2023 Retail Report: Visibility, Innovation, and Sustainability

Sourcing Journal recently published its 2023 Retail Report—all about retail technology. Now, more than ever, it is vital for retailers and logistics providers to invest in the most up-to-date software and trends to stay ahead of the curve. With more AI supply chain innovations on the horizon, in addition to new ways of controlling and operating production, there is no doubt that the future is digital.

Here are  the biggest takeaways from the report, including a huge emphasis on accurate data and more cutting-edge ways for retailers to sell their products.

Supply Chain Digitization and Data

Since the pandemic and the consequential supply chain upheaval, there has been an increased demand for digitization as a prerequisite for efficient supply chain operations. This necessity has resulted in more businesses planning to raise their technology spending in the next two years, creating an opportunity for supply chain collaborative visibility technologies. These platforms offer real-time transparency and data to stakeholders to bridge potential gaps and constraints in supply chain operations. As Padhu Raman, Co-founder and CPO of Osa, said in the report, “To achieve predictability in the face of a rapidly transforming supply chain, businesses need full visibility."

New software includes tools to view production and assure quality control and packaging. Other technologies focus on freight, allowing stakeholders to rate shop in real-time and manage shipments. Other organizations are focusing on mitigating cargo theft while also using real-time visibility technology.

Reverse logistics is also getting a makeover. By investing in the returns process, retailers can improve customer loyalty and profitability, redirecting customers towards other products by delivering strategic messaging, promotions, and discounts to save the sale. To increase convenience, retailers can create more options, such as scheduling a return pickup and offering curbside returns. Target has announced the rolling out of curbside “Drive Up” returns to all stores nationwide this spring and summer, offering customers a chance to make free returns while staying in their cars. Crate & Barrel moves returned inventory back out to customers directly from its doors without sending it to a warehouse.

“The key to preventing returns is utilizing data captured through the supply chain to help track which items are being returned and where, so retailers can precisely direct inventory to where returns are less likely to occur and help manage unrecovered profits and mitigate loss. Osa helps streamline returns by providing comprehensive returns reporting and managing returns execution, offering visibility into returns data.”

Padhu Raman

Co-Founder and CPO of Osa

Padhu Raman

Regarding returns, Raman remarked on the importance of visibility data to maximize efficiency and eliminate unnecessary costs. “The key to preventing returns is utilizing data captured through the supply chain to help track which items are being returned and where, so retailers can precisely direct inventory to where returns are less likely to occur and help manage unrecovered profits and mitigate loss. Osa helps streamline returns by providing comprehensive returns reporting and managing returns execution, offering visibility into returns data.”  

Sizing and Augmented Reality (AR)

Speaking of returns, as e-commerce continues to grow, the problem of ill-fitting online returns threatens to eat into retailers' profits. This has prompted the rise of fit technology companies such as Bold Metrics, Perfitly, Volumental, and Fit:Match, all aiming to ensure online shoppers buy the best-fitting item on the first try; the virtual fitting room market is estimated to grow at a compound annual rate of 20.5% through 2029. 

Bold Metrics has seen an increased demand for its solutions, which require consumers to answer a few basic questions about their body shape and size, generate a body model, and recommend the ideal size. Other companies offer scan-based solutions using smartphones and tablets. However, industry insiders anticipate that the next wave of AR will not require a smartphone; instead, smart glasses will be used to create more immersive experiences for customers.

AI and Automation

Due to an increase in e-commerce demand and ongoing supply chain issues, apparel companies have faced a myriad of inventory problems. Therefore, investing in technology to assist in demand forecasting, benchmarking, merchandising, and pricing is vital for retailers. This technology must include the ability to allocate inventory based on current trends and localize merchandise. Additionally, retailers can use AI-based solutions to optimize markdown pricing and promotions by taking into account various variables such as trends, seasonality, life cycle, and inventory position.

Effective forecasting requires incorporating extensive data and potential drivers that could influence a forecast. Raman noted, “To achieve predictability in the face of a rapidly transforming supply chain, businesses need full visibility into the journeys of their products and use data from their systems and that of their 3PL partners to sense pattern changes and respond quickly. Our Osa Unified Commerce tower dashboards equip executives with easy-to-understand insights for ‘interactive visibility’ to make effortless decisions that go beyond the usual reports and summaries.".”

In terms of production, apparel manufacturing is having a resurgence in the US thanks to AI and automation. Tailored Industry in Brooklyn is using AI to produce sweaters ordered directly by customers, while Bespoke Manufacturing in Phoenix creates on-demand bridesmaids dresses, Better Team USA in Clifton, New Jersey, has computerized every step of the process to produce premier outdoor wear. Many retailers are also turning to domestic manufacturing as a way to become more sustainable.

Sustainability

Being green continues to be a significant value in supply chains, retail operations, and to the end consumer. More and more fashion brands are incorporating an innovative, sustainable approach to their designs. For example, Carve Design, a swimwear brand, launched its Heritage Collection, which is made from recycled plastic bottles and produced domestically in California, but is priced lower than what it would cost for a boutique manufacturer.

Digital textile printing, product passports, QR codes, and optimal order quantities are also popular innovations used to make the industry more efficient and less wasteful. Influencers play a role in the shift towards sustainability, since partnering with companies like Kornit, which offers digital textile printing, can help quickly realize nearshoring, onshoring, and optimal order quantity.

Live Shopping

Live-selling, where retailers sell their goods on live stream, is the next wave of digital commerce, with mainstream adoption taking shape in the US after years of growing success in the Asian market. Online live-selling platform CommentSold, which enables small-to-medium-sized businesses to sell their wares, has emerged as a leader in the space. Los Angeles-based Timeless Threads founder Sarah Bertram, who designs and develops womenswear in Downtown LA, hit $5m in total sales on CommentSold at the end of 2022 after four years on the platform. The platform allows businesses to go live at the same time on Facebook, Instagram, TikTok, and their own website and sell products in their own native format.

3-D E-commerce

Fashion brands are optimizing 360-degree views of products on their e-commerce sites. VNTANA provides a content management system for 3D marketing, allowing 3D models to be shared and compatible with the web, mobile, and in-store platforms. The company boasts 50 clients, including Hugo Boss, Wolverine Worldwide, and Merrell, and has been effective in increasing conversion rates on e-commerce sites by offering 360-degree, 3D views of footwear and accessories, reducing returns by 40%. VNTANA also offers augmented reality through a QR code, allowing shoppers to project 3D objects onto a flat surface. While the technology for practical and accessible 3D clothing representations is still being developed, the Metaverse has developed virtual try-on options for items that exist in the real world.

Web3 Wearables

Collectible digital assets are also continuing to make waves. Orange Comet, an experiential Web3 production and promotion company, believes that everyday people must be convinced that their digital assets have actual value for this trend to become ubiquitous. The company emphasizes education and transparency in onboarding people to the Web3 space, and prioritizes true partnerships over licensing content when collaborating with brands to create unique products and original content.

The 2023 Retail Report by Sourcing Journal highlights the growing trend of retailers investing heavily in AI technologies and the increasing need to tackle the challenge of returns. New technologies that optimize supply chain visibility, data, and collaboration are repaving the way for a digital future in the supply chain and retail spaces. With the industry moving towards digitization, logistics professionals and retailers alike must continue to adapt and innovate to stay competitive, improve their offerings, and enhance customer experience.