Fashion Retail in Europe: The Status of Core Business Processes and Applications
Filippo Battaini
Research Manager, IDC Retail Insights
November 2021
About this Report
The content for this report was taken directly from “Fashion Retail in Europe: The Status of Core Business Processes”, Q4 2021 (IDC #EUR148392221, November 2021).
Abstract
This IDC Market Presentation is based on IDC's Global Retail Core Processes and Applications Survey and examines the solutions apparel, footwear, and accessories retailers are implementing to innovate their ecommerce, supply chain, and customer experience processes, with examples from European retailers in the segment.
Table of Contents
- Most Challenging Core Processes
- Top 3 Business Objectives of Fashion Retailers
- Implementation Status of Selected Solutions With Case Studies
- Store Systems/Operations
- eCommerce
- Customer Experience
- Product Merchandising and Marketing
- Supply Chain
- Employee Experience
- Benefits of Collaborating With CPG Companies
- Benefits of Implementing Selected Solutions for Core Processes
- Top 3 Factors Influencing IT Partnerships
- Key Takeaways
Customer experience, ecommerce, and store systems/operations are the most challenging processes to address for apparel, footwear, and accessories retailers (fashion retailers).
Top 3 Most Challenging Core Processes
- Customer experience: 59%
- eCommerce: 57%
- Store systems/operations: 56%
- Supply chain: 45%
- Product merchandising and marketing: 45%
- Employee experience: 38%
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 87 apparel, footwear, and accessories respondents)
Increasing store-sourced revenue, ecommerce sales profitability, and customer loyalty are the top business objectives of fashion retailers.
Top 3 Business Objectives of Fashion/Apparel Retailers for the Next 12-24 Months
- 61% Increasing store-sourced revenues
- 56% Increasing ecommerce sales profitability
- 45% Increasing customer loyalty
- 44% Executing seamless, frictionless, automated omnichannel (converged physical and digital) retail
- 39% Increasing merchandise and assortment planning accuracy
- 38% Executing omni-channel fulfillment efficiently and at scale
- 17% Improving employee experience metrics across corporate, stores, and logistics facilities
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 87 apparel, footwear, and accessories respondents)
Fashion retailers' store operations focus has shifted from in-store inventory management to retail execution, store infrastructure management, and loss prevention.
Implementation Status of Store Systems/Operations Applications
- Retail execution: 38% planning to implement over next 12 months, 29% currently implementing, 19% already implemented
- Store infrastructure management: 31% planning, 29% implementing, 19% implemented
- Loss prevention: 29% planning, 35% implementing, 27% implemented
- Curbside pick-up/click and collect: 38% planning, 27% implementing, 21% implemented
- In-store workforce and task management: 40% planning, 27% implementing, 23% implemented
- In-store traffic analytics: 27% planning, 27% implementing, 44% implemented
- Location based services: 19% planning, 31% implementing, 44% implemented
- POS/Payment/self-checkout: 35% planning, 17% implementing, 37% implemented
- Sales/return processing management: 38% planning, 17% implementing, 33% implemented
- In-store customer service management: 46% planning, 17% implementing, 35% implemented
- Shelf management: 35% planning, 15% implementing, 48% implemented
- In-store inventory management: 31% planning, 8% implementing, 54% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 52 apparel, footwear, and accessories respondents)
Case Study: Pimkie introduced an innovative and discreet RFID system to prevent theft
Following its brand repositioning, Pimkie wanted to change its flagship stores globally by making its outlets more innovative and consumer-oriented. Pimkie's flagship store in Milan was redesigned with an open entrance and discreet surveillance systems that do not hinder looking at the merchandise. The surveillance system uses a smart RFID reader that does not block the view of the merchandise. RFID readers eliminate false alarms, track and recognize merchandise, and are simple to install and connect with third-party software.
Fashion retailers are prioritizing consumer mobile application and voice search ecommerce to generate unified shopping experiences.
Implementation Status of eCommerce Applications
- Consumer mobile application: 28% planning, 37% implementing, 33% implemented
- Voice search: 27% planning, 40% implementing, 18% implemented
- Proprietary Marketplace management: 27% planning, 42% implementing, 18% implemented
- International and cross-border ecommerce management: 24% planning, 31% implementing, 22% implemented
- Third-party services integration and management: 20% planning, 40% implementing, 24% implemented
- Catalog management: 20% planning, 31% implementing, 40% implemented
- Payments management: 18% planning, 27% implementing, 44% implemented
- B2C order management: 18% planning, 44% implementing, 29% implemented
- Visual search: 18% planning, 44% implementing, 33% implemented
- Store inventory and operations sharing: 11% planning, 27% implementing, 58% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 45 apparel, footwear, and accessories respondents)
Case Study: Gucci revamps its mobile app by introducing virtual try-on and gaming
Gucci renewed its app to include functionalities such as augmented reality, fashion show livestreaming, and a vintage-style games section, Gucci Arcade. The app's home contains up-to-date information on the brand's activities. With virtual try-on, consumers can use augmented reality to try on clothes and digitally furnish their homes. Another section is dedicated to livestreams and catwalk looks, while Gucci Arcade has been enriched with new games.
Fashion retailers prioritize the improvement of customer lifetime value and loyalty to strengthen customer relationships.
Implementation Status of Customer Experience Applications
- Identity management: 42% planning, 23% implementing, 19% implemented
- Loyalty Management: 40% planning, 33% implementing, 19% implemented
- Content optimization: 23% planning, 44% implementing, 14% implemented
- Personalized offers within product recommendations: 21% planning, 37% implementing, 28% implemented
- Customer analytics: 21% planning, 33% implementing, 44% implemented
- Product recommendations: 16% planning, 33% implementing, 40% implemented
- Customer data management: 14% planning, 30% implementing, 42% implemented
- Call triage and routing, chatbots, and call transcribing: 5% planning, 30% implementing, 56% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 43 apparel, footwear, and accessories respondents)
Case Study: H&M offers two-tier membership loyalty program to reward devoted customers
H&M offers a membership-based loyalty program to customers: H&M member and H&M Member Plus, a two-tier membership that consumers can access after having collected 300 points. H&M customers can accumulate points when they opt for eco-friendly choices. H&M Member Plus membership benefits include free shipping and returns, special access to limited collections, early access to sale collections, and surprise offers.
How it works: The program is completely digital, available in the H&M app or at hm.com/signup. Earn points that turn into rewards, enjoy exclusive offers and perks, free online returns, a birthday surprise, and more.
How to join: It’s fast and free to become an H&M member. Download the H&M app or go to hm.com. Already have an hm.com account? Simply provide your birthday.
Earn points: Earn points on every purchase. You’ll also earn Conscious points by purchasing Conscious items (look for the green hangtag in stores and the Conscious label online). For every 200 points you collect, you’ll receive a $5 Reward.
How to redeem your offers: In-Store: Go to My Account in the H&M app or on hm.com, activate the offer or reward you’d like to use, and present it to the cashier. Online: Ensure you’re logged into your account, select the offer you’d like to use and click ADD TO BAG to have it automatically applied at checkout, or add the offer or reward of your choice in your shopping bag before proceeding to payment.
Plus member: Once you reach 500 points, you’ll unlock deeper discounts and better benefits such as free shipping on every order, unique experiences, and early access to limited collections.
Fashion retailers are looking to increase profitability and margins through the implementation of promotional performance analytics and measurement.
Implementation Status of Product Merchandising and Marketing Applications
- Promotional performance analytics and measurement: 43% planning, 24% implementing, 17% implemented
- Space planning: 38% planning, 43% implementing, 14% implemented
- Promotion planning and optimization: 31% planning, 31% implementing, 26% implemented
- Allocation & Replenishment: 29% planning, 33% implementing, 26% implemented
- Assortment optimization: 26% planning, 36% implementing, 24% implemented
- Price Management & Optimization: 24% planning, 38% implementing, 24% implemented
- Category management: 19% planning, 43% implementing, 33% implemented
- Merchandise Operations Management: 14% planning, 31% implementing, 55% implemented
- Demand forecasting: 12% planning, 21% implementing, 60% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 42 apparel, footwear, and accessories respondents)
Case Study: adidas uses Google data insights to create targeted storytelling and more relevant product messages
adidas adopted Google Marketing Platform to target consumers on each step of their journeys. Through the platform, adidas can also gauge product interest to better profile shoppers and offer targeted products. Data-driven ads were delivered in real time when a big sporting event was taking place. The audience was segmented by the Google Platform to determine the exact moment adidas should send the right message to the right person. By adopting Google Marketing Platform, adidas can better understand how its online messages directly affect sales and enhance its marketing campaigns.
Google Marketing Platform includes: Display & Video 360, Analytics 360, Surveys 360, Search Ads 360, Data Studio, Tag Manager 360, Optimize 360.
Case Study: Slowear has implemented a decision-making platform to produce faster and better seasonal sales and merchandise forecasting
Slowear introduced a decision-making platform that helped define sales forecast and margins by allocating the most accurate seasonal budget based on historical data. Slowear implemented a holistic approach to connect its planning and analytics steps, from the strategic plan to daily replenishment in-store, to decrease end-of-season stock and boost visibility and ownership of in-store merchandising.
Fashion retailers focus on robotic automation and workforce engagement to enhance their employee experience.
Implementation Status of Employee Experience Applications
- Robotic Automation/ICO-automation: 38% planning, 24% implementing, 14% implemented
- Workforce Engagement: 33% planning, 36% implementing, 19% implemented
- Process Automation: 29% planning, 38% implementing, 21% implemented
- Workforce Communication: 19% planning, 24% implementing, 52% implemented
- Customer Support: 17% planning, 21% implementing, 55% implemented
- Labor/Task Management: 17% planning, 26% implementing, 52% implemented
- Workforce Optimization: 2% planning, 52% implementing, 36% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 45 apparel, footwear, and accessories respondents)
Case Study: Zara automated its in-store pick-up process for both employees and customers
Zara wanted to reduce customers' waiting time for in-store pick-up and free up employees' time so they can focus on helping in-store customers. As a result, Zara introduced robots that bring items from the back-end to accelerate the in-store pick-up process. After scanning their codes at collection points, customers have their parcels delivered by robots to drop boxes.
Case Study: Robots helped Zalando to accelerate order preparation during peak seasons
Zalando expanded its robot fleet at its logistics site in Lahr, Germany, by adding 20 robots to help employees with order-picking in preparation of Cyber Week 2021. Zalando is not new to deploying robots to support employees in labor-intensive tasks. With this expansion, it uses robotics as an effective way to support staff and increase efficiency in operations to respond to peak seasons.
Ecosystem collaboration and last-mile delivery optimization are among the top priorities for supply chain innovations.
Implementation Status of Supply Chain Applications
- Ecosystem collaboration: 43% planning, 22% implementing, 16% implemented
- Last-Mile Delivery Optimization: 32% planning, 32% implementing, 16% implemented
- Global Trade Management: 32% planning, 24% implementing, 5% implemented
- B2C order management: 24% planning, 19% implementing, 41% implemented
- B2B order management: 24% planning, 27% implementing, 41% implemented
- Returns Management: 22% planning, 30% implementing, 46% implemented
- Fulfillment: 19% planning, 22% implementing, 49% implemented
- Transportation Optimization: 19% planning, 27% implementing, 49% implemented
- Supply Chain Inventory Management: 16% planning, 30% implementing, 49% implemented
- Warehouse Management: 14% planning, 24% implementing, 54% implemented
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 37 apparel, footwear, and accessories respondents)
Case Study: ASOS is trialing electric vehicles for improving its delivery service by cutting carbon emissions
ASOS teamed up with Liefery, a German logistics company, to launch a prototype delivery service in Berlin that will use Tropos electric vans. ASOS aims to reduce its carbon footprint significantly to provide clients with more environment-friendly delivery alternatives. ASOS' goal is to decrease its CO₂ emissions through the introduction of electric vehicles to help generate a guilt-free shopping experience for consumers.
Case Study: Calzedonia Group's Tezenis opts for Beumer Group's pouch technology to enhance omni-channel operations
The Tezenis brand, part of Calzedonia Group, implemented a pouch technology solution to maintain high standards in customer service as ecommerce and D2C grow. The technology increased the existing warehouse's fulfilment capacity and returns handling without requiring more physical space. Calzedonia Group used the technology to innovate its warehouse facilities, improving operations for omnichannel integration while reaching higher efficiency in handling and fulfilment.
For fashion retailers, the major benefits of collaborating with CPG and brand companies include the reduction of labor hours required and better accuracy of CX personalization.
Benefits Achieved When Collaborating With CPG and Brand Companies
- 48% Reduction in labor hours needed and/or labor freed up for other tasks
- 44% Increase accuracy of customer experience personalization
- 39% Better alignment of promotional cadences with customer demand
- 37% Higher rates of on-time ecommerce deliveries
- 32% Lower cost to service e-commerce deliveries
Source: IDC's Global Retail Core Processes and Applications Survey, 2021 (n = 87 apparel respondents)
Increasing conversion rates, profitability, and revenue growth are the major benefits achieved by fashion retailers with the implementation of selected retail core process applications.
Benefits of Implementing Selected Solutions
Loss Prevention
- Increased Conversion Rates: 62%
- Increased profitability: 54%
- Increased Customer Lifetime Value: 54%
- Increased revenue growth: 54%
- Reduced time to market: 38%
- Increased forecast Accuracy: 38%
Loyalty Management
- Increased Conversion Rates: 88%
- Increased profitability: 63%
- Reduced time to market: 38%
- Increased forecast Accuracy: 38%
- Increased Customer Lifetime Value: 38%
- Increased revenue growth: 38%
Last-Mile Delivery
- Increased profitability: 83%
- Increased Conversion Rates: 67%
- Increased revenue growth: 67%
- Increased forecast Accuracy: 50%
- Increased Customer Lifetime Value: 33%
- Reduced time to market: 0%
Mobile Application
- Increased profitability: 73%
- Increased Customer Lifetime Value: 73%
- Reduced time to market: 45%
- Increased forecast Accuracy: 36%
- Increased Conversion Rates: 36%
- Increased revenue growth: 36%
Performance Analytics
- Reduced time to market: 75%
- Increased Conversion Rates: 75%
- Increased profitability: 50%
- Increased Customer Lifetime Value: 50%
- Increased forecast Accuracy: 25%
- Increased revenue growth: 25%
Robotic Automation
- Reduced time to market: 100%
- Increased revenue growth: 83%
- Increased forecast Accuracy: 67%
- Increased Conversion Rates: 33%
- Increased profitability: 17%
- Increased Customer Lifetime Value: 0%
Fashion retailers focus on retail and technology expertise and transparency in pricing when selecting IT partners.
Top 3 Considerations When Choosing IT Vendors
- 61% Has deep expertise in the retail industry
- 57% Has deep technology expertise
- 55% Offers flexible and transparent pricing schemes
- 48% Participates in ecosystems of services vendors that both collaborate and compete with each other
- 46% Offerings are among the least expensive in like-for-like terms
- 32% Demonstrated to be a reliable partner in past projects with us or our peers
Contact:
Filippo Battaini
Research Manager, IDC Retail Insights
fbattaini@idc.com
IDC.com linkedin.com/company/idc twitter.com/idc blogs.idc.com