they will have theframework to implement Omni-Channelretailing with confidence—openingshopping to omnipresent online and mobileenvironments, while retaining focus onthe store. They can also expect significantdirect and indirect business benefits inthe areas of cost reduction, inventorymanagement, and revenue growth.Workforce ManagementInventory intelligence helps improve laborutilization, productivity, and morale instores and distribution centers throughautomation, accuracy, and upscaling jobresponsibilities. It cuts the time spenton manual entry and inventory counts,and the time wasted following—and thencorrecting—information that is either wrongor insufficiently detailed for its intendeduse. Accurate inventory, allocation,and replenishment information reducespre-emptive buying and the inevitablemarkdowns and write-offs that followfrom carrying too much stock. And anautomated system that offers top-to-bottom visibility cuts losses from internalshrink fast.Inventory ManagementFast processes and lean inventoriesimprove inventory turns, and reliabletracking of items and store locations helpsstores reorganize their stock to maximizefloor-space utilization and sales persquare foot. More accurate forecasting,ordering, allocation, and replenishmentintelligence helps stores tune their productportfolios, and make better use of fixtures,displays and other capital assets. Data-based collaboration with supply-chainpartners raises compliance with ordercycles and delivery requirements, andopens opportunities for closed-loop, end-to-end collaboration, for example in tagreclamation programs.Revenue growthInventory intelligence could be justified ona cost and efficiency basis alone. But thereal prize from Omni-Channel retailing isrevenue growth, from:// Fewer abandoned orders due to out-of-stock events// Higher loyalty, from rewarding consistent shopping experiences across all touchpoints within the retailer brand// Greater merchandising potential, using clienteling and customer relationship management (CRM) information from in-store, online, and mobile channels
    • / 8 / Inventory Intelligence / Tyco White PaperHigh-quality inventory intelligence collectedfrom stores in real time feeds back throughthe entire supply chain, harnessing itsefficiencies in the service of shoppers’demand.Avoiding Implementation RisksAfter the false starts and missteps of first-generation Multi-Channel retailing, retailershave earned the right to be skeptical. Butthe lessons learned from that experiencecan help them sidestep the errors offragmentation, transition shocks, andimmature technologies with theirOmni-Channel initiatives.FragmentationBy definition, fragmentation is the enemyof integration, in retail intelligence as withanything else. In planning their transitionsto the Omni-Channel model, retailersshould take care to avoid:// Geographic fragmentation—the global reach of retail supply chains demands inventory information continuous from the manufacturer to the point of sale. For forward logistics, that includes tagging at the source; for reverse logistics, it includes recirculating tags all the way back to the manufacturers// Technology fragmentation—inventory intelligence needs inputs from established Bar Code and Electronic Article Surveillance (EAS) technologies, emerging technologies like Radio Frequency Identification (RFID), transitional technologies like dual RFID/EAS, and adaptability to future technologies// Infrastructure and systems fragmentation—single-purpose point solutions create duplication and gaps: hardware-only solutions shift integration costs and risks to retailers// IT-centric, narrow-focus solutions can’t assure reliability of inputs and outputs, leaving the fundamental problem of inventory intelligence unaddressedTransition shocksEqually dangerous are abrupt “shock andawe” transitions to any new retailing model.By selecting technologies that can bephased in gradually across product lines orregions, retailers can avoid:// Publicity risks -– News about problems in a pilot program is manageable, and may even help a retailer position itself as an innovator. System-wide problems are an entirely different kind of story— one that puts your brand on the defensive// Financial risks -– Wholesale “rip-and- replace” upgrades of entire retail systems are not only difficult to coor- dinate but beyond the means of even the most established retailers// In-store experience risks -– shoppers can tolerate short-term bugs in a pilot program, or avoid the affected stores or channels until they are resolved. But when the problem is system-wide, they have no choice but to avoid your brandTechnology ImmaturityImplementing a new program is riskyenough without using unproven technologyto do it. Use processes that have alreadybeen proven in retail environments, basedon mature technologies that integrate withestablished technologies, and offer a bridgeto the future.Future-prepared InventoryIntelligenceEven solutions prepared for today’sopportunities and risks can still be blindsided by rapid technological, social, and competitive changes. Three current trends show how to keep systems and technologies future-prepared:// Integration avoids yesterday’s information islands, and supports coordinated action for quick response as changes emerge“High-qualityinventoryintelligencecollected fromstores in real time,feeds back throughthe entire supplychain, harnessingits efficienciesin the service ofshoppers’demand.”I like.
    • Inventory Intelligence / Tyco White Paper / 9 /1 Greg Girard. “Transparency, Localization, and Economic Premiums of the Box”, in IDC Retail Insights (newsletter). (Framingham, MA: International Data Corporation, February, 2011). Available at: http://www.idc-ri. com/contact/newsletter.jsp2 Brian Kilcourse. How Omni-Channel Retailing is Affecting In-Store Publishing (Summary). (Miami, FL: Retail Systems Research, May 11, 2010). http:// www.retailsystemsresearch.com/_document/ summary/1110.3 Verizon Business. The need for standards in retail IT. (New York: Verizon Communications, Inc., 2010). www.verizonbusiness.com/.../wp_need- standards-in-retail-it_en_xg.pdfFootnotes:// Flexibility accelerates adoption of new processes and technologies, limiting risk exposure through experimentation, pilot programs, and phased deployments// Sustainability is a “win-win” proposition: low-impact, paperless solutions, recirculation of tags, and de-cluttering of retail environments all cut costs while meeting shoppers’ expectations for environmental responsibilityConclusionsInventory intelligence is a fundamentalcomponent of modern retailing—not onlyto support Omni-Channel initiatives, but toassure availability on store shelves or to ship,building shopper satisfaction and financialperformance. Inventory intelligence alignsthe supply chain to demand, and helpsretailers keep the promises they make toonline, mobile, and in-store shoppers. It’scoordinating information up and down theirorganizations and back along complex supplychains. Flexible solutions, properly deployed,can help retailers seize new opportunities,avoid predictable risks, and preparethemselves for a future that combinesshop-from-anywhere convenience with anenhanced shopper experience centered atthe retail store.Leverage our strengthand experienceTyco Retail Solutions, a unit ofTycoInternational, is a leading global providerof integrated retail performance andsecurity solutions, deployed today at morethan 80 percent of the world’s top 200retailers. Customers range from single-store boutiques to global retail enterprises.Operating in more than 70 countriesworldwide,Tyco Retail Solutions providesretailers with real-time visibility to theirinventory and assets to improve operations,optimize profitability and create memorableshopper experiences.Tyco Retail Solutions portfolio for retailersis sold direct throughTyco businesses andpartners around the world.For more information, please visitwww.tycoretailsolutions.com.
    • / 10 / Inventory Intelligence / Tyco White Paper// Notes
    • Inventory Intelligence / Tyco White Paper / 11 /// Notes
    • Global strength. Local expertise.At your service.North America Headquarters1501Yamato RoadBoca Raton, FL 33431United StatesPhone: +1 877 258-6424Latin America Headquarters1501Yamato RoadBoca Raton, FL 33431United StatesPhone: +1 877 258 6424United Kingdom/Ireland RegionalHeadquartersSecurity House,The SummitHanworth RoadSunbury-on-ThamesMiddlesex.TW16 5DBUnited KingdomPhone: +44 1932 743 432Continental Europe HeadquartersAm Schimmersfeld 5-740880 RatingenGermanyPhone: +49 2102 7141 0Asia-Pacific HeadquartersNo.26 Ang Mo Kio Industrial Park 2Level 1Singapore 569507Phone: +65 63898000South Africa Headquarters1 Charles CrescentEastgate Ext 4, SandtonSouth AfricaPhone: +086 12 12 400Leverage our strengthand experienceTyco Retail Solutions is a leading globalprovider of integrated retail performanceand security solutions, deployed todayat more than 80 percent of the world’stop 200 retailers. Customers range fromsingle-store boutiques to global retailenterprises. Operating in more than 70countries worldwide, Tyco Retail Solutionsprovides retailers with real-time visibilityto their inventory and assets to improveoperations, optimize profitability and creatememorable shopper experiences.The Tyco Retail Solutions portfolio forretailers is sold direct and throughauthorized business partners aroundthe world.Inventory-Intell_WP_RTL_NA_12-2012Copyright © 2012 Tyco Retail SolutionsAll rights reserved. TYCO RETAIL SOLUTIONS,SENSORMATIC and the product names listedin this document are marks and/or registeredmarks. Unauthorized use is strictly prohibited.www.tycoretailsolutions.comL-8810-00 / Rev 1 - 12/2012Safer. Smarter. Tyco.TM