What’s the Story?

This Case Study explores how Factory 54—an international fashion retail chain and an exclusive distributor/operator of leading global fashion brands in Israel—has partnered with technology solutions provider Nexite to help its partner brands resolve in-store merchandising challenges and optimize its store operations and merchandising decisions. We look at how Nexite is enabling Factory 54 to achieve operational efficiency for its partner brands by leveraging real-time product metrics as well as data on customer engagement levels and conversion or abandonment rates. The partnership is also helping the brands optimize in-store sales through informed merchandising decisions alongside providing a seamless customer journey through omnichannel commerce. This report is sponsored by Nexite.

Nexite’s Connected Merchandise Platform Helps Factory 54: A Case Study

About Factory 54 and Its Initial Challenges Factory 54 is part of Irani Corp, an international apparel, footwear and accessories fashion chain, home to leading global fashion brands in Israel. The company operates online and in the brick-and-mortar channel: It operates 16 stores under its own name as well as stores under the banners of its 150+ partner brands, including Burberry, Calvin Klein, Levi’s, Michael Kors, Polo Ralph Lauren, Saint Laurent, Tommy Hilfiger and Valentino. Factory 54 manages these brands through a variety of marketing channels: wholesale, multibrand retail stores, monobrand flagship stores and e-commerce. The company played a major role in revolutionizing the Israeli fashion market by creating a premium retail environment and establishing the infrastructure for international brands to operate in the country. To help its partner brands with their technology needs and understanding of the offline consumer journey—to the same level of transparency as they have into online shoppers—Factory 54 has partnered with Nexite to implement the Connected Merchandise Platform solution in partner brands’ stores in Israel. In the second quarter of 2021, the companies began a pilot run of the platform at a store of one of Factory54's premium apparel brand partners. Factory 54’s partner brand faced challenges in leveraging in-store metrics and merchandising data to optimize in-store sales. The partner brand also desired improved inventory visibility and control with the ability to track inventory from the warehouses to the point of sale—and even inside the stores, if possible. Along with gaining business insights, Factory 54 also wished to offer a seamless shopping journey to its customers, through contactless shopping and faster checkout. The Nexite Connected Merchandise Platform Nexite’s Connected Merchandise Platform uses fixed readers and collects data from every product in the store. By doing so, Nexite converts passive in-store merchandise into active digital communicators, providing retailers real-time data about in-store merchandise—such as location and availability (in terms of size, color, design, style, material). The platform also provides insights about the customer’s in-store journey and experience—including how they interact with the merchandise in terms of identifying items, their preferences, levels of engagement and conversion/abandonment rates—matching the level of data detail and accuracy that retailers can collect online. Furthermore, Nexite leverages data analytics to identify which products catch the attention of shoppers, which products they try and which locations in the store tend to see the highest sales or engagement—helping retailers make informed decisions about in-store merchandising and ensuring that stores comply with the guidance from headquarters. Nexite supports efficient inventory management by continuously tracking inventory across all warehouses, shipments and stores. [caption id="attachment_135101" align="aligncenter" width="700"] Source: Nexite[/caption]   Nexite’s Competitive Advantages

• Nexite’s uses NanoBT technology–a battery-free, long-range communication technology that automatically transmits signals using Bluetooth Low-Energy tags with no internal power source, for a relatively low price. The company believes this solution to be more useful and cost effective than the regular/more widely used RFID or active Bluetooth tags: RFID tags must be read manually, making it more difficult for retailers to get real-time data, while Bluetooth tags require a battery and are more costly.
• Nexite tag has an anti-theft mechanism, providing security and replacing existing security buzzers, whereas RFID doesn’t support security features.
• The Nexite platform integrates with a customer’s mobile app providing a contactless shopping experience. With RFID, platform integration is not possible.
• Nexite technology provides continuous data about in-store merchandise through its readers and helps brands understand stock levels and the availability of merchandise in terms of color, design, style, etc. RFID does not provide continuous data about the merchandise
• Nexite uses IoT (Internet of Things) tags that read and store physical attributes of in-store products in a digital format and can be read by customers using their smartphones. In addition to just tracking the in-store merchandise, the tag is also capable of supporting other features such as mobile-based self-checkout, without the need for any manual scanning. For retailers, it offers data and analytics on in-store merchandising and shopper behavior.
• Nexite provides real-time actionable insights by combining unique data from the customer journey, product positioning and in-store display availability, helping store managers and staff to optimize merchandising decisions and boost sales.

Nexite’s contactless shopping experience is secure: Customers can disable security tags during purchase and enable them during returns with just one click through their mobile. It also helps customers make purchases from anywhere in the store, along with click-and-collect features, and hassle-free returns—with no queues and requiring no in-store staff support. The Factory 54 and Nexite Partnership For the pilot program, the Factory 54 partner brand’s selected store has a display area of 180 square meters (1,938 square feet) and two levels of storage area, totaling 80 square meters (861 square feet). The store also has two fitting-room areas. Of the 4,000 articles of merchandise in the store, Nexite has tagged about 1,500, including men’s jeans, shorts and polos, and women’s jeans, shorts, dresses and skirts. Nexite has deployed about 14 readers inside the store to automatically collect real-time data from every tagged product in the store, with information related to consumer engagement and conversion/abandonment rates for each item being processed in the cloud. Nexite’s solution collects and integrates data from merchandise in real time, helping Factory 54 and partner brands make fast, informed decisions based on insights into consumers’ buying behaviors. Amir Hussain, CIO of Factory54, said:

We cannot do continuous reading of data using RFID, and it’s not a platform or solution. Nexite helps to know each and every time the stock level and to get much more data on the product. We can’t do this with RFID and Nexite is also a solution for security. So, it’s an all-in-one platform from my point of view.

Results and Measures of Success

• Improved In-Store Visibility and Product-Level Insights

The real-time availability of data is helping Factory 54 to optimize its brand stores with the same visibility as that of a website and improve operational efficiency. The brand gains insights into the number of times a particular item is engaged with, and whether it converts into a sale or is abandoned by the consumer—exactly the same data derived in e-commerce. The brand leverages product-level insights to compare the sales and revenue of this store to its best-performing store, identify what’s preventing it from achieving higher sales volumes and optimize sales and conversion metrics—such as making changes to product placement and store layout to emphasize certain products in areas that attract traffic and engagement. Nexite’s solution identifies other reasons related to non-conversion, such as issues with design and people not engaging with products despite high availability; it provides feedback to the design and marketing teams from the sales floor. [caption id="attachment_135102" align="aligncenter" width="420"] Product-level insights
Source: Nexite[/caption]  

• Facilitated Data-Driven Merchandising Decisions

Nexite’s platform optimizes merchandising decisions based on in-store location metrics and minimizes labor costs for the brand by automating merchandising-related work such as the scanning of items and locating merchandise in-store. The solution also helps the brand’s store associates get real-time alerts to ensure that the right SKUs (stock-keeping units) are always on shelf and displayed properly. Nexite enables store associates to identify local trends using conversion rates by size, style and product type, so they can optimize product placement in the store to generate more sales. As the solution also automates merchandising, associates can convey in-stock information to customers and replenish in-demand stock when needed. [caption id="attachment_135103" align="aligncenter" width="700"] Real-time alerts about availability and engagement/conversion of items in-store
Source: Nexite[/caption]   Upcoming Nexite and Factory 54 Initiatives in the Partner-Brand Store Nexite and Factory 54 plan to integrate a consumer-facing module into Nexite’s offering to provide additional services in the partner brand’s store via four new features:

• Buy & Go will offer a contactless checkout experience. Customers will be able to disable the security tags on their purchases with just one click when paying and then leave the store.
• Pick & Go will facilitate BOPIS (buy online, pick up in store). Customers will be able to walk in, verify the pickup order, scan it with a handset to disable the alarm and walk out.
• Return & Go will enable faster returns. Customers will be able to drop off their items at a designated spot in-store, scan products to automatically verify that they have been returned and reactivate their security alarm, and walk out; they will receive the refund digitally into their account.
• Ship & Go will turn the store into a fulfillment hub from which online orders can be shipped—providing a closer alternative to a far-away distribution center. Ship & Go will thereby support faster deliveries while simultaneously reducing delivery costs.

Consumers are increasingly unwilling to spend time in queues, prefer faster checkout and are more comfortable with contactless shopping experiences (as they are accustomed to online). Nexite’s upcoming shopping features—Buy & Go, Pick & Go and Return & Go—will support contactless, efficient shopping through the partner brand’s offline store. According to the Shopify Future of Commerce 2021 report—covering findings from a September 2020 online survey of more than 10,000 consumers in 11 countries and analyzing Shopify sales data from more than 1 million merchants around the world—62% of consumers globally are more comfortable making in-store purchases with digital or contactless payments. We believe this proportion is continuing to increase amid the ongoing pandemic, with more retailers and shoppers adopting contactless services.

Nexite’s Technology: Implications for Physical Retail

Understanding how shoppers interact with in-store merchandise can help retailers improve the shopper experience—making it more personalized and seamless. Below, we examine two key ways in which third-party technology solutions such as Nexite’s Connected Merchandise Platform offer consumer-centric benefits to physical retailers. Embrace Tech-Powered Omnichannel Retail Despite the consumer shift to e-commerce—driven by safety concerns and demand for convenience during the pandemic—the physical shopping experience is likely to gain traffic once again moving forward, as it provides the “touch and feel” experience for shoppers. Omnichannel retail therefore offers retailers opportunities to engage with shoppers through multiple touchpoints, capitalizing on both online and in-store traffic, and provide improved customer experiences—including by offering alternative fulfillment services such as BOPIS. How Nexite helps: Nexite’s Connected Merchandise Platform facilitates BOPIS services. The technology also brings the benefits of online shopping to the physical store, by offering contactless and convenient experiences—helping retailers to compete with their online counterparts. Optimize Stores Using Real-Time Data Gaining insights into the offline consumer journey enables retailers to identify high-traffic areas of a store, optimize product placement and ensure compliance with headquarters’ visual merchandising guidance. How Nexite helps: Nexite technology captures real-time data on merchandise movement and consumer buying behavior in physical stores: Physical stores can go beyond sales data metrics to understand merchandising execution and the sales funnel in stores. Tracking in-store metrics and aligning merchandising with consumer behavior informs better product placement, engagement and conversion.

What We Think

This case study shows that Nexite’s Connected Merchandise Platform is bringing seamless, contactless, omnichannel experiences to shoppers at one of Factory 54’s partner-brand stores, with real-time store data enabling the brand to optimize product placement, manage inventory and drive sales through data-driven merchandising decisions, as well as keeping customers informed of in-stock availability. It is critical for retailers to gain visibility into the in-store shopping journey—just as e-commerce players can gather data about consumer behavior online—if they hope to be truly omnichannel and customer-centric. We therefore expect more physical retailers to ramp up their omnichannel capabilities through tech initiatives.