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November 10, 2015

Setting up (smart) shop: UK leads IoT retail revolution

CEO briefing: Detego CEO Uwe Hennig says always-on consumers are driving IoT and digitalisation in the fashion market.

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In 1909, Harry Gordon Selfridge famously said "the customer is always right". Over 100 years later, the same rule still applies to the UK retail market.

According to Detego’s CEO Uwe Hennig, "the UK is extremely important because the UK, in digitalising a store, is the number one in Europe. It is the fastest adopter, extremely innovative, [and there are] lots of fashion brands here."

He also urged the sector to move to digital as consumers are now always-on with smartphones and other devices, with e-shops now common place. Added to this, customers expectations have also shifted. "They expect the same [digital and interactive experiencing] in store."

Having taken the job in January this year, Hennig runs a software company that provides cloud solutions that enable fashion retailers to become digital. But the main selling point today is radio-frequency identification (RFID) technology, enabling retailers to know where a specific item is, "because you want to serve a customer".

The Austrian company has designed a roadmap that puts RFID technology at the heart of its strategy, with products to smarten up shops across the globe.

In the UK, the firm is eyeing major British retailers to deploy its technology, which Hennig believes is changing much more than just stores’ IT.

"If you are adopting RFID it is not just about putting the technology out there, you also need to change some processes.

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"Lots of processes in the store are changing. We advise customers to tag at the source [where the garment is manufactured], and then we or a partner of ours installs the infrastructure like an RFID reader for example."

But why did RFID take so long to enter retail? According to Hennig, RFID was not mature enough and was also too expensive until now.

"The technology is not new. It was not mature enough and there were no global standards. Reading RFID in the UK, and trying to read the same thing in China, where the garment is made, did not work, as there were no global standards.

"Then the standard bodies developed standards so the technology matured, more people adopted it, and that has got the effect that prices went down."

He said that going back six or seven years, a RFID tag would cost $.50. "They were too expensive to buy, 100 millions of them. At the moment, they cost between $.04 and $.06. The technology matured, the standards arrived and the tag price went down."

As the fashion retail market is very much under pressure, and IT resources are very limited, this made the right circumstances for the company to walk in. "Lots of people are fighting to get a project signed."

"I would say that in the next 24 months you will see lots of companies adopting it."

As RFID is already making shops smarter, the future of retail is lined up for a much deeper technology makeover.

Henning said: "The smart shop of the future should be, from the service point of view, like in the old days: enough people in the store to help customers, ask questions, help with everything – but supported by technology like 3D graphics, magic mirrors and holographics."

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