Digital Versus Physical: Understanding Inventory Localization in Fashion Retail

Technology has made mind-reading seem common-place by customizing our online lives. The content availed to us in various social media platforms is relevant, comfortable and familiar because of algorithms that ensure we see exactly what we prefer.

This concept is not lost on digital fashion retail platforms. They too have adopted these strategies to maintain the attention and interest of clients, and boost sales as a result. Products displayed online to customers are based upon answers to a few questions, as well as previous searches and purchases alike.

Physical stores are then placed at a disadvantage in this regard. With such personalization online, most consumers have little to no patience for the traditional style of shopping. Walking in and out of various stores while searching through racks of clothing, then fitting a few before purchasing is tedious for the modern-day consumer. As a result, physical stores are facing extinction if they don't adapt quickly.

The reality is that it is virtually impossible to customize physical stores in the same way as digital stores.

But Perhaps There Is A Way

Physical stores, particularly franchise stores, have always standardized everything; their products, customer service, right down to how clothes are organized in the store. This can no longer work in this digitized age; standardization is dying and localization is rising.

Localization involves using vast amounts of data collected through online platforms and from in-house staff on the ground to customize a customer's entire experience in a physical store. This will certainly affect the strategy of inventory management retail stores employs due to inventory localization since the products carried by the stores will be informed by the unique picture painted by the data analysis.

Success Stories

Some brands have successfully implemented inventory localization for their brick and mortar stores. One such brand is H&M. After dealing with years of poor sales and losses due to bad market predictions, H&M employed the use of big data and analytics for nearly perfect product prediction which then helped in pricing and proper stocking of inventory. They analyzed data from product returns, loyalty cards, and receipts to better understand their clientele at each location and facilitate a suitable localization retail strategy.

Zara is another leading fashion brand that has found success in inventory localization. The brand invested in technology by attaching a microchip to each of their garments. This enables tracking all the way from their warehouse to the point-of-sale section at their stores. By analyzing this data, Zara is able to determine which designs are selling fast and need to be restocked, which ones are not and need to be pulled or re-deployed to another store. Therefore, Zara ensures that its customers in varying locations are getting exactly what they want when they want it; which is about as close as you can get to the effectiveness of digital retail.

How Exactly Does This Work?

Localization requires data collection from various sources, primarily:

  • Online stores and platforms

  • In-house stock tracking

  • Sales management and staff reports

  • Receipts

  • Loyalty cards

  • Returns

Data collected from these sources is then analyzed to give a clear picture of each physical store and respond to its needs rapidly and effectively. In fact, data from online platforms can be used to provide a seamless online to in-house experience for a customer. The customer can order an item online and come to an in-house store to fit and collect it before taking it home. Or a client can return a product ordered online to a physical store and collect their refund or replacement.

[ Related: Handling NOOS in fashion: key items for retailers ]

This convenience is quite appealing to the modern-day shopper and can greatly boost customer loyalty and increase revenue for the store. It is also within the reach of many apparel stores that may not have unlimited resources to collect data. By simply merging their online presence with their inhouse stores (by adopting an omnichannel strategy), great improvement can be witnessed in a relatively short period of time.

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