**5.4 Adoption of lean services in apparel retail**

Apparel retailers face the challenge of adapting quickly and frequently to keep up with product change and buying trend to meet customer needs. Lean services are introduced to better manage store operations in a more efficient manner as well as to bring customers with fresh new shopping experience so that the retailer will stay competitive in the markets through automating the customer touch points which are beneficial to both the customers and retailer. Based on the approach in **Figure 2**, a value stream map of the 'As-Is' processes is created where purchase orders are initiated to upstream suppliers based on customer purchase representing the ultimate business value and the retailer should maintain the value flow in the supply chain through improving customer conversion continuously. The approach is depicted in **Figure 3**.

Based on the CCOR model, value stream mapping of the in-store pre-sales activities was defined systematically through organizing the CCOR processes, i.e. '*relate*', '*sell*' and '*contract*' in the retail services operations so that value is created from the use of RFIDdriven lean systems which improves customer conversion. Under these three CCOR process groups, lean services are developed based on the value creating activities shown in **Table 1**. **Table 2** illustrates the mapping of lean services and the operation processes from the perspective of CCOR, customer and retailer aimed at delivering target business value.


Table 2. Mapping of Processes and Lean Services with Intended Values

With far-field RFID technology, lean services are realized in the apparel stores through offering a variety of intelligent services that essentially extend the RFID application to the "last 50 feet" of apparel supply chains for improving the efficiency of store execution and in particular, sales-floor operations such as customer conversion and item management (Hardgrave and Miller, 2008; Heizer and Render, 2007; Magnusson, 2010; Russell and Taylor, 2009; Sarma, 2008). Providing suggestions on clothing mix-and-match is one of the new initiatives of lean services in apparel retail. Together with the following store management functions, interactions at the customer touch points in the retail operation can be improved with the expected values as detailed in **Table 2**.

 *Mix-and-match suggestions*: enhance customer experience, through providing suggestions personalized for VIP or registered customers based on their transaction history by discovering purchase patterns, i.e. estimating preferred choices through using data-mining technique or machine-learning algorithm. However, only standardized recommendations are offered to casual customers;

service delivery time reduction (Shostack, 1982;1984), lean apparel services are customer oriented which emphasize creating customer value through suggesting mix-and–match of clothing items in a smart (e.g. photo displayed in response to the detected RFID-tagged

Apparel retailers face the challenge of adapting quickly and frequently to keep up with product change and buying trend to meet customer needs. Lean services are introduced to better manage store operations in a more efficient manner as well as to bring customers with fresh new shopping experience so that the retailer will stay competitive in the markets through automating the customer touch points which are beneficial to both the customers and retailer. Based on the approach in **Figure 2**, a value stream map of the 'As-Is' processes is created where purchase orders are initiated to upstream suppliers based on customer purchase representing the ultimate business value and the retailer should maintain the value flow in the supply chain through improving customer conversion continuously. The

Based on the CCOR model, value stream mapping of the in-store pre-sales activities was defined systematically through organizing the CCOR processes, i.e. '*relate*', '*sell*' and '*contract*' in the retail services operations so that value is created from the use of RFIDdriven lean systems which improves customer conversion. Under these three CCOR process groups, lean services are developed based on the value creating activities shown in **Table 1**. **Table 2** illustrates the mapping of lean services and the operation processes from the perspective of CCOR, customer and retailer aimed at delivering target business value.

With far-field RFID technology, lean services are realized in the apparel stores through offering a variety of intelligent services that essentially extend the RFID application to the "last 50 feet" of apparel supply chains for improving the efficiency of store execution and in particular, sales-floor operations such as customer conversion and item management (Hardgrave and Miller, 2008; Heizer and Render, 2007; Magnusson, 2010; Russell and Taylor, 2009; Sarma, 2008). Providing suggestions on clothing mix-and-match is one of the new initiatives of lean services in apparel retail. Together with the following store management functions, interactions at the customer touch points in the retail operation can

 *Mix-and-match suggestions*: enhance customer experience, through providing suggestions personalized for VIP or registered customers based on their transaction history by discovering purchase patterns, i.e. estimating preferred choices through using data-mining technique or machine-learning algorithm. However, only

Table 2. Mapping of Processes and Lean Services with Intended Values

be improved with the expected values as detailed in **Table 2**.

standardized recommendations are offered to casual customers;

items) and agile (e.g. contactless and personalized services) way.

**5.4 Adoption of lean services in apparel retail** 

approach is depicted in **Figure 3**.

Fig. 3. 'As-is' Processes of Apparel Retail Service Operations


RFID, an Emerging Wireless Technology for Sustainable Customer Centric Operations 149

As shown in **Figure 5**, clothing items that are picked by customers are tracked and recorded by the smart apparel system with valuable "on-the-spot" business intelligent data associated with customer identity. With the new system, customers are able to resemble the style that they want to portray in a more autonomous manner and less relies on the staff on the salesfloor, not to mention unpacking clothing items for trial in virtually unlimited number of times, which is very inefficient and wasteful. Besides, retailers may gain instant access to the customer preferences and buying behavior captured in the shopping process, which enable them with the capability of offering personalized mix-and-match suggestions and formulating marketing strategies and business plans based on actual customer needs.

Lastly, the *electronic point-of-sales (ePOS)* module which is the last access point in the shopping process provides contactless check-out functions in the *inventory management* and *transaction processing* routines with the transaction records automatically updated in the database. Besides, the *article surveillance* module plays the role of gatekeeper by generating alert message to shop assistants via the ePOS if it detects any tagged item that is not properly check-out and the results are shown in **Figure 6**. The 'To-be' processes of lean services essentially collapse the manual tasks in the three process groups into different smart apparel system features delivered sequentially by the software for smart dressing mirror, smart fitting room, ePOS and article surveillance modules that are responsive to the

Fig. 5. Roll-up and Drill-down of Mix-and-match Suggestions

Fig. 6. Active Monitoring at ePOS and Display of Alert Message

#### **5.5 Lean service improvement with RFID-based apparel applications**

The smart apparel retail system has a number of modules including *smart fitting room* and *smart dressing mirror* enabled with RFID technology with the promise to enhance shopping experience by offering responsive mix-and-match capability based on real-time analysis of customers' behavioral data stored in its database together with the implementation of essential shop management functions under a lean service environment in Firm A's retail stores. **Figure 4** shows the basic operations and flow of shopping process associated with the RFID-enabled smart fitting room and smart dressing mirror that were designed based on the process flow mapping in **Figure 3** and **Table 2**.

Fig. 4. Smart Fitting Room and Smart Dressing Mirror

Both smart dressing mirror and smart fitting room are equipped with RFID readers embedded with middleware and intelligent apparel application which respond to any tagged clothing item associated with registered product ID and can be further associated with relevant product data and photo image stored in the backend databases on the inhouse networks. It is the design objective that *mix-and-match suggestions* are provided to customers in a faster and easier way than conventional human method. For arousing customer interest, smart dressing mirror is the first access point in fashion shop providing simple mix-and-match recommendations through image projection or high resolution TV display. When customer presents the tagged clothing items in front of the dressing mirror, the product images and mix-and-match image slide show of the products are displayed on the adjacent screen. Based on the suggestions, customer may proceed to smart fitting room equipped with a touch-screen display which has the capability of showing detail product information including product ID, price, color, size, and inventory status in an organized mean, while specific information such as VIP discount and preferred choices are customized for registered customers. **Figure 5** shows the screen displays of smart fitting room module. The product search flow is similar to smart dressing mirror previously accessed by the customer.

The smart apparel retail system has a number of modules including *smart fitting room* and *smart dressing mirror* enabled with RFID technology with the promise to enhance shopping experience by offering responsive mix-and-match capability based on real-time analysis of customers' behavioral data stored in its database together with the implementation of essential shop management functions under a lean service environment in Firm A's retail stores. **Figure 4** shows the basic operations and flow of shopping process associated with the RFID-enabled smart fitting room and smart dressing mirror that were designed based on the

Both smart dressing mirror and smart fitting room are equipped with RFID readers embedded with middleware and intelligent apparel application which respond to any tagged clothing item associated with registered product ID and can be further associated with relevant product data and photo image stored in the backend databases on the inhouse networks. It is the design objective that *mix-and-match suggestions* are provided to customers in a faster and easier way than conventional human method. For arousing customer interest, smart dressing mirror is the first access point in fashion shop providing simple mix-and-match recommendations through image projection or high resolution TV display. When customer presents the tagged clothing items in front of the dressing mirror, the product images and mix-and-match image slide show of the products are displayed on the adjacent screen. Based on the suggestions, customer may proceed to smart fitting room equipped with a touch-screen display which has the capability of showing detail product information including product ID, price, color, size, and inventory status in an organized mean, while specific information such as VIP discount and preferred choices are customized for registered customers. **Figure 5** shows the screen displays of smart fitting room module. The product search flow is similar to smart dressing mirror previously accessed by the

**5.5 Lean service improvement with RFID-based apparel applications** 

process flow mapping in **Figure 3** and **Table 2**.

Fig. 4. Smart Fitting Room and Smart Dressing Mirror

customer.

Fig. 5. Roll-up and Drill-down of Mix-and-match Suggestions

As shown in **Figure 5**, clothing items that are picked by customers are tracked and recorded by the smart apparel system with valuable "on-the-spot" business intelligent data associated with customer identity. With the new system, customers are able to resemble the style that they want to portray in a more autonomous manner and less relies on the staff on the salesfloor, not to mention unpacking clothing items for trial in virtually unlimited number of times, which is very inefficient and wasteful. Besides, retailers may gain instant access to the customer preferences and buying behavior captured in the shopping process, which enable them with the capability of offering personalized mix-and-match suggestions and formulating marketing strategies and business plans based on actual customer needs.

Lastly, the *electronic point-of-sales (ePOS)* module which is the last access point in the shopping process provides contactless check-out functions in the *inventory management* and *transaction processing* routines with the transaction records automatically updated in the database. Besides, the *article surveillance* module plays the role of gatekeeper by generating alert message to shop assistants via the ePOS if it detects any tagged item that is not properly check-out and the results are shown in **Figure 6**. The 'To-be' processes of lean services essentially collapse the manual tasks in the three process groups into different smart apparel system features delivered sequentially by the software for smart dressing mirror, smart fitting room, ePOS and article surveillance modules that are responsive to the

Fig. 6. Active Monitoring at ePOS and Display of Alert Message

RFID, an Emerging Wireless Technology for Sustainable Customer Centric Operations 151

 Improving the accuracy and efficiency of operations is the purpose of applying RFID technology to *product catalogue* and *inventory management*. Based on the user feedbacks, the new RFID application software need to be integrated with existing system and hence, product developer has to design and develop their RFID products compatible with major business applications in retail, for example, ePOS systems and ERP systems. Without proper compatibility with other retail business applications, the use of RFID technology could be limited. Besides, many ePOS systems have bundled with low cost bar-code reader as input device. RFID product suppliers may consider product integration through forming strategic alliance with ePOS vendors. Hence, *cost advantage*

 Existing *electronic article surveillance* (EAS) devices based on magnetic technology are mature and competitive in prices. Although the apparel retailer expects the new RFID system to help save cost in the long term, the price of RFID-based EAS needs to be competitive in order to compete with existing technologies. Otherwise, the new product would be hard to survive alone. Alternatively, it can be sold in bundled with other products as a total solution before it comes to the end of product life cycle. Hence, *time* 

The study introduces an innovative RFID application that realizes lean thinking in the presales service operations of an apparel retailer aimed at customer service excellence with improved customer conversion rate and greener operations. The study has made a contribution to practices by establishing a systematic approach in the creation of value stream for lean services with the use of CCOR model which has not been studied in previous research. Practitioners and researchers in the field of organizational improvement will systematically define the value stream of a retail firm and improve the services at customer touch points based on this approach. According to the retailer, various kinds of customer including prospective customers and contract/VIP customers are beneficial from this new initiative leading to an increasing customer conversion. However, in reality, getting new idea adopted, even if it has obvious advantages, is often very difficult which may take quite a lengthy period and may fail in the process of adoption (Rogers, 1995). Therefore, strategic implications of applying RFID technology to lean services are discussed with the purpose to alleviate the practical problems and user concerns so that lean services can deliver maximum value to apparel retailers. Four practical issues are identified based on the interview results: (i) *ease of use*, (ii) *data privacy*, (iii) *cost advantage*, (iv) *compatibility*, and (v) *time to the market*. Developers of lean services, RFID suppliers and apparel retailers need to

and *compatibility* are the critical success factors.

*to the market* and *cost advantage* are very important.

take note on these issues when developing or acquiring the new services.

Aikens, C.H., 2011. *Quality inspired management: the key to sustainability*. NJ: Prentice Hall. Auto-ID Center 2002. *Technology Guide*. US: Auto-ID Center, Massachusetts Institute of

*Practice and Trends from Leading Experts*. US: Kogan Page, 82-100.

Christopher, M., Lowson, B. and Peck, H., 2004. Fashion logistics and quick response. *In*:

Fernie, J. and Sparks, L., eds. *Logistics and Retail Management – Insights into Current* 

**6. Conclusion** 

**7. References** 

Technology.

detection of RFID-tagged clothing and human touches on the screen. The performance improvements in terms of customer conversion are summarized in **Table 3**, which indicates that the overall profitability has been significantly increased by more than twice after adopting the new approach.


Table 3. Customer Conversion Rates of Process Groups

#### **5.6 Discussions and implications**

The case study demonstrates the use of CCOR model that systematically creates the value stream of lean services for an apparel retailer based on a hierarchical process mapping method by walking through all the pre-sales activities happening on the retail shop floor (See **Figure 3**). The convergence of these two management systems was not explored in previous studies. Based on the interview results, the pre-defined values shown in **Table 2** based on the lean services objectives, help streamline the operation processes and enhance the customer experience on the service operations such that the bottom line and customer satisfaction of the retail sales are improved in two years' time which exceeds the management's expectation. As shown in **Table 3**, the number of contract customers is increased significantly by about 20% and contribute over 45% to the sales revenue in each year despite of the stringent competition. More importantly, the customer conversion rate is improved from about 6% to exceeding the market average, which is about 12% in apparel retailing (Conroy and Bearse, 2006). According to the retailer, casual customers, VIP customers and first-line staffs are all beneficial from the new initiatives with improved operational execution and decision-making assistance that lead to increased customer conversion rate by delivering a better customer experience.

The case study provides not only insights but also strategic implications to apparel retailers on realizing lean services with RFID technology. Both the merchant (Firm A) and its RFID supplier (Firm S) have to consider various practical issues in addition to merely look for obtaining business values when implementing the services that heavily rely on emerging technology. Hence, interview results obtained from the users in Firm A and staffs in Firm S are consolidated in association with the system functions and they are presented below:

 The strategic intent of offering *mix-and-match suggestions* based on visual effects and rich information is to close the sales faster than conventional approach. Addressing the complexity and security concerns of RFID technology is the key to success as the moment of truth can never be captured if customers do not actually use it. Based on the user feedbacks, there exist problems concerning *ease of use* and *data privacy* which should be resolved before launching the new technology.

