What does a retailer do when it has developed a self-checkout system broadly considered in the industry as the best in the world? If you’re Fast Retailing, you try to make it even better.
“The current version of our self-checkout system is not yet complete,” the company’s group executive officer, CIO, Takahiro Tambara told Inside Retail in an exclusive interview on the sidelines of the recent NRF Asia Pacific show in Singapore. “Of course, we think it’s a good system, and it’s well received by customers. But we plan to keep on evolving the system.”
For those not familiar with the self-checkout technology installed in Uniqlo stores around the world – including in Southeast Asia – customers can collect items they want to purchase in a basket as they roam around the store, then – when ready to leave, simply tip the contents into a rectangular hopper. Sensors instantly read the RFID tags embedded in the products, present the shopper with the total price on the screen, check if they want a bag or if they are loyalty program members, and then ask how they wish to pay. With a ‘tap-and-go’ debit or credit card, the shopper can be on their way in as little as 60 seconds.
Consumers who use the service are often effusive about the technology, with Reddit threads about it. “Pretty cool,” wrote one fan. “But weird because it was too good. Like I expect self checkout to be hell and it was magic.”
“It blew my mind,” wrote TomTheIntern on Reddit. “It somehow knew what was in my hands and the quantity of every separate SKU without me scanning a single thing. Still wondering how this works because it is very cool.”
So, Tom, here is how it works: At the heart of Uniqlo’s self-checkout solution is the humble RFID tag, which for years, has been considered the ultimate tracking device for products sold in retail stores. The main barrier to its adoption in retail formats that would benefit from it most – think grocery stores where shoppers are buying from five to 50 items at once – is price. As Supply Chain Dive recorded, in the early 2000s RFID tags cost 50c to 75c US each. By 2018, that cost had dropped to between 3c and 8c and today, in volume, as little as 4c. That represents a significant add-on cost for a 50-cent candy bar, rendering their uniform use impractical in a grocery retail environment. But for an apparel company, where the cheapest product might be a $3 pair of socks, the most expensive a $200 jacket, the benefits of using RFID tags now justify the cost.
Asked both on stage and during our interview, Tambara was reluctant to discuss the cost aspect, deferring to the fact that RFIDs played a role in the entire supply chain – not just facilitating easy checkouts.
“The key to making it successful is having control over the entire supply chain – production, logistics, warehouse and retail stores. We look at things holistically. To improve the current self-checkout system, we need to keep evolving our RFID platform.”
Fast Retailing began embedding RFID tags in apparel back in 2017. Tambara said the technology can help by performing some of the tasks that humans used to do – in areas of inventory control across the entire supply chain, including stores.
With typical Japanese humility, Tambara accepts that Uniqlo’s technology is drawing interest globally – from rivals, especially.
“I think we are quite advanced not only in Japan but in the entire world. I have various discussions with global partners in the RFID domain and they have been telling us that we are quite proactive and advanced in this area,” he said.
He declined to share with Inside Retail precisely what areas the company was looking to improve.
Tambara last year told Focus RFID that the checkout waiting times have halved in stores in the US and Canada where the machines have been installed. For those concerned about privacy, items cannot be tracked post-purchase.
So convenient are shoppers finding the self-checkout technology, that the adoption rate is as high as 90 per cent in some markets, although he declined to name them. The average uptake is about 80 per cent. That is a stunning contrast to global grocery industry trends. In the US, Safeway and Walmart are ripping out self-checkout solutions in favour of returning to manned lanes and in the UK, the upmarket Booths is following suit, with all but two stores returning entirely to manned cashier stations.
Tambara conceded it takes time to reach that level of acceptance across multiple markets. “Once we introduce this new technology, you have to recognise that it’s new to customers, too. But once customers get the hang of it, they realise it is convenient and so the usage rate goes up after a while.”
“We first introduced the self-checkout system in Japan, and then other countries followed one after another. Every time we introduce it in a new country, we get new customer feedback. So we try to embrace it and make improvements.” Those improvements are then rolled out globally, he explained.
Key to the technology’s evolution – and a raft of other innovations in product and technology – is a complex and expansive customer feedback program spanning Fast Retailing’s 3600 stores worldwide and its online platforms. As Tambara told Inside Retail, the retailer listens to the views submitted by some of its 30 million customers every year.
“Every year, we receive over 500,000 requests and feedback about items from customers – the amount of feedback we can capture has increased 200 times during the past few years. So this information and these insights are extremely valuable for us to drive product improvement,” he said.
“It’s impossible for our merchandisers and designers to check every comment, so that’s where AI comes to help us out, [but] we don’t rely completely on AI to analyse our customer feedback. Our designers and merchandisers still read reviews and feedback. We are focused on continuously improving our product.”
Customer feedback and AI insights are driving new products and improvements in existing ones. He cites the Oxford shirt he wears to our meeting as an example.
“This shirt has a very classy, simple design so many people will assume that this design never changes. But using customer insights, we are always trying to improve the product and make its simplicity perfect. Recently, we improved these shirts by changing the fabric to make it more durable, and also the length and the width have changed.”
“The designers’ and merchandisers’ insights are complemented by the AI analysis and we get feedback from customers on products they are wearing today that are also used to make minor modifications to the product.
“Our vision is to constantly make available to customers the product they need, when they need it, in the place they need it. So, to accomplish this vision, we need to understand our customers’ needs completely. That is why we collect the voices of customers to anticipate trends and conduct demand forecasting, which is when AI comes into play. We also want to make sure we produce only what is necessary, so in the supply chain, we try to optimise our inventory by using AI and algorithms.
“Our vision is clear to all employees: to make the product available in exactly the right quantities on exactly the right day in exactly like location exactly where our customers want them.”
That helps the company be more sustainable, he explained, because it means Fast Retailing is not producing wasteful merchandise.
Tambara considers it a strength of Fast Retailing that it was founded in brick-and-mortar stores and has since expanded significantly into e-commerce – but only through its own brand.com sites.
“Ultimately, for the customer, it is best if they don’t have to think about whether they are shopping – whether at a store or online, it will be seamless.
“Customers could be visiting the store but actually purchasing online, or they may be purchasing online but still want to go to the store. And we want to make it natural for customers to choose whatever they want. Because we want to make it a real, natural experience for the customer, which digital technology will certainly contribute to.”
Tambara stresses it is critical to make inventory management more precise and to recognise that the company’s warehouses support both physical stores and e-commerce.
“Becoming a digital consumer retail company requires connection and smart coordination across the whole business process, not just in a specific part of the business,” he said.
Tambara, who recently relocated to London to add more of a global perspective to the company’s technology insights and innovation, said Fast Retailing plans to build a truly global IT team in terms of physical location and diversity.
He said the company wants to build a future “where we innovate and commence all key processes to the technology and the information”.
“We will achieve this by analysing and applying the customer perspective and insights that we gain through those technologies,” he said.
“Our transformation is about connection, so we must link the old tools, actions and resources for customers. We certainly leverage technologies more and more, but the important point is not to see or use that technology as a standalone solution. We are always focused on the customers and on making the best use of technology for their benefit.
“Everything we are doing is to create an easier, more convenient, more efficient and more positive experience for customers.”
The post Fast Retailing CIO talks RFID, self-checkout and continuous improvement appeared first on Inside Retail Australia.
