How to Become a "Real-Time Retailer"

Advances in technology offer retailers unprecedented opportunities to achieve operational advantages. And these opportunities are emerging across all aspects of retail operations, from engagement with the customer to optimized inventory management and fulfillment.

But to capitalize on those opportunities, retailers must make thoughtful investments in both back-end and in-store infrastructures — essential enablers of next-generation retail operations.

Network infrastructure is a prime example. Robust in-store wireless networks are essential for enabling operations such as optimized mobile and social engagement with customers and the granular capture of radio frequency ID (RFID) tag activity. Robust enterprise networks are essential for gathering Big Data, subjecting that data to intensive analytic processing and pushing results out to both employees and customers. Indeed, investments in network infrastructure are essential for next-generation retailing.

“You can’t be a real-time retailer if you don’t have a real-time network,” says Ken Morris, principal at Boston Retail Partners. “Just as networks transformed banking by enabling ATMs, networks transform retailing by enabling centralized operations and use of the cloud.”

Tory Burch, a global clothing retailer, offers a prime example of this principle in action. Its sales associates provide customers with a highly personalized shopping experience using a mobile application that runs on company-issued iPad devices. These devices allow staff to see customers’ web sales histories and wish lists — while also performing tasks such as emailing customers and checking inventories. The iPads also function as mobile point-of-sale (POS) systems by communicating with the store’s primary register.

According to Serge Minassian, the company’s vice president of infrastructure and shared services, this service requires that careful attention be paid to the distribution of wireless access points throughout stores — especially in larger stores with multiple floors. Stores also have both primary and backup network hardware to ensure continuous connectivity to critical back-end systems.

Most importantly, all of this connectivity is rigorously secured to safeguard both customer and corporate data. “In the wake of the high-impact, high-profile breaches that other retailers have experienced, information security has become a C-level concern,” says Minassian. “In a brand-oriented business, the last thing you want to do is put your reputation at risk.”

That’s why Minassian advocates complementing internal security teams and resources with external security partners who can provide an outside perspective on both technical vulnerabilities and best practices: “It’s good to have someone looking over your shoulder when you’re trying to ensure that your environment is protected,” he says.

Minassian has found outside expertise particularly valuable when it comes to evaluating risk, performing correlation analysis, and responding to alerts. “A security partner offers an independent and unbiased view of risk,” he explains. “They also have a broad view of how vulnerabilities are being exploited, which helps us prioritize our security activities and our responses to security alerts.”

The Internet of Merchandise

Another technology that has the potential to significantly transform retail operations is RFID. With RFID, retailers can remain aware of merchandise from the moment it gets tagged at its place of manufacture to when it lands into the hands of a customer.

This raises a host of possibilities for retailers, including:

• End-to-end inventory tracking: Retailers face a variety of inventory management challenges that range from confirming shipments to ensuring that front-of-store displays match back-of-store inventory. RFID can turn this time-consuming manual task to one that can be completed with a quick scan-and-tap. It can also help trading partners resolve disputes when they disagree about whether a given shipment actually arrived at its intended destination.

• Richer product descriptions: RFID technology can carry product information that goes well beyond the traditional attributes of style, color and size to include materials, country of origin, related products and more. “Clothing buyers have questions that go well beyond how something looks and what it costs,” says Melanie Nuce, vice president of apparel and general merchandise at GS1 US, a standards management organization. “By leveraging RFID data, retailers can more easily answer those questions on the spot with confidence.”

• In-store product movement monitoring: RFID also can reveal how often and for how long customers handle merchandise as they’re shopping. This can help drive better marketing and merchandising decisions. It can also enable more intelligent loss control, since conventional electronic article surveillance tags don’t provide rich product information and can be clumsy to handle.

Of course, to achieve these goals, retailers must make significant investments in both fixed and handheld RFID readers, as well as in in software necessary to deliver RFID-based data to mobile users in real time.

Both of these investments could really pay off as retailers try to better match inventory to customers.