SCDigest Editorial Staff

SCDigest Says:

So SCDigest expects over time the need for retailers – and eventually their suppliers – to take in-store orders, perhaps requiring final postponement of colors, fabrics or other features – and fulfill those orders with rapid delivery cycles – to likely increase. What do you say? Send us your comments here

The National Retail Federation (NRF) held its annual conference in New York City last week, accompanied by dozens of new product announcements from technology and service vendors.  As usual, the primary focus was on in-store technologies, with a relatively small emphasis on the supply chain.

A key trend was obviously enhancing – or perhaps even revolutionizing – the in-store experience by using a whole range of technologies, including kiosks, 3D and virtualization, mobile devices, and “contextual” information to “wow” consumers, make them feel special, and provide better product information.

The jury is still out, of course, as to whether these new technologies will work as promised and be embraced by shoppers, but we think there are some potential supply chain implications for retailers and manufacturers.

The new technologies – for example, a virtualization system that enables shoppers to see a piece of furniture in a realistic home setting – might lead more shoppers to want customized products not stocked in-store. If more product options are presented to shoppers using these technologies, including those not stocked locally, then it seems likely that more shoppers will opt to order in-store for home delivery or store pick up – if the product can get there quickly.

(Supply Chain Trends and Issues Article - Continued Below)

As opposed to past years, there were very few RFID related announcements.

Here’s a summary look at announcements coming out of NRF:

Trends and Surveys

• NRF economists predict slow but decent US retail sales growth in 2008 of 3.5%, but most of that coming in the second half of the year.
• IBM unveiled a new survey of 19,000 US consumers which found that across multiple retail segments, only 21 percent of consumers are “advocates” for their primary retailers. Customer experience and the retailer’s product range emerged as the top drivers of advocacy.
• As with apparel vendors before them, which have long been funding in-store shops at department stores, traditional consumer goods manufacturers are increasingly helping create and fund store design as part of category management initiatives.
• An NRF survey shows the top retail priority for 2008 is improving the customer shopping experience. Usually, the top pick is expanding the number of stores. This year, store expansion is tied for second place with “cutting costs.”

In-Store Technologies:

• Intava Corporation releases new kiosks to enable shoppers to compare products (the Smart Merchandising System). For example, shoppers can browse physical shoes on the shoe display wall and place them on a special sensor near the table to view detailed information on each shoe, or compare multiple shoes side-by-side.
• Wipro Technologies announced the launch of The Intelligent NextGen Associate (TINA), a retail automation platform developed as part of customer experience enrichment program at Wipro’s Applied Innovation Lab. TINA is a platform on which customer interaction applications that use speech, touch and motion may be deployed.
• IBM offered the IBM Multi-Sensory Experience. Through the use of 3-D glasses, participants viewed a fashion show from Europe complete with music and smells. For example, as a model walked down the runway, her perfume was noticeably in the air. Also, when she held out a very expensive leather purse, shoppers had a 3-D view of it and could smell the fine leather.

IBM also demonstrated more "Immersive Retailing" with something called the “IBM Cave.” Meant to complement a multi-channel retailing experience, this demonstration brought the user into a virtual reality experience using a 3-D virtual world and stereoscopic goggles. These goggles react with the head movement of the user and create a 360-degree view of a virtual reality room. IBM used the technology as part of a scenario in which a consumer redesigned a room in his house into an entertainment room.

• Edgenet Inc., announced the release of its 3D Visual Selling solution called Edgenet Vision, which offers consumers 3D renditions of real products shown in true-to-life room settings. By showing a full range of product choices in the context of a drag-and-drop room environment, the new solution stimulates creativity and overcomes common objections to buying major home products unseen. It also allows the consumer to think in terms of whole-room projects as opposed to individual products, the company says.
• Source Technologies announced the availability of TreoSystems’ interactive iPAL product locator system for large-format retail stores on their new interactive kiosk. Using the iPAL product locator, a customer entering a large store can quickly locate a specific product on the sales floor.
• Cornell-Mayo Associates (CMA) announced the release of Omniwatch™ Returns Management, a returns management solution that protects retailers from shrinkage due to unauthorized returns, while improving the customer experience. Omniwatch Returns Management helps retailers automate the returns process, while ensuring that returns are legitimate and not fraudulent. Additionally, the solution prevents the return of stolen merchandise and post voided items, identifies frequent return customers, and prevents items from being returned more than once.
• RedPrairie Corporation announced the release of major new enhancements to its Execution Management application, which provides task planners, gatekeepers and store managers a comprehensive view of store operations and workloads to enable customization and optimization of projects and tasks. Enhanced functionality also empowers the store with additional localized detail and customization, providing a vehicle to implement individual store best practices that drive revenue growth and increase employee productivity throughout the store chain.
• NCR unveiled NCR FastLane Self-Return, which enables retailers to offer a self-service solution to customers to improve the often time-consuming and frustrating merchandise return process.
• Infor announced a new version of HCM Workforce Management. New functionality enables retailers to more accurately schedule and optimize their workforce, as well as measure employee productivity and utilization for single locations or across multiple facilities. Chief among the retail enhancements is the addition of a new Labor Forecasting and Schedule Optimization (LFSO) configuration editor that consolidates the setup and administration of store information and company-wide scheduling processes onto one intuitive screen. Also added is a new feature called Employee Loan and Borrow. Employee Loan and Borrow enables store managers to view a complete schedule, identify an open shift and then initiate a process to borrow an employee from another location to fill that shift.

Supply Chain Solutions

• In an interesting move, apparel maker Kellwood is using technology to gain competitive advantage with its retail customers. Kellwood and major department store retailers can determine the optimal merchandise size distribution by individual store to eliminate early size breaks, increase regular priced sell-thru by door, reduce end-of-season markdowns, and reduce operational handling charges. The company is using 7thOnline Size Optimization technology to power this initiative.
• Quantum demonstrated its flagship solution, Q, which helps retailers balance shareholder value with customer service by removing the complexity which surrounds supply chain planning and optimization. Just how this is done wasn’t clear.
• i2 featured its Cycle Time Optimization solution that retailers can use to react to fashion trends more quickly, optimize and manage spend across the supplier base, and reduce distribution and handling costs as well as reduce inventory while maintaining superior customer service levels. It emphasized the benefits for retailers embracing private label product strategies.
• Sterling Commerce announced the availability of Sterling Supply Chain Visibility On Demand, a new hosted solution that provides partner connectivity, process integration and real-time visibility throughout a company’s extended supply chain. The product instantly displays and summarizes actionable supply chain information from all electronic trading partners and communities through a secure, reliable hosted infrastructure.
• JDA announced a new version of its Transportation & Logistics Management suite. JDA's solutions allow retailers and others to plan and execute all transportation needs, including company-owned fleets. The suite will also provide enhanced visibility into the movement of product through the elongated supply chain, ensuring that lead cycle times are reduced and goods are delivered on-time and on-budget to the right distribution centers and right stores. The JDA Fleet Management module, provides a single platform to more effectively manage a mixed private fleet and third-party carrier operation, which will enable many companies to realize increased backhaul utilization and reduced freight expense.

Merchandising/Other

• JDA announced a new version of its Assortment Planning solution software, which allows retailers to create consumer-centric plans based on product hierarchy or product attribute, including theme, collection, floor-set plans or promotions. The software application enables retailers to dynamically group store locations into clusters based on calculated data, such as size and type of store, volume of merchandise sold and customer attributes. Additionally, Channel Clustering allows stores to be grouped together based on performance analysis data, which then can be translated into actionable decision-making, among other features.
• Cognos announced its Retail Financial Workbench & Scorecard Blueprint, which provides a performance management framework – including planning, scorecarding, dashboarding and reporting – that enables retail executives to standardize the corporate-wide planning process, gain consensus between financial and operational plans, identify and monitor key metrics, and ensure all departments are working towards the same business goals. The new Blueprint provides a mechanism for consolidating multiple operational plans into a single high-level financial plan, conducting ‘what-if’ analysis and scenario modeling, generating financial statements and monitoring key performance metrics through a pre-built scorecard and intuitive dashboards.
• SAS featured SAS Regular Price Optimization, advanced technology that helps retailers maximize sales and improve profitability. Through the use of powerful SAS analytics and forecasting, SAS Regular Price Optimization automates the pricing process at a detailed level to determine store-specific pricing for each stock-keeping-unit (SKU). After taking into account detailed demand history, key causal factors, price elasticity and business rule constraints, the solution applies advanced analytics to determine profit-maximizing prices that are aligned with business goals.
• RedPrairie Corporation announced the availability of RedPrairie Performance Management™ (RPM) for Retail. RPM is a web-based analytic solution that leverages the wealth of existing information from RedPrairie’s retail operations and workforce management applications to monitor, analyze and report on the key performance indicators (KPI’s) that drive an organization’s success.

RFID/EAS

• IBM and Germany’s METRO Group stores are teaming on an innovative customer focused RFID project in one of METRO Group's Galeria Kaufhof department stores in Essen, Germany. As part of a pilot program, approximately 30,000 articles in the menswear department have been equipped with ultra high frequency second generation RFID tags. Employees and shoppers are using the system to locate specific items and to monitor stock to ensure that popular items are always available. The store also features devices in the store's fitting rooms which recognize the tagged garments and display information such as price, fabric and care instructions.
• Universal Surveillance Systems Corporation (USS) introduced the “Cobra” Pinless Tag. Consumers have been demanding a solution to security tags that create holes and damage merchandise. The Cobra, with a pinless design, solves the problem.

Any interesting new product announcements coming out of NRF that we missed? What impressed you? Do you think all these new in-store technologies will have an impact on the supply chain? Let us know your thoughts at the Feedback button below.