Retail is entering a vital new stage of digital evolution. If we call the 1980s and 1990s a "world of digitalisation" where everything could be digitalised, now we are in a "world of digital understanding", according to Andy Lippman, MIT Media Lab Associate Director.
The age of digital understanding presents big opportunities for retail. With new technologies, retailers are empowered to capture, gather and analyse data to find hidden patterns and unknown information. Analysing the big data enables them to better understand store performance, shopper’s behaviour and the needs of potential customers so that new products, services and marketing campaigns can be designed to boost customer experience and increase profitability.
Retail in Asia recently caught up with Ramesh Jayaraman, Vice President of Tyco Retail Solutions for Asia-Pacific to find out the trends in retail technologies and how retailers can improve their bottom line and increase sales with intelligent retail solutions.
RIA: What challenges are retailers facing today? How to cope with the challenges with technologies?
Ramesh Jayaraman (RJ): Retailers, as we get to speak to them, have two areas that they continue to talk about – maximizing profits and understanding customer behaviour to improve shopper experience – all of which ties back to an improved bottom line and increased sales.
Theft still poses much of a challenge for retailers today by affecting their bottom line. It can either be customer driven – by individual shoplifters and organised retail crime syndicates, or employee driven – in this case, we are referring to employee or internal theft. As research shows, shrinkage commonly impact revenue in the range of 1 to 2 percent.
Retailers tend to combat this profitability risk with class leading Electronic Article Surveillance (EAS) solutions like Sensormatic and video deployment via American Dynamics or Tyco partners, to safeguard their store merchandise and secure profits.
The second area that is huge in our discussions is understanding customer behaviour and enhancing shopper experience, and this has become more important with increasing competitive intensity and customer retention needs. Retailers are trying to figure out the effectiveness of their marketing programs which should result in increased traffic flow into their stores, understand variances in traffic flow so they can staff customer service associates appropriately, and understand how the pattern and density of the customer flows within the stores, which helps with merchandising or clearance sales to dispose inventory to name a few.
Based on the 2012 IHL group inventory distortion study, out-of-stock contributes 56 percent of the 800 billion inventory distortion problem. As such, retailers are trying to avoid this situation on the sales floor via better management between backroom and store, frequent inventory counts and increasing the basket of customer purchases – to enhance brand loyalty. To help with these needs, retailers have started deploying Tyco Retail Solutions’ Store Performance Solutions with EAS Intelligence, Traffic Intelligence and Inventory Intelligence.
RIA: Can you talk us through your business?
RJ: Operating in more than 70 countries worldwide for over 45 years, Tyco Retail Solutions has been in the business of providing integrated retail performance and security solutions to a variety of customers both big and small, including 80 percent of top 200 global retailers. Our customers range from single store boutiques to global retail enterprises across all major sectors including department stores, specialty, apparel, food, DIY and mass merchants, to name a few.
We are the largest vertical market in Tyco, approximately 1 billion in revenue. Our comprehensive solutions include anti-shoplifting, loss prevention, fire and life safety, video surveillance, access control, intrusion detection, traffic intelligence and store performance. They are designed to deliver value today, and protect the retailers’ investments by offering a flexible migration path to future technologies.
In the past decade, under our Sensormatic brand of EAS systems, we have protected more than 115 million products. As a global market leader in retail Source Tagging, over 40 billion consumer items have been protected, reinforcing Tyco as the brand trusted by our customers.
RIA: What gives you the competitive edge in the market?
RJ: Firstly, I would say it all starts with our customers. We have been partners with them for over 45 years, all this while working very closely and helping retailers address their changing needs.
What we bring to our customers – from Loss Prevention solutions and now Store Performance – are all customer-driven, designed specifically with the intention of helping them meet their goals of increasing profits. In short – our customers define our strategy! And this has been our mantra since the beginning when we started out.
Secondly is our technology. Our Sensormatic Acousto-Magnetic (AM) technology is class-leading compared to the other Radio Frequency (RF) offerings in the market. It is able to detect tagged merchandise within foiled-lined bags, effective even on products containing liquids and non-ferrous metal. Additionally, Tyco’s integrated TrueVUE platform can provide retailers with real time actionable data across the store on employees, inventory and shoppers for retail performance. We were awarded the "2012 VICS Item-Level RFID Initiative Industry" Award and "2012 North American Customer Value Enhancement" Award for our consistent innovative practices.
And finally, it is our focus, or as I sometimes put it "Inch Wide Mile Deep" approach. We are a dedicated vertical of the world’s largest pure play Fire & Security Company with a deep and laser-like focus on retail. Additionally, we have an effective support team set up to specifically meet the needs of our global and regional customers where we act as a single point of contact, while working in parallel to address the needs of the mom-and-pop retailers. This consistent focus and service delivery would not be possible without great colleagues who put customer service first. Simply said, I am proud of our team and strongly believe “Great Teams do Great Things”.
RIA: What retail technologies are being adopted fast in Asia? How do you support retail partners to meet local market needs?
RJ: We find that traffic intelligence and inventory intelligence are gaining traction in this region and we have invested heavily to ensure we partner with retailers to solve their business needs and build more local-for-local solutions.
In APAC today we operate in close to 20 countries either through our direct offices or business partners, and have been in the region for over 40 years. We have manufacturing and assembly centres spread across Asia, and in 2011, our hard tag recirculation centre in Hong Kong commenced operation to support our Source Tagging recirculation program. All these enabled enterprise wide deployments and provide location and logistics advantage to the region. Additionally, our two Centers of Excellence in China and India were set up to drive engineering, research & development efforts and facilitate the production of customer-centric solutions to meet local market needs.
RIA: What do you see as the most exciting emerging technologies for retailers in the near future?
RJ: After talking to various industry analysts and participating in a number of forums with retailers, three common insights come up consistently – Mobility, Big Data and Internet of things.
In my head, these trends said simply mean that our retail industry is an increasingly data-driven one as there is lots of data being generated from various systems in a typical retail operation. At the end of the day, what matters and will make a difference to retailers is when data from multiple sources pulled together is reliable and actionable, allowing them to make predictive analysis. For example, how we leveraged data from video-based sensors to generate heat map to understand traffic flows or help customers improve out of stock situations.
To help retailers achieve this, Tyco’s TrueVUE retail integrated software platform was designed to collect and analyse data from multiple sensors, equipping retailers with a comprehensive understanding of what happened in the store. What’s more, with an added feature of mobile reporting included, data can be made available for real time and remote viewing, putting important operation information in the hands of key decision makers in a timely manner.
RIA: What is your advice to retailers looking for retail solutions to improve store performance?
RJ: First and foremost, understand customers and their behaviour to satisfy them. The retail market is evolving –the rise of omni-channel retailing and increasing mobility all play a part. Getting the data, understanding the trends of customer behaviour and having items available for customers to get their hands on – providing them the instant gratification will play a key part. The winner ultimately is the one who is able to understand the customers and their needs and satisfy them – setting apart the progressive retailers from those who are not.
Second, choose a qualified integrator or partner that is able to address all your security needs and provide future-proof solutions to protect your investments today.
Third, and sometimes more importantly, it is about getting the basics correct. Just like building a house – laying the right foundation is key. To us, this means having the basic infrastructure right. This may mean deploying the correct systems such as EAS, video surveillance or other solutions beneficial both in the short and long term – and not cut corners just for a one-time cost savings.