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Technology in Fashion Report

How fashion retailers are using technology to get ahead in business

Contents

Foreword page 3

Torex foreword page 4

Avery Dennison foreword page 5

Chapter 1: Introduction page 6

Chapter 2: Multichannel retail, ecommerce

and the impact on store systems page 8

Chapter 3: CRM and customer insight page 12

Chapter 4: Supporting international

expansion page 15

Chapter 5: Analytics – merchandising, pricing

and allocation decisions page 18

Chapter 6: Product lifecycles and the

supply chain page 21

Chapter 7: Digital marketing and PR page 25

Chapter 8: The human element page 27

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Innovation on trend

Drapers has tracked the growing acceptance of technology and desire to innovate by fashion retail companies over the past decade. Ecommerce, internationalisation and increasingly tech-savvy consumers are just three of the trends we’ve written about that are focusing attention on IT.Earlier this year, Drapers set out to investigate just how important technology is becoming to fashion retailers. We wanted to know where their pain points are, and which technologies they and their customers believe can strengthen their businesses and propositions.The project kicked off with a survey of our readers on Drapers’ website. With 165 responses, the results were compelling, and supported much of what we were hearing anecdotally. From there we ran a roundtable alongside our sponsors, Torex and Avery Dennison, which enabled us to talk through some of the results with a group of fashion retailers.

It’s clear that many companies recognise that technology is crucial to providing what their customers want, whether it be bringing new trends to market faster, better stock availability, cross channel services or more personalised and relevant marketing. And it’s also true that many of the issues to do with adopting new technology are common to our readers, whether they be global fashion brands, or single store independents.

So, as the final part of the project, we have turned all the research – as well as information on many examples of innovation we have collected recently – into this report. Highlighting the most interesting trends in how fashion businesses are using technology, the report is designed to inspire retailers, large and small, to take their businesses to the next level.

We hope it sparks your imagination.

Joanna Perry, Special Projects Editor, Drapers

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A word from our sponsors

Fashion, as an industry, is continually evolving. The only certainty about it is the perpetual fascination that drives millions of shoppers to engage with attention grabbing brands and snap up the latest must-have item. To understand and appeal to their potential customers, fashion retailers must innovate, meet consumer needs and convert them into buyers. This is where technology comes into its own to empower staff and deliver the compelling brand experience.

People don’t just buy in-store nowadays; shoppers have transformed into intelligent consumers increasingly comfortable with being able to flip between the physical and real world without differentiating between the expanding number of channels. The importance of social media and discussion forums means that brands need to be monitoring their online presence to get closer to their customers and leverage peer-to-peer recommendations. Fashion retailers now recognise the importance of technology and the need to keep up with these changes, but where is the investment best focused? Most retailers already have an online presence yet cross-channel transactions are typically clunky and disjointed. Knowing the customer and predicting their preferences and buying patterns and then delivering a good and consistent shopping experience however and wherever they want to shop is the key to the future of good fashion retailing.

Audiences and brands are now global too. How can retailers take advantage of new markets without being restricted by technology that cannot scale to meet these demands? Servicing online retail with stock and central processes, developing effective franchise and partner relationships and facing challenges of different payment methods, tax and legal environments all need to be addressed.

In this report, we examine how fashion retailers can use technology more effectively to capture the ever important spend. We also go beyond, to look at next-generation technology that is being adopted today by market leaders, developing the fashion retail technology standards of the future.

Helen Slaven, Vice-President Retail, Torex

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A word from our sponsors

Avery Dennison Retail Branding and Information Solutions (RBIS) is pleased to partner with Drapers on this important report investigating the increasingly dynamic role that technology plays in the retail fashion industry today.

It is evident from the findings of this report that the consumer is now leading our industry in driving the rapid adoption of new technology at retail. Although fashion retailers have always recognised the important role that technology plays, it is more critical today for the industry to move faster and more efficiently to serve today’s digitally-enabled consumer base.

In today’s complex global economy, every retailer must seek ways to leverage technology in order to ensure that they are differentiated, on trend, and optimising their operations while keeping pace with the consumer’s use of digital connectivity.

To do so, fashion retailers must seek partners that understand the complexity of the evolving technology landscape and help them build intelligent solutions that will elevate their brand appeal while delivering innovative technology solutions to accelerate their operational performance.

With over 115 locations in 50 countries, Avery Dennison RBIS delivers intelligent, creative, and sustainable solutions to our customers around the world. We lead the market with innovative technology solutions that enhance branding and leverage RFID to improve inventory visibility and loss prevention.

Many thanks to Drapers for their continued thought-leadership in the industry and on this exciting topic, and to Avery Dennison’s James Stafford, Market Development Manager – Europe, and Pete Moylan, RFID Development Manager – Europe, who were able to join the roundtable discussion and share insights on this important topic.

Graham Diamond, Vice-President and General Manager Commercial Apparel Solutions Europe, Avery Dennison

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The past decade has really seen the fashion retail industry awaken to the possibilities of technology.

And at a time when businesses in the sector face pressures from rising input costs, a depressed

consumer outlook and fierce competition from all directions, innovation has proved crucial in

creating compelling customer propositions and realistic cost bases.

The results of our survey among readers provides great insight into the changing attitude towards

technology, and the developments retailers feel can really make a difference to their businesses.

Positive outlookNearly three quarters of the 165 people who took part in the survey have a positive attitude towards

technology within their business (see pie chart below). In particular, 22% believe that it allows them

to differentiate themselves from competitors with their customer proposition.

And when we asked about the importance of technology to the whole fashion retail industry, the

results were even more striking (see pie chart overleaf). Asked to choose between one of five state-

ments, only 6% said technology is becoming less important to the industry. 21% were quite positive,

saying it’s more important as it plays a part in dealing with the pressures on the sector. But the

majority – 69% – were very positive, saying it’s crucial to optimising profitability and meeting

customer expectations.

If traditionally the role that technology has played in fashion retail has largely been a back office

one – finance, merchandising or supply chain systems – then the internet and multichannel retailing

trend means that this is no longer the case. More and more of the technology being deployed directly

1. Introduction

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What is your company’s attitude towards IT and technology?

13% It is a necessary evil

14% We invest in IT when it’s crucial, but only ever adopt proven technology

27% Technology has become more crucial to our business as it has grown

22% We must have a flexible IT platform to stay competitive

22% Technology allows us

to stay ahead of the competition with our

customer proposition

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touches the customer; whether it is independent retailers launching a website, or high street chains

deploying iPads in their stores.

In the following chapters, we explore how both customer-facing and back office technology is

evolving, and what the trends are in how retailers are using it. At the same time, in chapter 7, we

review the many ways that retailers are using systems that they don’t themselves control – particu-

larly for marketing and customer service purposes using social media platforms.

And last, but by no means least, in the final chapter we think about how the adoption of tech-

nology that’s currently taking place in the industry is changing both the role of technical staff within

fashion businesses, and also leading to technology touching many more job roles and types of staff.

Fashion retailers are starting to appreciate that technology is not just a cost, it can help them win

more sales, better manage their margins and develop better relationships with their customers.

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Is technology becoming more or less important in the fashion retail industry?

4% Less important. Margins are too

tight for technical innovation

2%Less important. Product and marketing is where fashion businesses compete

5% The same

21% More important. Technology plays a part in dealing with the pressures on the sector

69% More important.

Technology is crucial to optimise profitability

and meet customer expectations

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The internet has dramatically changed how fashion businesses connect with their customers, promote

themselves and compete. In the UK, clothing and footwear sales online continue to grow by upwards of

20% year on year, for retailers with stores, it still makes up a relatively modest proportion of sales.

Our research suggests that rather than sales continuing to migrate online at pace, the internet will

complement stores and play a role in the many technology-backed customer propositions and cross-

channel services retailers hope to deliver. The graphs below showing the developments that retailers

believe their colleagues and customers would like are particularly interesting.

2. Multichannel retail, ecommerce and the impact on store systems

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Which of these developments are your colleagues demanding?

Mobile app Mobile website

Web kiosks in stores

Access to online

content in stores

Mobile point of sale

Click-and-collect

systems

Multichannel gift cards

Staff communication/

task management

system

Pricing/markdown/allocation

optimisation systems

37%

45%

13%

34%

16%

25%

16%

27% 30%

Loyalty scheme

Free Wi-Fi in stores

44%

49%

19%

41%

18%

38%

22%

42%

25%

Which of these developments are your customers demanding?

Mobile app Mobile website

Web kiosks in stores

Access to online

content in stores

Mobile point of sale

Click-and-collect

systems

Multichannel gift cards

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As our chapter on people (page 27) discusses, retailers are increasingly delivering technology that is

used by customers rather than staff. This began with ecommerce websites, but is a trend that is spreading

to stores. Many of the developments retailers believe their customers want involve delivering customer-

facing technology to the store.

Online on trackAbout a decade ago, fashion businesses began setting up websites and then selling online. It’s a sector of

retail that has been slower to adopt ecommerce than others – it’s only relatively recently that brands such

as Zara and H&M have launched transactional websites in the UK.

Even five years ago, it was common for retailers to treat their ecommerce operation as their biggest

store, now many of them are achieving online sales that are significantly beyond this, and retailers have

come to realise that the development of their web platforms will have to be a continuous endeavour.

New trends in ecommerce include being able to trade in multiple currencies, running completely sepa-

rate sites for different countries, and integrating with multiple fulfilment providers to offer a wide range of

delivery choices (including same-day and even 90-minute delivery).

Online is also coming into the store. IPads and kiosks are starting to pop up in stores as a way of staff

being able to assist customers to track down what they want,

and customers doing this for themselves.

Crew Clothing is using iPads to give customers access to its

internet stock while in store. To get the solution live quickly

it decided to just display its website on the devices, and uses

the IP address of each device to record which store the order

has come from so it is credited for what is an online sale.

Crew Clothing systems manager Ruben Alonso claims that

the devices provided a payback through extra sales within

two weeks. “The increase in sales that it has driven has been

amazing,” he says.

And this type of technology seems to also work well for

chains with more mature customers. East has also rolled out

iPads to all stores, after a successful six-store trial.

The next big competitive battleground for fashion will be

click-and-collect services. Republic (see box on page 11),

Thomas Pink and Aurora Fashions have led the way with

these services, and now New Look is heavily promoting its

cross-channel services too (pictured).

In many cases, this has required changes or upgrades to

EPoS systems to facilitate. New Look, Marks & Spencer and

Republic all made investments in point-of-sale software in

order to launch click-and-collect services. However, those that have achieved it often remark that it is actu-

ally the creation of new business processes and acceptance by store staff that is harder to get right than the

technology changes required.

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Mobile enablementThe other strong trend in fashion is the development of mobile channels. Mobile websites and mobile

apps were ranked as the top developments that retailers thought their colleagues and customers were

most keen on.

18 months ago, retailers began to introduce mobile apps – mostly for the iPhone – and then in the past

12 months mobile-optimised websites have become more popular as the number of owners of other types

of smartphones has quickly risen.

What retailers have found is that mobile does not simply cannibalise sales that customers would other-

wise make online, but that it can also help to drive customers to stores. In the same way that consumers are

open to using kiosks and iPads in stores to order stock they can’t find on sale that day, they are also browsing

retailers’ websites on their own phones while in the store.

This is one of the reasons why retailers are becoming more interested in offering free Wi-Fi for

customers to use in stores, to ensure they have a fast internet connection on their smartphone. John Lewis

announced in October that it will provide free Wi-Fi in its stores.

Customers have tended to run ahead of retailers in their use of mobile. Even before they have apps or

mobile-optimised websites retailers are finding that smartphone users are accessing their websites on these

devices, and this normally helps to make the business case for the investment in mobile developments.

Retailers are also beginning to explore how they can use the location-based services technology within

smartphones to market to customers and drive traffic to stores. Republic is doing this with

Facebook (see box overleaf) and several fashion brands including French Connection have offered deals

through mobile network O2’s location-marketing scheme O2 Priority Moments.

Providing marketing or services to customers based on the information their phone provides on their

location means offers and content can be made much more relevant to customers, and acts as another

strong link between what retailers do online and in their stores.

New style storesOne of the likely next trends is a rethink of store layouts, made possible by the technology being introduced

to stores. Particularly click-and-collect service desks, and mobile point-of-sale devices mean that fashion

stores need no longer conform to the stereotype of stock at the front of the store, cash desk at the back and

cramped changing rooms.

Aurora Fashion group strategic development director Ishan Patel says the adoption of new technology –

such as iPads – is bringing the online channel and in-store expe-

rience together. He says: “It has really started to question our

store design. We are looking at the whole customer journey

through the store... out on the shopfloor and in the fitting room.”

Aurora has chosen not to lock-down its iPads, as it wants staff

to have the freedom to use them with customers all around the

store.

SimplyBe – one of the home shopping retailer N Brown’s

brands – has begun to open a small chain of stores in the UK

(pictured overleaf), and is very much using them to trial innova-

tive store designs backed by technology.

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We are looking at the whole customer journey through the store Ishan Patel, group strategic development director, Aurora Fashions

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N Brown Group IT director Neil McGowan says the

company felt it could improve market share with a

small number of stores: “Customers just expect an expe-

rience that includes the store... especially in fashion.”

It wants to allow customers with existing SimplyBe

accounts to continue their relationship when they

come into store, and will trial concepts and technology

until it comes up with a winning formula. This includes

monthly releases of new software for use in stores,

constantly tweaking to improve the customer experi-

ence. For example, McGowan wants staff to be able to check customer’s account limits in store, and even-

tually be able to open new accounts too.

In focus groups, the retailer found that the brand’s plus-size customers were particularly concerned

about the sizing and fit of clothes. So it has designed the store with a large changing room area, with a high

concentration of staff and mobile point-of-sale terminals so staff can offer real service.

With a large range of sizes, the brand is also experimenting with web kiosks so that when a product isn’t

available in a store it doesn’t lead to lost sales.

The internet was once seen as a potential threat to the future of stores, but as technology develops it is

becoming clearer that the various channels complement each other and can bring a renewed relevance to

physical retail. The development of mobile technology will only accelerate this trend.

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Any which way

Republic has already innovated with the launch of a click-and-collect service, which has quickly become 10% of its online sales. And with its Westfield Stratford City store, it’s further experimenting with cross-channel services.

The store has iPads fixed to desks in the store so customers can browse and purchase from the retailer’s extended online range. Republic head of multichannel Jo Molineux says the developments are designed to enable customers to “tailor their shopping according to their lifestyle”.

The retailer is using the Torex Channel Hub to provide a seamless cross-channel experience. The solution enables the business to provide a unified customer order, fulfilment and delivery service.

Republic is also extending its use of Facebook’s Deals platform to drive customers

to store. After successfully using Facebook Deals in its five flagship stores, it’s rolling out the service to 25 more. Customers who “check in” on Facebook when they arrive at the store are given special deals and discounts.

The retailer has also installed an interactive mirror in its changing room that connects to Facebook, allowing customers to show off potential purchases to their friends on the site and get instant feedback. Whether such fun developments will ever take hold in the industry in any meaningful way, or be superseded by what consumers will do with their own devices, is almost immaterial. Such technology provides great PR and a consumer talking point for retailers trying to communicate to their customers that they are innovative and prepared to try new things.

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While few fashion retailers are yet to have achieved a single view of their customers’ activity across

all channels, there is a real push to use customer data better.

More than half the respondents to our survey said their marketing departments had introduced

new systems in the past five years. And 42% said they thought customers would like a loyalty scheme.

Online-only fashion retailers have a clear advantage here, as customers must provide some basic

data as part of the order process which they can analyse. And independents are often able to build

this kind of intelligence on their customers in order to suggest future purchases with the tried and

tested method of keeping a black book, although they could also benefit from collecting and holding

this data digitally rather than leave it in the hands of store assistants.

For retailers and brands with multiple channels it has always been more difficult, as they often

can’t tie store transactions to a particular customer record. But recently there are more and more

examples of retailers trying to collect email addresses or other contact details in stores so that it can

use the data provided for marketing and insight activity.

Monsoon Accessorize has launched a loyalty card, and Gap is collecting email addresses on hand-

held devices in-store to market special offers and deals to customers. Republic is working with SMG

on a customer feedback programme called Your Views, and also sends special offers by SMS to

customers who hand over a mobile phone number, in a move likely to appeal to the younger end of

its customer base.

In general, retailers find that they must incentivise customers to hand over extra information

about themselves. Gap sends an email with a 15% off voucher within a day or two of customers

handing over their email address in-store. It uses barcodes on its email offers so it can track customers

who redeem them in store. My-Wardrobe also has a loyalty scheme, that offers reward points that

can be redeemed for money-off vouchers, and also invites VIP customers to special events.

3. CRM and customer insight

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When it comes to analysing data on customers in stores, fashion retailers have adopted technology

that’s widely used in other types of retail. For example, tailor Gieves & Hawkes is using a footfall

analysis system from Experian FootFall in its flagship store, with the hope to roll out to the other

nine once the first deployment is bedded in.

Data from three thermal imaging cameras will be used to monitor visitor traffic, match staffing

levels to visitor patterns and ensure the optimum approach for service and sales conversion.

Gieves & Hawkes IT manager Sam Thompson explained that the system is helpful in ensuring the

tailor has its staffing levels right to offer appropriate levels of service: “The sales approach is a key

differentiator and customers are expecting a high level of service and interaction. We hope to be able

to use the data to form shift patterns in the future and once the service has bedded-in we plan to roll

out the technology across our other nine stores.”

Closing the loopOne more recent development is that fashion brands are beginning to prove to customers that they

are reacting to the information and feedback customers give them. Topshop offers a ‘Product of the

Week’ on its email newsletter to customers based on the feedback it gets through its ratings and

reviews. And Debenhams and Next have used online customer panels to help inform business deci-

sions. Debenhams uses its Debenhams Design Team panel to recruit participants in face-to-face

research too.

Asos is also closing the loop on its marketing by running promotions where the most popular

items are given the biggest discounts in its timed Sales (see chapter 7). Customers who signed up to

the timed Sale through a Facebook application were given early access, essentially in a trade-off for

giving Asos access to their basic Facebook profile information.

A next step for larger retailers is likely to be more in-depth analysis of social media, both the senti-

ment of what customers saying about their brands and products, and also trying to tie information

about particular customers to the transactional information held on them in a CRM system. This

would provide more personal data to allow segmentation.

Home shopping retailer Shop Direct Group has also been involved in an interesting trial in

Ireland, using geo-targeting to market to customers when they are near specific shopping centres.

Basically, Shop Direct asks customers of a certain mobile phone network to opt-in to receive offers to

their phone, and then sends these offers when it knows they are out shopping, and therefore at risk

of buying from a competitor.

Jonathan Wall, group eccomerce director at Shop Direct Group, says it’s early days for using such

technology and the company must also be careful in how it uses customer’s data. And he is right; but

this is a great example of a retailer thinking about using what it knows about customers – even their

location – to market to them.

The results from our survey on how retailers expect to be using customer data in the next few

years clearly shows the direction these businesses are heading (see overleaf).

While many will still offer blanket marketing emails – which if done well with a strong editorial

tone and engaging fashion content can continue to work well – they will supplement this by using

customer data to market more intelligently and individually to their customers.

In addition to the marketing benefits, analysing information from product ratings and reviews, »

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returns information and analysing comments on social media can also help inform product develop-

ment, buying and trend decisions.

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How one-to-one works

One-to-one marketing, whether via email, text or other marketing mediums, draws on information from CRM systems on customers’ buying habits, as well as any other relevant sources of information to deliver campaigns that are personalised to each customer.

As fashion retailers increase their ranges online, this allows them to highlight products to customers that are most likely to complement items already bought, or that match their preferences.

Debenhams has improved its email conversion rates by 75%, and driven sales by 200%, using one-to-one content in its email and SMS marketing – that’s partly determined based on customer behaviour.

Hundreds of thousands of the department store’s customers now receive emails and/or text messages offering relevant, personalised offers using marketing automation software from Neolane to drive sales and retain customers’ loyalty.

How do you expect to use customer data in the next few years?

One-to-

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To info

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To info

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merchan

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/

pricing

decis

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marketin

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Basic s

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Real-tim

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56%52%

45% 43%39%

36%

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There are two clear and very different trends when it comes to the use of technology for supporting

fashion businesses as they head overseas.

First, it is clear that more and more retailers are seeing ecommerce as the easiest and cheapest

channel through which to explore international markets. In our survey, 46% said international

expansion through ecommerce would be a business priority in the next three years.

In comparison, 22% mentioned international expansion through stores, and 26% said expanding

their wholesale operation. This leads to the second technology trend in this area; using technology

to link all outlets around the world (whether they are owned by the brand, franchise partners or

independent stockists) to react faster to customer demand and respond to it more intelligently.

The net widensThe past 18 months has seen an explosion in the number of retailers offering international delivery

on their websites. Drapers already published a special report on international ecommerce in late

2010. And more recently it’s a trend that’s been advanced with names such as Aurora Fashions and

Asos launching dedicated sites for specific overseas markets.

The first step for most retailers is to offer alternative

currencies on their UK site alongside international delivery.

River Island, for instance, opened its site to customers from

over 100 countries this way. Once you’ve added new curren-

cies and payment options there is little other technical

changes needed to a site to begin selling overseas. Behind the

scenes retailers may want to link to international address and

fraud checking systems in the same way as they would use for

their UK business.

It’s a good idea to start this way – even though more

advanced retailers have moved on to launch dedicated

websites for certain markets – as it gives great data on shop-

ping habits and preferences in different countries that can

shape the way country-specific sites are developed in the future.

Aurora launched its website tailored for the German market in October. Aurora is offering

German customers free returns, standard and express delivery options and, most importantly, local

payment options, such as invoicing. Other retailers have admitted that opening their sites to German

customers without offering preferred local payment options has hindered their growth in the

market. Aurora multichannel director Hash Ladha said the site offers “service we’re confident will

equal that expected of any local etailer”.

Debenhams is looking at tailored sites for a few markets, and will invest in a new ecommerce plat-

form to allow this,and then expects to upgrade its UK site too. Unlike physical retailing, where in the

past fashion brands have used different systems for different countries, there is very much a push to

leverage as much of the same ecommerce platform as possible for international sites.

Aurora is also using its German ecommerce launch as a test bed for a new tabulated website,

where customers can shop all three of its brands in the same place and with one checkout. If

successful, it could be emulated in the UK too.

4. Supporting international expansion

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We need very reliable information. We are dealing in 25 to 30 currencies Michele Norsa, chief executive, Salvatore Ferragamo

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Trade linksIf only things were quite so simple when operating stores internationally. If businesses trading inter-

nationally online are flooded with data about their new overseas customers’ shopping habits, then

traditionally there has been a data drought from stores.

In the past five years, this has begun to change, particularly led by major fashion brands who

have realised that they need much more real-time information on what’s going on in every

country in which they operate, and particularly the emerging markets, for both their direct and

wholesale businesses.

In chapter 6, we discuss how brand Gerry Weber is using RFID labels on all garments to provide

accurate data on everything sold. This includes allowing other retailers that stock the Gerry Weber

brand to benefit from the data that the RFID system provides.

Many brands have decided they can grow sales and profits more quickly internationally by

opening more company-owned stores – and in some cases taking ownership of franchise stores.

These trends all put pressure on IT departments to deliver systems that can be rolled out quickly to

different countries and update central stock and

sales information in real-time.

In August, it was announced that Mulberry

will deploy Torex’s Retail-J point of sale system

to support its international expansion.

Mulberry has also committed to investment in

systems for international ecommerce, and so

the Retail-J system was chosen to help ensure a

consistent consumer experience across all coun-

tries that extends to cross-channel commerce.

The system also offers a central point of

management. As the EPoS system needs only to

be configured for different markets, it will allow

Mulberry to quickly open more international stores while maintaining close control.

Earlier this year, Drapers went to Florence to visit the headquarters of Salvatore Ferragamo, and

hear why it is making a massive investment in systems to be able to better control its international

business, particularly in the fast-growing Chinese market.

The software will give the company centralised control of stock management and distribution,

collating point-of-sale information so head office has a real-time view of what’s selling and where.

Fellow Italian company Valentino Fashion Group has made significant investments in its global

systems for similar reasons. Once brands have expanded to the extent that the majority of their sales

are overseas they are at the mercy of exchange rates. It’s not enough to have accurate and up-to-date

information on what’s selling where, they also need to know how much money they are making from

sales day-by-day when the cost of goods is in one currency and the sale price achieved in another.

Levi Strauss & Co. provides another example of a brand that’s standardising systems across the

world, in this case merchandise and assortment planning using applications from Maple Lake.

The company has more than 400 company-operated stores and more than 1,500 franchised and

licensed stores around the world, and thinks the system will improve the efficiency of its stock

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We are continuing to drive the right assortments in store and maximise our inventory investments worldwide Jeremy Leaf, leader global retail operations team, Levi Strauss & Co.

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holding while better tailoring assortments to maximise the chances of meeting differing customer

demand in each market.

Another type of system where brands get huge benefit from linking up across the world is

customer relationship management (CRM). For luxury brands in particular, customers may buy

from them in several countries – Chinese and Russian consumers particularly are propping up the

sales figures of many Bond Street stores – any systems that can properly record their total global

spend allow brands to better target such high-value customers.

So UK retailers must also consider how they cater for their overseas visitors. Selfridges accepts

the Chinese payment card brand China Union Pay, and many others have adopted systems for

allowing tax-free shopping. In July, Reiss announced it would adopt the Retail-J EPoS system, not

just to support international expansion, but also so it can offer tax-free shopping through the tills

in its UK stores.

The other point to note is that British brands who want an international presence must be

mindful of how technologically advanced domestic retailers in the countries they trade are. In India

and China particularly, local brands are investing in the latest systems, often Western technology, to

maximise their top and bottom lines.

For instance, Chinese-owned sportwear brand Erke is to roll out store systems from Eurostop

to 7,000 outlets across China. Technology will be a differentiator that domestic brands use to

compete more effectively against international brands trying to grab market share as their

economies rapidly expand.

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Ted on tour

Ted Baker’s burgeoning international business has required it to invest in new systems for many of the same reasons mentioned above.

IT director Dustan Steer explains that it had to think about international systems after taking over franchise stores from a partner in Hong Kong. This gave it the opportunity to install its own systems, and trade and merchandise the store using the same processes as it would its own stores in the UK.

This was so successful that it led to the idea of moving into China with its own stores. It’s chosen a system from Cegid for this, as Steer

says its existing system could not cope with trading in China. It will then also replace the systems used in its Hong Kong and US stores, as it wants the whole international business running the same systems.

Steer raises the important point that while centralisation of systems management is great there are some practicalities of running systems in overseas markets that must be addressed. It’s setting up data centres in its US office, and in Hong Kong, as it can’t rely on the speed at which data would be transferred all the way from its servers in the UK to its warehouses and stores in these territories.

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Independent retailers have the benefit of being fairly easily able to assess decisions they make about

what to sell, what sizes their customers are likely to want, and how much they will sell product for in

order to sell-through their collection at an adequate margin.

The smaller you are the easier it is to match your supply to the demands of your customers. But as

fashion brands and retailers grow this becomes more complex, and bad decisions lead to rails of

heavily discounted stock taking up valuable selling space, or website home pages covered in Sale

messaging when it could be promoting new season garments. In particular, as businesses set up more

channels, and expand into more countries, such decisions become ever more complex because there

are so many variables that will impact the overall outcome.

UK fashion retailers have been a little slower off the mark than those in North America to adopt

advanced analytics systems that can help them make all types of pricing and stock merchandising

decisions to achieve the best balance between margin and sell-through rates.

While independent and smaller retailers may not need to make systems investments, they

should use the data and reporting capability they do have for pared down analysis of what’s going

on in their businesses.

Getting price rightPrice and markdown optimisation

systems are particularly popular in North

America, but it is a trend that is spreading

to the UK. However, retailers are often

particularly coy about revealing the

results they are achieving with analytics,

as it can often lead to substantial margin

improvements.

In our survey, only 9% of respondents

said merchandising was the area of the

business most dependent on their IT capa-

bility, and only a further 16% said it was

the second most dependent. Yet when we

asked what systems colleagues in the busi-

ness were demanding, 30% said those that

provide pricing, markdown or allocation optimisation.

There has been some resistance to adopting systems that were seen to be taking over the skills of

buyers and merchandisers, but now it is recognised much more that they can support these depart-

ments in their work, allow them to spend less time on number crunching, and will not replace them.

Analytics can help with initial pricing decisions, and then manage pricing through the lifecycle of

a product, providing insight into how big a markdown is necessary to start shifting slow-moving

stock. The more SKUs a retailer has, the more they are likely to benefit from such a system, and the

same is true the more channels and differently performing stores they have. The goal for most who

adopt this type of technology is to get to a position where in-season pricing decisions are virtually

automated, any may differ by channel or cluster of store to achieve the best outcome.

5. Analytics – merchandising, pricing and allocation decisions

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[Our buyers] have confidence in the system and the process to help manage in-season inventory and make the right decisions for the business, and that in turn frees time to look ahead to new seasons Lucia Cimaglia, general manager supply chain,

Aldo Group

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Footwear chain Aldo has used markdown optimisation for a number of years, and in April this

year announced that it had upgraded its Oracle system to allow it to more closely analyse the

performance of individual items and make markdown decisions by clusters of stores in the UK

and North America.

Oracle believes it is possible to achieve gross margin improvements of between 5% to 15%,

and 5% to 20% improvements in sell-through rates.

Sorting out stockThe same type of analysis can be applied to decisions

on stock assortment, allocation and replenishment.

The aim is to target merchandise to specific

customers, improve product availability and negotiate

better discounts from suppliers with the help of the

quicker and more accurately gathered data.

International lingerie brand Hunkemöller is using a

merchandise planning system from Torex to improve

merchandise and assortment planning decisions for its

500 stores across 14 countries. The system will support

the merchandising team as it plans local ranging for its company-owned and franchise stores.

North American retailers such as Hudson’s Bay Company (which operates more than 600 stores

under four banners in Canada, and houses brands such as Topshop and Tommy Hilfiger) uses a size

optimisation tool to determine the best distribution of sizes of each garment for different stores.

And Matalan has introduced a system in the past year to help it make better replenishment deci-

sions for each store. The system from Quantum Retail uses real-time sales data from each store to

make replenishment decisions. But to optimise the decision, it does not just replenish what was sold,

but will analyse what could be sold. For instance, if a store sells out of its initial allocation of a partic-

ular dress very quickly, the system may send a larger amount in the replenishment delivery, as it can

“sense” unfulfilled demand.

New Look was the first retailer in the UK to introduce this system, and has said that the sales and

margin improvements it allowed meant the system paid for itself within five months.

Small brands can use the simple systems they do have to improve their decision-making. For

example, luxury sports brand Rampant Sporting uses its fully integrated retail system from Prima

Solutions for full stock visibility, automated order input and stock replenishment. The real-time

information it provides is helping to improve stock planning across its own stores, website and

growing number of stockists.

37%of respondents have introduced new merchandising systems in the past five years

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Best practice planning

Mid market Italian fashion chain Conbipel has introduced the Torex Merchandise Planning system to its business to create a single integrated process for its buying and merchandising functions. The 150-store chain wanted to improve forecasts and allocations, at the same time as doing away with its spread-sheet culture, to reduce discounting and terminal stock.

It faced issues such as men’s raincoats being carried by all stores, when analysis showed only half could sell them profitably. Its inability to accommodate regional preferences or to re-forecast in-season meant its merchandising decisions could not match customer demand. This resulted in much discounting, and even then it still carried about 10% terminal stock.

Introducing the system has allowed Conbipel to standardise its procedures, and adopt best practice. For instance, the retailer has been able to align buying and merchandising product plans with its retail store plans. Within a year of going live, it has been able to reduce markdowns and terminal stocks, reduced administration and created profitable localised assortments.

In stage one of the project, Conbipel began to use the in-season re-forecasting module (WSSI) to create an ongoing analysable view of stock, sales and intake. This has allowed it to constantly adjust forecasts, promotions and intake to better manage stock levels. Profits have been optimised, and the retailer has also improved its tracking of trends and better controlled seasonal transitions.

In stage two, Conbipel improved the width

and depth of assortments throughout its portfolio of stores by using space, stock and historical sales data to better analyse sales potential. The system allowed it to ‘join up’ its pre-season merchandise planning, such as store planning, clustering and assortment planning.

Conbipel head of merchandise and planning Sue Elder explains that stage two was timely for the development plans of the business: “Our recent operational review resulted in the redesign of a third of our stores to drive sales growth. The newly-visible pre-season option width and depth planning has helped us to optimise this strategy.”

As a result of the system, the Conbipel business has developed a more demand-pull and customer-centric culture.

[The system] has given us deeper visibility across the company, integrated our operations and tightened our supply chainSue Elder, head of merchandise and planning, Conbipel

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Information is becoming ever more critical within the supply chain to help fashion retailers optimise their

operations. Technology has long been used to lower the cost of moving garments from their country of

manufacture – increasingly overseas – to distribution centres and stores in the UK and international

markets in which fashion brands operate.

But now innovation in this area is going beyond just cutting costs. It’s helping businesses maximise the

speed to market of new product, and better matching supply to demand for sales and margin gains.

Making fashion fasterProduct development tools and product lifecycle management (PLM) systems have come on leaps and

bounds in the past few years, and assist retailers and brands in getting design concepts from the drawing

board to the shopfloor in some cases in a matter of weeks.

In September, Lectra unveiled a 3D version of its apparel pattern-making and grading software, which

allows patterns to be drafted and seen in

3D in a specific fabric right away. Any

onscreen adjustments are then directly

applied to the flat pattern, and modifica-

tions are visible in both flat and 3D modes.

Lectra says early adopters report being

able to reduce the number of physical

samples by half or more. In some cases, this

means producing just one prototype for

each garment.

JD Sports Fashion is one UK retailer

that has invested in a PLM system this year.

It is deploying a system from Centric to consolidate product and design information for its private label

garments, creating one consistent version of the plans for different teams within the business to use. The

aim is to improve collaboration and productivity in the product development process.

JD Sports Fashion group IT director Frank Watts says: “Improved data visibility will enable better

management of processes, from design and merchan-

dising to sourcing and warehousing, which is essential for

our significant private label business.”

Modules in the system that JD will use include line

planning, product specification, materials management,

sourcing and quality.

Global fashion brand Benetton Group has also

invested in PLM technology, from Dassault Systems, as its

platform for global development and sourcing. Why it

needs systems to manage these competencies becomes

clear when you understand how complex its manufac-

turing resources are.

It has production centres in Italy, Eastern Europe,

Tunisia and India, with several of its sites operating

6. Product lifecycles and the supply chain

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We now only create one physical prototype of each garment because the pattern has been so perfected virtuallyMassimiliano Trambaioli, owner of Italian pattern development company Prontomodel

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complete production cycles of raw materials to

finished product. Benetton believes the system will

help it reduce lead times, streamline product line

complexities and aid collaboration, both internally

and with external suppliers who will also be able to use

the system.

This type of technology is also evolving to the new

ways in which buyers and designers work, often

outside of the normal office environment at fashion

events or visiting suppliers. Centric has created an

iPhone app that allows users of its PLM system to

directly upload pictures taken on an iPhone to the

system, where they can then be reviewed and analysed

by other users.

Information on the moveOnce fashion product has been manufactured, technology then plays a part in ensuring that retailers know

where their stock is, and where it can be best utilised. After many false starts, RFID technology is now being

adopted at the item-level for fashion goods, and there are several successful examples, such as American

Apparel in the US, and the German fashion retailer Gerry Weber’s work with Avery Dennison and Torex

(see box on page 24 and pictured below).

US department store retailer Macy’s has successfully piloted an item-level RFID system at its

Bloomingdale’s chain and achieved 97% inventory accuracy. In 2012, it plans to add RFID tags to its fastest-

selling garments in all Macy’s and Bloomingdale’s stores – accounting for about 30% of the retailer’s sales.

Avery Dennison, which also works with Marks & Spencer on its item-level RFID tagging of clothing in

the UK, says the technology gives retailers improved stock accuracy, which leads to better availability and

ultimately higher sales.

Merchandisers need information on where product is to make decisions on where to allocate and

replenish stock. This process is complicated in many cases by the fact that these decisions must be made for

multiple channels.

The issue of one channel being out of stock of a product which another has stock of but can’t shift will be a

problem familiar to many in retail. 51% of those surveyed said they need to improve the prioritisation of stock

allocation across channels, and the same

amount want to be able to dynamically

model stock availability.

For fashion retailers, decisions over

stock allocation to different channels are

often complicated by wholesale or fran-

chise agreements. For instance, lingerie

brand Hunkemöller (see page 19) is using

the Torex Merchandising Planning system

to optimise assortments across its

company-owned and franchise stores. »

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We used to do one inventory count a year to get 100% accuracy; by the end of the year it was down to 60% accuracyChristian von Grone, chief information officer, Gerry Weber International

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US footwear brand Aerosoles has invested in a system from Maple Lake to centralise and co-ordinate

merchandise, store and assortment planning activities for each channel. “Operating a true multichannel

business with concept stores, outlet stores, ecommerce as well as catalogue and direct sales businesses

required some significant co-ordination; relying on spreadsheets is no longer an option for us,” says Aero-

soles chief information officer Tupper Kinder.

And if a brand that is stocked in thousands of stores worldwide was until recently relying on spread-

sheets for such planning activities, then it should come as no surprise that many of the fashion businesses in

our survey are still heavily dependent on spreadsheets too.

Some retailers have virtualised their stock pools, so they can easily reallocate stock between different

channels to react to demand patterns. There are also cost advantages of warehousing stock for web and

store channels together. There has been a trend away from running separate ecommerce fulfilment

centres, and modern warehouse management systems are able to cope with processing different types of

orders simultaneously. This especially makes sense for retailers that offer fulfilment to stores for web orders.

River Island has closed down an ecommerce fulfilment facility this year as part of its move to a new

distribution centre. At the new site at Magna Park, Milton Keynes, it picks ecommerce orders in the same

way as orders for stores before being packed separately.

It’s not even enough to have complete visibility of stock levels internally, retailers are starting to provide

this information to their customers too, through their websites and in-store kiosks and iPads. Several of the

Arcadia brands now provide basic store stock information through the product pages of their websites for

customers, for example.

And Debenhams is using kiosks to great effect in its smaller department stores to provide customers

with access to its complete online range. Retailers from Marks & Spencer to Karen Millen to Tesco offer

online, exclusive ranges with limited stock that can only be bought online.

So it’s certain that real-time stock availability and flexibility in how the stock is allocated becomes more

and more crucial as retailers develop multichannel and cross-channel services. Take Aurora Fashions, after

introducing click and collect, it has gone one step further by utilising Shutl’s 90-minute delivery service

where stock sold online is taken from a nearby store.

If ever proof was needed of how crucial technology is to fashion supply chains, then remember the

example of Superdry, which earlier this year suffered serious reductions in stock levels and ranges of sizes in

its stores after a problem with a warehouse system upgrade.

The retailer was forced to issue information to investors warning of a reduction in profits of between

£6m and £9m, and it had to take extra warehousing space while the issues were rectified.

Retailers cannot run without stock, but increasingly they can’t run without supply chain systems too.

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On the radio

German-based international fashion retailer Gerry Weber begun using radio frequency identification (RFID) tags on all products sent to its own stores and other stockists in Janaury this year following trials of the technology. It’s invested 2.7m euros in the supply chain technology project which provides multiple benefits and is expected to provide a return on investment within two years.

RFID is the next stage on from barcode technology, and each tag provides a unique electronic product code (EPC) identifier which can be read by a scanner without needing line of sight. Gerry Weber is adding an RFID tag to the care label of each individual garment, so it can be tracked along the supply chain, from the point of manufacture to the point of sale. About half of its turnover comes from international stores, and new stock hits stores every two weeks.

The RFID care labels – provided by Avery Dennison – are the first time the technology has been integrated into a wash-resistant care label. They also include an anti-theft element, which does not interfere with security systems in other retailers’ stores.

Before products arrive at the store, the retailer’s Alexa ERP system transfers a list of items to be delivered to the Torex point-of-sale system. Goods are then scanned on arrival and the point-of-sale system stores their unique serial numbers in a database, so it always knows exactly what is in the store. The serial numbers for products are deleted from the database when they are sold.

Gerry Weber International chief information officer Christian von Grone has overseen the project. He explains that the company saves a lot of money by being able to easily check all garments in consignments arriving at its logistics providers from the manufacturer in the country of origin.

And the benefits increase further in store. Von Grone says about half of the total business case comes from knowing exactly what stock each

store holds. Stock checks take each store only an hour, and are carried out once a week, instead of the once a year that Gerry Weber carried out before the system was introduced.

“We used to do one inventory count a year to get 100% accuracy; by the end of the year it was down to 60% accuracy,” he explains.

The other benefit of this technology is that it is also used as a loss prevention aid. The tags are marked as sold at the point of sale, and an overhead antenna at the door ‘reads’ when sold garments leave the store. If goods not marked as sold in the point-of-sale database leave the store an alarm sounds in the same way as for other electronic article surveillance (EAS) systems.

In addition, von Grone says that the weekly stock counts also highlight loss prevention issues in particular stores much more quickly. Several other retailers are now believed to be exploring using RFID in the same way.

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Marketing departments in all kinds of fashion businesses have seen a big impact from the growth of the

internet. While major brands still derive much benefit from print advertising in fashion magazines, the

internet has created many new ways to communicate with potential customers.

The great news is that many of these new mediums are low cost. But the internet moves quickly, so as

we’ve seen in the chapter 3 on CRM the blanket marketing emails that worked two years ago might not

be proving so successful today. And in the next couple of years they are likely to get even less so as other

retailers move towards more personalised communications.

Marketing was the function within the business that 19% of respondents in our survey ranked as

being the most dependent on their IT capability. It came second after ecommerce and multichannel.

But there are many free and low-cost web platforms that give retailers of all sizes access to a marketing

presence on the web. Social media platforms particularly allow brands to reach out to huge audiences,

and interact with those who are most likely to buy from them.

Social campaignsFashion retailers of all sizes – and particularly independents –

should be looking at what the big brands are doing with social

media, and working out how they can use these ideas within their

own businesses.

Burberry allowed Twitter followers to get a sneak peak of its

new collection before it even hit the runway at London Fashion

Week. The ‘Tweetwalk show’ saw photos of the models broadcast

via Twitter backstage at the Hyde Park show as they prepared to go

out onto the runway. Burberry also live-streamed the show via its

Facebook page, to give customers around the world a taste of the

excitement and exclusivity of being front row at a catwalk event.

It doesn’t take much imagination to see how any retailer could

tweet pictures of new stock before it’s even come into store in

much the same way. And similarly setting up a Facebook page

takes only a little time but allows customers to opt-in to a relation-

ship with you by ‘Liking’ your page.

Denim indie Donna Ida uses Facebook, Twitter and YouTube to get its message to market. It’s a great

example of how the different social media platforms can be used for different things, but they can all

also promote each other. On Donna Ida’s YouTube channel, you’ll find content such as a video on mater-

nity demin. On Facebook, there’s competitions and links to the blog posts on its website providing

regular new content on its Facebook wall. Then Twitter allows owner Donna Thornton to bring a little

personality to the brand.

Asos is also renowned for using social media. Its presence on Twitter gives individual staff members

a voice to customers, and acts as a customer service channel. But it uses other platforms well too

(see box overleaf).

Word of mouthAs well as the positive side of social marketing campaigns, the fashion industry has also had to start

7. Digital marketing and PR

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Twitter is instantaneous and I love the idea that streaming a show can be in many different formsChristopher Bailey, chief

creative officer, Burberry, on

the brand’s Tweetwalk show

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addressing the negative. Remember the fuss made online when Gap tried to change its branding?

The same platforms that can make a brand can also damage it. So it’s not enough to use social media

to push out your messages, you need to be ready to respond to what your customers say about you too.

Again there are many free or low-cost tools such as HootSuite or TweetDeck for monitoring Twitter for

mentions of your brand name.

In Gap’s case, it tried to rebut the huge wave of criticism over its logo change. However, it was forced

to backdown, and the brand’s US boss stood down within six months of the incident earlier this year.

However, if you can avoid mistakes like this then you can harness what your customers say about you,

and use it as part of your marketing message. A few high-street retailers are trialling interactive mirrors

in store, which take pictures of them in outfits that they can send to their friends via sites such as Face-

book or Twitter. For example, River Island is offering this in its Westfield Stratford City store.

Word of mouth is one of the best ways of attracting new customers, and the internet makes it easier

for customers to tell their friends and the wider world when they like something you are doing. Already

retailers have begun adding buttons to their websites’ product pages to let people easily share the link to

friends on social networking sites. Such developments are only likely to be seen more often.

High street chain Republic ran a competition in October using Facebook to make consumers more

aware of its brand. Fans earned points by ‘Liking’ the brand, and also by sharing the link to the competi-

tion with their friends on the site. They then received further points if their friends then ‘Liked’ the

brand too.

While relatively few brands such as Lyle & Scott and Asos have launched transactional stores within

Facebook, there is much that retailers of any size can do on these platforms without having to make any

technology investments themselves.

Savvy about social

Asos uses multiple soical media platforms for some of its most innovative marketing campaigns. Take its ‘The Big Dress Drop’ timed Sale event, which took place on Sunday October 23.

In the days leading up to the event, Asos tweeted to recruit followers to watch a video on YouTube featuring product that would be in the sale. From there consumers were pushed to Facebook, where they could sign-up to gain early access to the Sale and monitor which items were likely to be given a 50% discount.

Asos uses a Facebook application it has

created to sign-up consumers to the Sale. In return for early entry to the Sale, it gets access to the customer’s basic profile information, and any other information they choose to make public on their Facebook profile.

While not all brands have the time and money to use the platform in such a sophisticated way, it’s interesting to note how Asos links all these touchpoints on different social platforms to maximise the impact of the campaign.

For more on analysing social media, see our article on the Drapers website.

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The biggest change to the work of IT departments and technologists within fashion businesses in the

past decade has been the move from providing systems primarily for use within the organisation, to

creating systems that will actually touch the company’s customers.

Looking back to the graph in chapter 2 showing the developments retailers think their customers are

demanding, many require technology infrastructure and applications to achieve.

This undoubtedly makes fashion retailers’ IT departments a more interesting place to work with

more opportunities, but can also put a considerable strain on small companies with limited technolog-

ical know-how and resources.

Talking the talkOne of the most interesting things about the

development of consumer-facing technology is

it means fashion businesses have to find the

right voice with which to talk to customers

about developments and problems with their

technology.

For instance, Wallis sent an apologetic email

to customers in September when an offer on its

website did not work properly. Republic has

done similar after its website was experiencing

problems over a weekend.

The many brands that have launched

mobile websites and apps have also had to start

talking more directly to their customers about

technology. And this means everyone in the

business, from store-staff upwards, needs some

appreciation of what’s being developed to

deliver a consistent message to customers.

Even the smallest brands and retailers need to know enough about technology to talk to consumers

who are increasingly tech-savvy. For example, The Only

Way Is Essex stars Sam and Billie Faiers encountered

problems with the launch of the website that supports

their Minnies Boutique in Brentwood.

When their site failed to launch as planned they apolo-

gised to customers via Facebook and a spokeswoman for

the boutique was honest and knowledgeable about the

problems, saying: “We had some really bad technical

problems to start off with, then by 6pm the web design

team sent us a link to look at the site and none of us were

happy with it. We are quite pedantic with how we want it

to appear and we didn’t like the banners, the typefaces

and other design aspects we had gone through before.”

8. The human element

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47%of respondents are running systems that don’t have the right functionality or don’t integrate with other systems well enough

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Walking the walkWhen technology is done well, it will help drive customers into stores, and even create publicity and a

buzz about the brand.

New Look has trialled a body scanner at its Westfield Stratford City store in October. The device, from

Bodymetrics, takes a scan of a customer in two seconds before calculating and mapping every curve and

contour to produce 100 measurements and body shape analytics. This is then followed by a personal

styling session by ‘Fit Stylists’, who help customers find the best jeans for their body shape. When

Drapers went to see the device there was a queue of customers wanting to use it.

But what do these new trends and developments

mean for the future of IT departments?

Only 18% of our survey respondents said they do

not have the IT expertise in-house to change their

systems. In fact more said that their dependency on

Excel spreadsheets was an issue (28%). And only 36%

mentioned IT budget being an issue preventing them

delivering on the business plan.

This all supports the idea of a developing consensus

on the importance of technology to fashion businesses

who want to thrive. And it’s not just the IT department

itself that understands this, but is an idea that’s gaining

ground across the board. Only 9% of those surveyed said the delivery of their business plan could suffer

as a result of resistance to new systems from head office staff. And only 10% mentioned it as a problem

for store staff.

Aurora Fashions outsourced its IT and distribution functions at the beginning of the year. It said the

decision was not one just of cost-saving, but would also give each brand more flexibility to manage its IT

developments in a way that is appropriate for the business.

But this does not suggest a trend for devolving responsibility for IT. While they are happy to leave the

ongoing running and management of core systems to the experts, retailers are much more likely to

want closer involvement with systems that touch their customers.

Debenhams developed its mobile site which launched earlier this year completely in-house. And

Crew Clothing was similarly closely involved with the roll-out of iPads to stores to allow customers to

order from the wider range on its website (see chapter 2).

Today, and in the future, IT departments are likely to work closely on projects with their peers in

other parts of the business such as marketing, store operations or ecommerce and multichannel teams.

This business-sponsored and customer-focused project mentality is likely to see more user-friendly

and successful technology delivered.

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31%of respondents want to improve the customer experience in-store

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