Ghost in the Machine
The fashion industry is losing out by a staggering €161 trillion in revenue due to overstocks, out-of stocks and returns, according to new research by IHL Group which refers to the phenomenon draining the sector as the ‘ghost economy’.
Market intelligence and research in the retail sector confirms that most retailers are paying a heavy price for the ghost economy, which makes up almost 12 per cent of retailer’s profits.
This is a major concern for retailers, yet not one that is truly recognised by the industry, according to global security provider Gunnebo which argues that retailers need to acknowledge and address the issue in order to fully take control, improve stock availability, uplift conversion, reduce returns and control shrinkage.
Returns are the main contributor to the ghost economy whilst thefts are on the rise, as 2016 saw the annual bill for UK retail crime soar to €613 million, its highest level since records began.
Research also suggests that only one in ten consumers have said they are satisfied with the fitting room experience, a major blocker to sales conversions.
Many retailers are looking to improve this customer journey, including using solutions such as Gunnebo’s Store Assist which uses intelligent sensors placed in each fitting room to notify store staff of occupancy and vacancy levels, and allow customers to call for assistance - encouraging them to spend more time and money in the store.
The retailer also benefits through better customer tracking and a reduction in theft.
Gunnebo has also produced 10 more critical fitting room area improvements to address the ghost economy:
1.RFID - Hard Tag Solutions: provide visibility of stock and what is tried on in the fitting room.
2.RFID – Data: record what has been tried on and what has been sold and ask: Is there a mismatch?
3.Fitting room call buttons: ensure all customers using the fitting rooms can receive help when needed.
4.Marketing: improve online offers while in-store.
5.Lighting: Improved lighting to complement the clothes being tried on – to create the ‘feel good factor’.
6.Smart Mirrors: 3D vision with interactive experiences for the customer – cross-sell other lines to complement the customer’s choice and check availability.
7.Improve security: reduce shrink and therefore improve availability.
8.Improve product availability and choice: better fits, satisfied customers and a reduction in returns.
9.Data analytics: understand your customer and respond to customer behaviour, especially around staff scheduling.
10.External omni-channel kiosks: allow your customers to purchase their goods in-store online and have them delivered to their home.
Making the most of positive customer experiences. Creating positive customer experiences will encourage loyalty to your brand, creating a ROI that will impact your business.
Patricia Lacey of Gunnebo said: “The average conversion rate of customers who buy an item after visiting the fitting room is 67 per cent but by making the experience as positive as possible retailers can help increase their conversion rate and protect themselves from the damage caused by their ghost economy."