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Next-gen Retail

Spanish apparel retail giant ZARA utilizes a location-based omnichannel platform to seamlessly integrate its online and in-store business operations.

ZARA store in Brussels | Image credit: Inditex

ZARA is one of the world’s most successful international fashion brands, owned by the world’s biggest fashion group, Inditex. Based out of Spain, ZARA operates over 2000 stores across 96 markets, with an online presence in over 200 markets.

Inditex has made headlines with its forward-looking digital transformation strategy, deploying advanced technology solutions to integrate its online and offline businesses.

For instance, ZARA stores are equipped with Radio Frequency Identification Technology (RFID), using cutting-edge systems to track the location of garments instantly and making those most in demand rapidly available to customers.

In September 2020, Inditex launched “Store Mode” for several ZARA stores across Spain, allowing customers to check store stocks in real time through the ZARA app and website, so that they could make purchases online and pick up their selections in-store almost immediately.

An open digital platform

To ensure the customers’ shopping experience is fully integrated between the physical and online channels, Inditex has developed its own proprietary digital platform called Inditex Open Platform (IOP). Starting with online sales, IOP pulls all linked processes together, including inventories, purchasing, distribution, and orders. This helps in maintaining service excellence at high-traffic times, especially during sales periods. The platform, launched in 2018, allows the company to offer its customers an integrated shopping experience, thanks to the integrated stock management system across stores and online that optimizes its ability to deliver products more conveniently, regardless of where items are or the physical location of the stock at the time of sale.

Location-based shopping experience

Using the IOP digital platform as its base, ZARA’s “Store Mode” allows shoppers to select stores closest to their location through the ZARA app or website, and have the whole selection of available items displayed in the feed. Shoppers can complete their purchases online and pick-up the items in-store after 30 minutes. Shoppers just need to show the QR code generated by the app upon checkout to collect their orders. Not only does the service reduce crowding in stores, it also removes delivery costs and wait time for customers.

For the selected ZARA stores, all items are geo-located in the mobile app. Shoppers can view products online and the app’s wayfinding functionality guides them to the products’ specific locations within the store. The app also allows shoppers to reserve fitting rooms to avoid long queues, especially considering the current social distancing guideline. Once a fitting room is available, shoppers receive a notification.

ZARA’s omnichannel shopping experience platform | Image credit: Inditex

Integrated stock management system

By integrating all of its sales channels in one platform, ZARA is able to complete a customer’s purchasing process seamlessly. This is critical especially with the increase in online sales. The end goal is to deliver items to customers as soon as possible.

The integrated stock management system enables real-time processing of product movements in all locations where stock is located — either in the distribution centers equipped with Internet of Things (IoT) technology, or in the stores using RFID technology. The entire system is also integrated at the headquarters of the logistics suppliers.

Some significant innovations have been introduced in different areas of the logistics infrastructures of the distribution centers, such as the multi-shuttle and hyper-loop systems, dynamic buffers, automated inductions, air palletizing systems, and automatic guided vehicles (AGVs), among others.

The Control of these logistics infrastructures is governed by a Warehouse Management System (WMS), allowing a unified vision and control of stocks by location. This helps the centers prepare deliveries in an orderly, dynamic and consistent way to the various destinations where stock is to be located.

in Shoppers' Interest

Using analytics to predict demand

In order to ensure the availability of products to its customers, ZARA uses Machine Learning (ML) models to determine the optimum stock that each point of sale must have – for both newly-launched products and restocked products. The initial predictions are reviewed and checked against real-time transaction data and customer insights from the sales teams, allowing the supply to be adjusted accordingly.

In collaboration with the Massachusetts Institute of Technology (MIT) in the US, ZARA has developed an analytical search engine to predict customer response for new products. As there is no historical behavioral data, the Artificial Intelligence (AI) based search engine uses data from comparable products to make accurate estimates of demand behavior before any new products are launched.

In July 2020, Inditex announced it will be investing €2.7 billion ($3.21 billion) to accelerate and broaden its digital transformation strategy, with €1 billion ($1.19 billion) pumped into boosting its online business and €1.7 billion ($2.02 billion)in upgrading its integrated store platform and deploying advanced technology solutions. Apart from ZARA, Inditex is also home to fashion brands such as Pull & Bear, Massimo Dutti and Bershka.

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