The catwalk to checkout revolution
20 June 2018
Speed, from catwalk to rail and from click to pick, is everything. Robotics, AI and intelligent automation may hold the answer explains Dave Bull, Head of Sales, Dematic Northern Europe.
By their very nature fashions change. However, in recent years the pace of change in the apparel sector has accelerated at an astounding rate. Not only are pure-play online brands disrupting business models on the high street, but omnichannel retailers too, are locked in combat to win over consumers through ever-faster deliveries, multiple service choices – such as pick-up and returns options – and the promise of enhanced customer experiences.
In this burgeoning world of fast-fashion it is the consumer that is in the driving seat. Armed with smartphones shoppers are now able to research, compare and buy on the go, putting margins under pressure and increasing complexity for those retailers competing across multiple channels. What’s more, consumers expectations on speed of delivery and service stretches far beyond the expediting of purchased items, they expect ‘looks’ seen on the catwalk one week to be readily available at affordable prices the next. This is the ‘Now Society’.
However, speed is not the only issue, scale is another important factor. Promotions, flash-sales and special events, such as Black Friday, are occurring at ever greater frequency and are streamed out across social media platforms at the push of a button, creating enormous spikes in demand. Twitter, Snapchat and Facebook too, amongst others, are now highly influential, with celebrity fashion choices and peer preferences guiding buyer behaviour, leading to unexpected runs on specific products.
To gain competitive edge and support consumer expectations apparel supply chains are not only becoming faster and sleeker, but also they are becoming far more complex. Technology, in its various forms, is now essential in augmenting and controlling order management and flows across multiple channels. However, the traditional manual warehouse, designed for the replenishment of high street stores with unitised loads is ill-suited to the single item, multi-line picking necessary for serving direct to customer orders. Picking single items or small order quantities and processing them for despatch has for most retailers been a labour intensive activity, requiring large numbers of people. This may have been fine in the early days of ecommerce, but the incessant growth of online sales has put manual operations under huge strain. A tipping point has been reached.
According to the IMRG Capgemini Online Retail Sales Index for April 2018, clothing sales grew by 15.6%, year on year, and figures from the UK’s Office for National Statistics (ONS) indicate that 15.3% of all retail spending is now conducted online.
With the rise in the UK’s National Living Wage and a dwindling pool of available labour in key areas, apparel retailers are looking closely at intelligent warehouse automation solutions to drive greater levels of productivity within their distribution centres. Speed and responsiveness are key attributes for fashion supply chains and robotics, AI and new scalable goods-to-person technology hold the answer to many challenges facing the sector.
Retailers who make sensible, considered decisions across their channels stand to gain greater control of costs and at the same time, improve market offerings. Efficient store replenishment, effective ‘single or few’ order fulfilment and the appropriate application of automated processes will be the key differentiators in a highly competitive apparel marketplace.
The retail fashion landscape
Clothing is a fundamental human need, but the garment and apparel industry is also a very significant component of the national and global economy.
Planet Retail valued the UK market for clothing, footwear and accessories in 2015 at £57.7 billion. Oxford Economics put the number of people employed in the UK fashion industry, from manufacturing right through to retail, at 880,000 in 2016 and EU figures show employment, purely in the retail of clothing and footwear, at around half a million.
Clothing retail exhibits almost every conceivable variety and combination of scale, complexity, and channel. There are couture houses, single store boutiques – perhaps selling a combination of their own designs and branded lines – specialist high street chains, general merchandisers, supermarkets and department stores. But in addition to these primary retailing channels, there is a significant secondary market for discontinued and end of season lines through ‘designer outlets’.
Then there are pure e-commerce players from the boutiques right up to giants like ASOS, while just about all high street brands are now omnichannel retailers offering some combination of in-store, home delivery and click’n’collect shopping. E-commerce is growing rapidly in fashion retailing – some analysts have forecast up to 40% growth in 2017 for online pure plays, while department stores such as Debenhams are typically showing an online component of 15% or more and growing.
Some analysts predict the terminal demise of high street shops but contrarily, some clothing brands are actively expanding their shop estate and even major e-tailers may have a handful of ‘flagship’ physical stores.
Market research company, Mintel, reported to the 2017 London Fashion Week that online sales in the sector would increase 17.2% in the year, to a spend of £16.2 billion. However, while 85% of young (16-24) women buy fashion online, only 15% source all their clothes this way, so the industry faces a multi-channel challenge for the foreseeable future.
There are a number of distinct challenges facing the sector.
Retail rents continue to rise, despite all the empty shops on the high street, and warehousing of any quality is in short supply in many parts of the country. Business rate changes too, have been a big shock to bricks’n’mortar retailers and with a continuing shift in the market to online sales, high street retail assets will need to be far more productive. Some retailers are looking to free-up back storerooms by building store-friendly sequenced loads in the distribution centre, enabling more space to be given over to sales display.
Automated systems in the distribution centre can readily build unit loads in precise shelf sequence, helping store staff to quickly display new lines and replenish shelves – freeing them up for customer interaction.
Transport and distribution costs
Fuel never seems to get any cheaper, drivers are in short supply and insurances and vehicle taxes continue to rise. In addition, more cities are contemplating congestion charges and are regulating the types of vehicle permitted and the times that deliveries can be made, which may mean paying overtime to be able to receive out of hours deliveries. Restrictions can also impact on the viability of using a physical store as a hub to fulfil home deliveries ordered on line, and reduce the attractiveness to consumers of click’n’collect options. Cost control requires the tightest planning of transport and the elimination of waste by ensuring that orders are consolidated where possible, are ready to ship on time, and are actually the right goods going to the right location.
Labour costs are increasing, not least due to rises in the Minimum Wage, however, the supply of competent, affordable labour, is falling, with many parts of the UK and Northern Europe at close to full employment. Warehouse jobs too, are increasingly seen as unattractive – rather unfairly as the intellectual requirements for an effective warehouse operative are rising quite steeply as more complex systems are introduced.
Automation in the retail chain is not primarily about reducing headcount, though – it is about getting more from the workforce while giving them more rewarding and safer careers.
PickWalls, Goods-to-Person systems and artificial intelligence can be cleverly deployed to enhance picking processes, and by using item verification techniques can ensure extremely high levels of pick accuracy. Automation can also assist in building optimised loads that maximise the utilisation of transport space.
In fashion, ‘seasonality’ has two meanings. Firstly, there are the peaks in demand from Black Friday, Christmas, and New Season promotions for which fulfilment systems have to find capacity.
More particular to fashion there is the regular and wholesale changeover of product ranges. Once, in womenswear, there were essentially two seasons, Autumn-Winter and Spring-Summer, dictated even in the ready to wear market by the Milan, Paris, London, New York fashion weeks. Now, thanks to the likes of Zara, a ‘season’ for a line of garments may be just a month or so. Therefore, it is absolutely critical that the retail supply chain has complete visibility of the location and availability of all its stock, at all times, so that it can respond instantly to customer demand. This is difficult or impossible in a manual system, of any scale.
An additional time pressure is that it becomes essential to be able to restock shelves, and racks, and to introduce new ranges and back-flush old lines almost instantly, both physically and on the business systems and websites. Once again, it is worth saying that automation can help present stock to shops in a store-friendly sequence and condition, so it can go straight on to the floor without back-store operations.
Unit of one
At the couture end of the business, all garments are by definition different. But even in the mass market, the SKU size is often one. A ‘little black dress’ may be run up in its thousands, but in a size 16, with the lace trim, without the silver piping, priced in Euros, labelled in Dutch to replenish a boutique in Amsterdam, it is effectively unique. Unsurprisingly, mis-picks are commonplace in manual fulfilment systems.
It is rare for garments to move through the retail end of the supply chain in anything like uniform loads. Singletons and small quantity orders are the rule. On the other hand, shops need to receive replenishments efficiently, in pallets or roll cages, while online consumers may have complex orders involving several garments plus accessories, all to be delivered together.
So at every level there is a need for systems to de-palletise inbound goods, and to make up loads for shops in sequence, and/or to consolidate individual multiple orders from the same customer.
The latter is a growing issue. Whereas online shoppers were once sat at a PC or laptop researching their purchases and compiling a single order ‘basket’ of items, now they are just as likely to be using mobile devices to order single items, perhaps responding directly to a social media prompt on Twitter or Instagram. Single item orders are simpler at the pick face, but can increase capacity problems elsewhere. Using systems, such as a pouch-sorter controlled by intelligent software, multiple orders from the same customer can be consolidated into a single package, significantly reducing packing and delivery costs.
For fashion purchases made on the high street, a returns rate of below 10% is fairly typical – high, but not overwhelming. With online sales, the average is above 30% and some retailers experience rates much higher than that.
To some extent this is inevitable. With online sales there is no opportunity to check the fit, or what the material looks like in the appropriate light so retailers have had to accept, even make a selling point of, the fact that customers will order three variants of shade and/or size, and return at least two.
But there are other, avoidable, causes of returns – goods that have been damaged at some point in the distribution process, mis-picks and late or failed deliveries. Automation can help ensure that goods are handled and packed appropriately, cleanly, and consistently; that the right goods are picked and combined and maintain their identity throughout the process; and that the resulting package is available on time and with the right address label.
Returns, assuming they are still in saleable condition, have to be made available for resale as quickly as possible. A popular item may be flying off the shelves, but if it only has a brief season and half the stock is stuck somewhere in a returns cycle, good money is being lost. But, interestingly, many retailers believe 75-80% of returns could be resold in a week. Pouch-sorter technology’s ability to create a dynamic buffer of fast-moving returned items, dramatically removes the need to return items to the shelf, allowing them to be called off immediately for re-despatch as a new order comes in.
Customer expectations of fashion retailing are constantly evolving. Tamara Sender, Senior Fashion Analyst at Mintel said recently, “The way consumers are shopping for clothes and shoes is changing: there is a buy now, wear now mentality and a desire to shop for clothes however and whenever they want, with consumers demanding convenient shopping that fits around their busy lifestyles”.
Other highlights from Mintel’s Fashion Online UK 2017 Report are that two thirds of UK Internet users have bought fashion online in the last 12 months – some 81% of Millennials, as you might expect, but perhaps more surprisingly 54% of over-45s. Fast-fashion is tapping into demand from young women for constant newness with 71% opting to shop at retailers that sell frequently updated ranges – and men are not far behind. As noted above, mobile shopping is growing: “almost half of Millennials have bought fashion from their smartphone”, but “the vast majority also shop for clothes and shoes in-store, highlighting the importance of having a joined-up shopping experience”.
Half of online shoppers have made returns, but as many as a third have kept items they don’t really want because returning goods is too much trouble – that may be a sale, but not necessarily a happy shopper. Three quarters are looking for ‘improved delivery options’, including dynamic delivery options, which will require the fulfilment process to be reactive even later in the cycle. Free delivery is probably unsustainable, but ‘subscription’ models appear to encourage multiple single-item orders.
Those are some of the challenges facing fashion retailers and distributors. How can Dematic’s automated solutions help?
Dematic automated solutions for fashion retail
Many of the challenges outlined above express themselves at the point of sale, but often the best place to address them is in the warehouse or fulfilment centre.
Few retailers are in a position to contemplate a ‘big bang’ move to full automation. However, applying automation to particular processes in a stepped approach can offer significant rewards in terms of productivity, capacity, accuracy and customer service.
Automation needs to be able to grow with the business, but at the same time it may not always make sense to scope automated solutions to cope with the highest seasonal peaks. Constant change is implicit in the garment industry and a feature of a good automated solution is that most change can be handled through the software, rather than by physical changes to plant and warehouse configuration.
A typical clothing retailer, of whatever size, will be looking for appropriate solutions to handle retail store fulfilment as well as e-commerce, normal activity and seasonal/promotional peaks, fast and slow moving inventory, and returns processing. The process to which automation can be applied include receiving, put-away, bagging, storage and buffering, replenishment, a wide variety of picking operations at pallet, case or piece level, consolidation, packing and shipping. There may be value-added processes such as pricing, labelling and fixing security tags too. Goods may be handled as cartons, in totes, in poly bags, as garment-on hangar, and items to be handled may range from rigid and regular, such as shoes in boxes, to floppy and amorphous, like dresses in poly bags.
Many automation components are generic to the warehouse environment, but there are also solutions and component combinations with particular applicability to the garment trade.
Garment on Hangar (GOH) systems
Although there is a long-term trend in the industry away from GOH towards boxed goods, GOH is still a valuable approach. Dematic’s Garment on Hanger overhead system can help deliver garments in pristine, unwrinkled, display-ready condition, accelerating shipping, reducing labour requirements, while maximising use of space.
Because GOH systems operate overhead, it frees floor space and does not interfere with manual ground-level operations, while cutting out the need to push trolleys around. GOH enables reduced cycle times so store replenishment lead times can be cut, while e-commerce customers can be offered later cut-off times – an important source of competitive advantage.
Pouch sortation system
Dematic’s pouch sortation system is an automated hanging system for efficiently storing, buffering, preparing, and shipping multi-line orders. Importantly for the fashion industry, a pouch system can accommodate both hanging and flat goods simultaneously, and is the ideal application for fashion e-commerce because of the easy combination of clothing, shoes, and accessories into one order. The use of pouches makes for a gentle handling experience for delicate items.
Returns handling can also be made simpler and more efficient with a pouch-sorter. Returned items can be placed in the pouch system and dynamically buffered, allowing items to be quickly called for despatch as soon as a new order is received. The system saves on time and effort placing returned items back to stock and enhances availability during short seasons.
Besides handling returns, a pouch-sorter can be utilised for fast-moving items by decanting an entire box into the buffer, rather than going through put-away and replenishment. Equally, buffering can smooth peaks - if there are orders for an item both for next day delivery and for a more extended, non-premium delivery, the latter can be picked at the same time and held in the dynamic buffer until needed. Buffers can be preloaded to anticipate peak demand.
Needless to say, controlling and optimising such systems is complex and requires high performance warehouse management software such as Dematic IQ.
Dematic’s RapidPut is a ‘putwall’, forming an interface between picking and packing and there are several ways of using it – batch picking all the items for a group of orders, picking the quantities of a single SKU for multiple orders, SKU-specific totes presented to the operator from, for example, a Dematic Multishuttle buffer, and similar alternatives on the packing face. Operations, both on the put and the pack face, are typically controlled from the software by Pick-to-Light or Voice Command.
RapidPut driven by Dematic IQ software creates a dynamic, waveless or endless batching system without the need for a picking buffer or expensive sortation equipment.
Order picking by operators pushing trolleys up and down aisles is slow, error-prone, and fairly miserable for the operator. Goods-to-person systems are an increasingly attractive alternative. It is all about presenting items to the picker in the desired sequence, enabling faster picking speed in a comfortable configuration: that is smarter, faster, ergonomic order fulfillment.
The operator stays in one place while items are delivered to the pick station in precise sequence — heavy items first, fragile items last, for lot control, by family group or in whatever sequence that business needs dictate. RapidPick allows ultra-high pick accuracy as only one SKU is presented to the operator at a time. In addition, RapidPick workstations accommodate totes and/or cartons of different sizes to facilitate picking directly into the shipping container.
The operator doesn’t have to wait for the next item to be picked. Product for picking flows into the RapidPick station smoothly and consistently, for example using Dematic Multishuttle as an automated inventory buffer. Picking rates of 350 - 500 order lines per operator per hour is readily achievable and some users have far exceeded this.
For those apparel retailers handling full case units, Dematic’s AMCAP® is a high-performance palletising system designed to assemble pallets that are ready for easy shelf re-stocking at the retail store and is flexible enough to cater for differing store layouts. As it combines scalability with a compact footprint, it can be easily integrated into existing facilities. The design allows flexible throughput variations up to several thousand cases per hour, bringing the cost per case down from typically 12p, for manual operations, to 5p with AMCAP®.
In effect, AMCAP is an automated robotic system comprising three distinct processes: Case De-palletising, where cases are taken from the stock pallet using a robot or hoist equipped with vacuum and side clamp technology: Case Storage and Retrieval using a Dematic Multishuttle® store (DMS), where de-palletised cases are temporarily stored; and Pallet Building where products from the DMS are re-oriented and assembled onto a pallet or roll-cage, either semi-automatically or fully-automatically, as required, and then wrapped in-situ before being labelled and taken away by conveyor or Dematic Egemin driverless vehicle to dispatch or storage.
RapidPick XT and Multishuttle ARM
Dematic is actively engaged in developing robots for picking individual items, such as a tee shirt, from a stock tote and placing it to an order tote. Dematic’s RapidPick XT robotic picking system is leading this field and can consistently pick up to 1,200 items per hour with an uptime approaching 24 hours a day, seven days a week. The robot is fully articulated and equipped with a 2D/3D vision system.
Just developed by Dematic’s research unit in Grand Rapids is the Multishuttle ARM. This is a completely automated piece picking system that combines the Multishuttle donor tote buffer storage and conveyance system, a robotic arm, vision equipment, and warehouse control and order management systems to enable picking of individual items to batch or order totes. Multishuttle ARM replaces manual goods-to-person processes for order fulfilment operations.
There are many other automation solutions that a fashion retailer can deploy, standalone or as part of a more integrated system – conveyors, pallet handlers, automated storage, bagging, packing, labelling and loading solutions, AGVs, narrow aisle vehicles and more are being developed all the time. There are as many possible configurations as there are retailers, all of whom see their pain points differently.