Consumers; Chapter 9. Technology and Global Market Innovation

Lastly, consumers with a model accounted for 10% of visits to the Land's End site.

HSN, Charming, Levi's, Glamour, Kohls, Lane Bryant, Nutisystem are adapting the technology right now. Similar technology is also used by some other online retailers.

This fusion occurs when companies deploy their technologies in new industries, thereby leading to the creation of new business concepts.

Hi-technology industries are a fertile field for this fusion.

Consider, for instance, the changing nature or the relationship between the firm and its employees.

For several generations, organizational loyalty and commitment were enhanced by frequent interaction and direct communication among members of the firm.

The numbers are proof of Europeans' love affair with high tech-more than 102 million Europeans are online,

according to NetRatings Inc., and self-checkout registers are prevalent throughout the continent. Tesco has installed 285 self-checkout units in 96 of its U.K. stores.

In fact, to consumers, apparel ____ problems are the biggest reason they are hesitant to buy on apparel online.

fit

2. Marks & Spencer is using the RFID technology to:

free up the store staff so they can be serving customers

While apparel companies are earning about US $ 26.6 billion in e-commerce market,.

they are concerned about how products are displayed and how well potential customers can interact with items by more advanced technology

Second Life residents are able to buy items virtually with Linden Dollars -- the currency of the virtual world -- or

they can connect directly from there to his recently-launched online store at www.emporioarmani.com for non-virtual vestments.

M&S ready to start national roll-out of item-level RFID

"Marks & Spencer is planning to deploy item-level radio frequency identification (RFID) tags at almost all of its clothing stores after successfully trailing the technology in selected stores last year."

"Marks & Spencer by 2007 has the potential to tag at the item level about 350 million individual pieces at a cost of about 20 cents for each tag," he estimates, putting the retailer at the forefront of item-level tagging.

"RFID, used to tag and identify individual items, is the one technology that can make a dramatic and rapid improvement to customer service in our stores," says James Stafford, head of RFID at Marks & Spencer, which had a revenue of %15.9 billion in 2004.

Especially for fashion products, effective supply chain might be competitive advantage for faster fashion cycle. Trends in global apparel retailers include:

(a) speed to market - short lead time for fast fashion cycle; (b) zero inventory - low quantities, scarce supply and (c) more style - more choice, more chance of hitting it right.

QR systems can save the cost for production in several ways:

1. Enormous inventories carried by textile mills, apparel manufacturers, and retailer can be reduced. 2. It should be possible to reduce incidences of forced markdowns that result from orders of goods that fail to sell as expected. ,

QR systems can save the cost for production in several ways:

3. The third area where QR can result in cost savings involves " stock outs." or situations where business is lost because a customer cannot find apparel in the desired style or size because it is out of stock. QR system permit smaller initial orders, all owing stores to recorder more of a product that proves to be popular.

In the early days of the Web many analysts considered it unlikely that clothing could be commercialized online, over the past few years, sales in this product category have boosted.

According to the State of Retailing Online 2008, US online apparel sales reached $ 26.6 billion.

Some e-commerce sites, such as Amazon.com, e-Bay, and portal sites (e.g., google, yahoo), have its own international domain websites to interact with the regional consumers.

Approximately 78.1 percent of the U.S. population has Internet access for getting information and services in June 2012.

WEB AND LODGING INDUSTRY

Booking travel, finding health information, buying products — there is a growing need to help people figure out whether a Web site is credible or not: Can I trust the information on this site? Can I trust in the services this site describes?

According to Internet World Stats in 2012, worldwide Internet population was about 2.41 billion.

China has the world's largest Internet population of 538 million, followed by U.S. (245 million), India (137 million), Japan (101 million), and Brazil (88 million) in 2012.

1. Why is RFID being considered for the economy in China?

China's supply chains are inefficient. , The infrastructure of the shipping industry in China far exceeds its capacity that is negatively affecting its supply chain., and Over 70% of the goods imported into the U.S. from the Pacific Rim come from China.

For one thing, it reinforces the need to invest heavily in developing and maintaining core technological skills, especially in the dynamic markets of the future.

Companies that ignore the investment requirements of emerging hi-technology industries are doomed. Moreover, it suggests that companies should give attention to the dynamics of technology fusion.

Cycle of Technological Innovation

Competitive dynamics in retail industries are being transformed as a result of technological innovation. For instance, productivity in apparel industries which utilizes mostly hand-working and sewing machines advanced faster than the manufacturing average between 1975 and 1985.

LAND'S END:

Direct mail retailer Lands' End added virtual 3 D capability to its site six years ago. Users could answer height, weight, and facial feature questions to create a virtual model that could " try on" digitized Lands' End clothing.

What is e commerce?

E-commerce is a term often used by the industry to describe online retailing via the Internet, where the customer and retailer communicate through an interactive electronic computer system. E-commerce is becoming increasingly important as a foreign market entry method

RFID technology is gaining traction in Europe, as retailers there push the technology beyond the case- and pallet-level tagging supply-chain applications that are prevalent in the United States.

Each of these European companies, like the U.S. retailer Wal-Mart Stores Inc. has initiatives that involve suppliers affixing passive RFID tags to cases, containers, or pallets. Europe's cultural climate may make it easier for metro and other retailers to push RFID deployments.

Marks & Spencer started itemization of RFID when its spring /summer clothing ranges came into stores. The item-level tags enable staff to carry out in-store stocktakes more quickly and more frequently than in the past.

Employees sweep handheld devices among rows of clothes to find out what size, styles and colors need replacing..........." Individual stores have increased sales through using RFID during spring /summer trial.

APPAREL E COMMERCE

Especially, apparel sales online are strongly growing as more consumers go online and more retailers develop shops in cyber space. It is estimated that that the Internet will handle half of all apparel sales in the future.

Websites are becoming more interactive by contributing to reservations and overall productivity. More organizations are concentrating on measuring the effectiveness of the marketing activity of their websites.

For example, hospitality industry is being successful on the Web.

By 2008, retailers worldwide were expected to contribute $1.3 billion to the more than $7 billion global RFID market, according to IDTechEx, a U.K. analyst firm.

European retailers will spend from $60 million to $100 million this year on their infrastructures and are expected to make similar investments in RFID software and tags the following year, says Peter Harrop, IDTechEx's chairman.

In addition, the declining cost and enhanced capabilities of this technology have spurred by major global retailers such as :

Germany's Metro, the UK's Tesco, and Wal-Mart in the United States.

In addition, with the explosive growth of mobile phone subscribers, Internet-enabled mobile phones (e.g., iPhone) have brought new ways of communications and marketing to target markets.

Global online market has a huge potential since the Internet users are rapidly growing worldwide.

Twelve bits of information (size, measurements, weight, hair color, etc.)

let users give a model the desired appearance; they usually recreate a virtual representation of themselves.

Nantel (2004) stated that consumers used the model were 26% more likely to buy clothing viewed on the site than consumers that did not have the model.

In addition, consumers with models purchased 13% more than other consumers.

RFID info can be used to automatically create advance ship notices or proof of delivery receipts. Wireless RFID handheld readers provide access to inventory and customer info stored in a database.

In dressing room, RFID readers identify all merchandise a customer brings inside and displays information on the garment on an interactive video touch screen display.

TECHNOLOGY AND SUPPLY CHAIN MANAGEMENT: One of the important issues on global retailers is supply chain networks. Retailers and manufacturers are working as partners to meet the customer's requirements.

In order to produce the right products at the right price, in the right time and in the right place, apparel manufacturers must be faster/flexible than their competitors to rapidly respond to consumer demands and adapt to current and future trends.

Technology alone does not guarantee success, even in hi-technology industries. Companies must invest in technological resources and organizational competencies that, if combined, create advantage.

Indeed, one can argue that technological investments are essential for participation in a hi-technology industry but do not guarantee success.

China is second only to the U.S. with regard to mobile phones, has 75 million people having access to the Internet, is the world's biggest producer of personal computers.

India is the leading software countries in the world, attracting foreign direct investment not only in manufacturing, but also for research and development, from high-tech leaders around the globe-including the U.S.

Online consumers are connected via social media (e.g., twitter, Facebook) and an Internet enabled device such as a smart phone. They become more sophisticated and demanding for fast response.

Internet makes it easy for customer to move on quickly to the next retailer.

Wal-Mart projects to enable 600 stores nationwide with RFID equipment, accounting for the production of nearly 8 billion RFID tags annually.

Many other Wal-Mart suppliers also are expected to adopt RFID later in 2005 (Tracy, 2005). By 2006, RFID capabilities are expected to be widely used by retailers, distributors, and suppliers.

".......Some 15 suppliers working in 20 countries tag every item in six clothing departments: men's suits, men's trousers, men's jackets, women's casual trousers, women's skirts and women's suits.

Marks & Spencer is also tagging the pallets and roll cages used by its clothing business so that it can keep track of goods as they move through the supply chain....."

They also could change the colors of garments, choose different accessories or even view a model from different angles.

Once a customer decided to purchase an item, the virtual model also could help determine the correct size.

Moreover, the designer will even attend the store's opening by way of a representative Second Live avatar.

Players will be able to buy items virtually with Linden Dollars, the currency of this virtual world. They can also choose to make a real purchase by connecting to Armani's online store

The RFID tags are perceived to be coded with a great deal more information than barcodes.

Retailers can store and transmit data, such as when the product item is manufactured, expiration dates for perishable items, and a record of the temperature at which an item is shipped

TECHNOLOGY AND E COMMERCE: Everyone is getting wired. Laptop computers and handheld or desktop devices not only fill the workplace but the home as well.

Retailing becomes increasingly about customer relationship management (CRM) —service and advice —across border and around the world.

CASE: SAMSUNG ARMANI PHONE IN SECOND LIFE

Second Life gets the best out of real life. designer Giorgio Armani just introduced the phone that he designed together with Samsung in the offer of his new fashion store that he opened in this virtual world.

Initially, E-commerce focused on domestic sales. Large number of companies started receiving orders from customers in other countries, resulting in the concept of International Internet Marketing (IIM)

Some companies are actively designing Internet catalogs targeting specific countries with multilingual Web sites. For example, Dell Computer Corporation has expanded its strategy of selling computers over the Internet to foreign sites (i.e., Hong Kong, other Asian countries) as well

According to a Jupiter survey, 84% of consumers said that the need to see, touch or try on certain products, which would ultimately be a barrier to purchasing a wider range of products online.

Some retailers are investing personalized 3 D rendering to boost the sales because 3 D allows visitors to get a better look at their products, keeps them engaged, and results in higher sales.

And chips have been embedded in plastic cards so London subway and train riders can automatically pay for their trips.

Still, retailers don't have to tread carefully to avoid the perception that RFID infringes on consumer privacy, a strong point of contention in Europe.

Without item-level RFlD tracking, it's nearly impossible for the company to keep up to date with 100% accuracy on items that come in complex sizes, such as bras, which have 68 size variations.

That results in frustration for the customer who can't find her size in stock "and for our staff who want to help the customer and complete the sale," Stafford says.

On the other hand, companies need to know the factors driving RFID adoption in the world's next major manufacturing center.

The RFID adoption is progressing in the United States and Europe, particularly in the warehouses and distribution centers of several hundred (and climbing) suppliers to Best Buy, Metro, Tesco, Target, Wal-Mart and the U.S. Department of Defense.

In this environment, audience selection is great and the number of advertisements much lower than that found in real life.

The Samsung Armani phone will also join the large number of products that have been taken from real life in this virtual world that arouses the interest of such a huge number of people.

In addition to hotel industry, restaurant companies are using Web technology to better services. Customers can reduce wait time or, order electronically.

The companies would be able to build customer database from their clicking on the Internet.

Just like it usually happens with other real products featured in Second Life, the Armani phone has exactly the same features as those from real life.

The handset is 10.5 mm in thickness and will fit in the palm at the size of a credit card, which means just a few pixels on the PC's screen.

Second Life is one of the most popular PC games that enable players to live an alternative life just the way they wish their real one to be.

The number of people that engage in this world is so large, that it has proved to be a great environment even for companies to make their brands known and advertise.

One of the ways RFID adds value is by improving efficiency in warehouse operations, due to its ability to read tags without a direct line of sight.

The system's capital cost is less than 10% of the annual cost of using barcodes.

The Samsung handset also includes a 2.6 inch QVGA touchscreen with vibration screen feedback.

There is also an evolved 3 megapixel camera and Bluetooth connectivity. Interesting enough, Armani's virtual store follows the lines of the one the fashion designer owns in Milan, Italy.

Technology should be supported by excellent organizational and marketing skills.

This has clear implications for strategy making and execution technology is expected also to transform the concept of the firm in other important ways.

Computer-assisted machines promised dramatic gains, increasing product and process innovation in 1990s. Investment in new plant and state of the art equipment increased from $2 billion in 1987 to nearly $3 billion in 1999.

This has included the development and use if shuttle-less looms, robitics, " nanotechnology" which employs technique from molecular engineering to improve fabric performance, and the creation of "smart" fabric etc.

IMPACT OF TECHNOLOGY

Today, most industries are facing the greatest challenge in its history because of the rapidly changing business environment with a respect to global competition, market performance, and changing technology

The big question now is:

When will manufacturers start to push RFID backward into their overseas manufacturing operations, specifically China?

MANAGING TECHNOLOGY IN A GLOBAL MARKET:

While globalization will continue to accelerate in both traditional and new industries, future lucrative markets will be technology-based. This simple observation has several important implications.

4. The secret to Zara's success is:

a focus on product replenishment that exceeds all others in the apparel industry.

For global marketplace, the supply chain networks are becoming more complicated and extended. For selling a garment, it would be designed in the U.S., sourced in China, assembled in Mexico, be warehoused in U.S...

be marketed in the U.S. and Canada, and sell to customers in the U.S. and the U.K. Therefore, global retailers need to pay a special attention to supply chain management.

RIFD TECHNOLOGY AND GLOBAL RETAILERS: What can RFID do?

can help retailers to manage their inventory more effectively by preventing overstocking and removing expired perishable items from the shelves.

According to Lodging Magazine Annual Report,

checking-in at a solid first place is the number of hits (visits) at 48%, and followed by purchases or bookings (37%), visitor feedback (26%), completed response forms (14%), brand recognition (11%), conversions generated from other sites (10%), click-through (9%) and page views (3%).

Therefore, many retailers ranging from supermarkets to prestigious specialty stores have already planned to apply RFID technology to their business actionschain

ex. , a retail chain store in the UK, Marks & Spencer, is expected to benefit most from the technology because it could support the industry's increasing demand for speed, frequent delivery and collaborative planning along the value chain.

3. RFID is used at Prada mainly to:

customize their customer service

SECOND LIFE IN ARMANI:

designer Giorgio Armani has opened up shop in virtual world Second Life, with a store modeled on his flagship location in Milan in Sept 2007.

5. Which of the following was the initial use for RFID?control of paroled criminals, highway toll tags, prevention of mission children or identifying warplanes since WW2?

identifying warplanes since WW2

Also, retail industry has recognized effective production through inventory management techniques, such as "Quick-Response (QR)"

including electronic data interchange (EDI), barcoding and point-of-sale data capture.

Technology is influencing education (e.g., Blackboard), media (e.g., Internet), and market environments, which might lead to improve consumers' standard of living.

innovations such as smartphoes, tablets, interactive home shopping, digital TV, and RFID apply to product development, logistics and retailing, leading to a higher quality of product and services and new consumption in domestic as well as international markets.

What is supply chain management?

is a process for managing the flows of goods, service and information between suppliers, retailer and the final customers.

What is a 3 D visualization tool ?

is software which creates a virtual 3 dimension model according to a user-specified profile.

In comparing that apparel was sold primarily through brick-and-mortar stores ($203 billion), and two direct channels: catalog /call centers ($16 billion) and e-commerce ($5.6 billion) in 2008,

it implied that e-commerce is now the largest and fastest growing segment with the growth including new purchases expecting to reach $73.0 billion in 2016 (eMarketer), as well as a channel shift from both bricks-and-mortar and catalog.

example, a Spanish retailing giant, Zara, has one of the sweetest success stories in the global fashion business. The company relies on communication technique to take control of almost every aspect of design,

production and distribution for fast fashion that it takes 5 weeks from design, fabric cut, sewing in local factories, and finishing and sending to warehouse, to Zara store.

Widespread adoption of "Radio Frequency Identification (RFID)" could improve supply chain efficiency such as:

real-time tracking, safety monitoring, and overall warehouse operations. This leads to increases in sales volumes and improves profitability for vendors and retailers.

Increasingly, however, organizations, and their employees are physically dispersed geographically. More people are working at home, bc new technology.

role of the firm as means of fulfilling employees' social needs is fast changing. New organizational systems are expected to evolve, requiring creative thinking and management.

According to Information Week, Mach 2007, the U.S. accounts for about 40% of worldwide investments in IT, and most major IT companies are located in the U.S.,

so the U.S. should be the focal point of the global IT economy).

Three dimensional body scan technology is being targeted for utilization in the apparel industry,

specifically for automated custom fit, size and fit prediction , virtual try-on, personal shopper services, co-design mass customization, custom pattern development for home sewers, and research.

Clearly, it is optimistic for the loading industry to be successful on the Web. However, lodging firms' concerns on the Web are as followings:

virus protection, acquiring capital for technical improvements, vendor support, lack of integrated package and obtaining senior management approval for technology projects.