Knowing customer shopping behaviors is vital to any business success particularly the retail industry. Many retailers that have brick and mortar stores find it difficult and costly to capture customer behavior data in stores.
The Hong Kong-listed jeweler Chow Tai Fook has adopted RFID technology to capture data on customers’ preference and shopping behaviors during the sales process in its stores to help create an engaging shopping experience for customers.
The technology is also used in the logistics and stocktaking processes, enabling faster and convenient stocktaking as well as efficient logistics management for the jeweler.
The jeweler used to collect customer shopping behavior data from front-line sales staff via questionnaires, but this method is neither efficient nor comprehensive.
“Customer data like gender, age, what jewelry types a customer is interested in and which items he bought are hard to collect,” said Patrick Tsang, deputy general manager and head of MIS department at Chow Tai Fook Jewellery Co Ltd.
Apart from customer shopping behavior, the jeweler has also faced challenges during the sales process.
It’s common practice for sales staff to use calculators to check and quote jewelry especially gold products’ pricing, which may result in longer sales transaction time and possible errors in calculation.
“With the deployment of RFID technology, our sales process is more efficient and customer data can be collected easier than before. Both help drive our stores’ conversion rates,” he added.
Conversion rate refers to the proportion of customers to a retail outlet who make a purchase.
Understand shopping behaviors
Developed in-house, an RFID module was integrated to Chow Tai Fook’s cloud-based inventory control system (ICS). RFID devices including RFID-enabled price tags, electronics jewelry display trays (smart tray) and handheld RFID product scanners (mHand) are provided by a local RFID vendor. They combine to form an RFID-enabled ICS.
With a built-in sensor, the smart tray not only displays product information of the jewelry placed on it such as price, weight, the location of the jewelry item, stock level but also has the capacity to collect customer data.
The smart tray can track and display instantly how many jewelry items are put on it and which item is taken away for customers to view or try. At the end of each selling, sales staff can make use of the smart tray to conduct a simple survey with customers to collect data like gender, age, purchase purpose etc.
The data collected by smart trays will be sent to and synchronized with the business intelligence system at the jeweler’s headquarters on a scheduled basis.
Through the process of data extraction, transformation and loading (ETL), the jeweler can derive customer behavior insights based on the data captured by smart trays and sales transactions, which allow its business leaders to understand sales performance, demographic and jewelry selection patterns of customers in each shop.
As a result of data analysis, Chow Tai Fook can make better business decisions at the corporate level and at each shop.
“The collected data constitutes a treasure trove for us. By digging into the data, we are able to understand customer behaviors, the challenges of selling, and hence make appropriate adjustments such as changing product mix for each shop,” said Tsang.
Time saved in stocktaking & logistics
Aside from customer data capturing, RFID also helps Chow Tai Fook to save time in logistics management and stocktaking.
The jeweler needs to distribute a substantial quantity of diverse products to extensive retail outlets in Hong Kong and overseas on a regular basis. And sales staff have to do stocktaking three times a day in shops. The routine stocktaking is tedious and time-consuming.
As the jeweler continues to expand its business, both the logistics and stocktaking processes have proved rather stressful for staff.
The RFID devices have relieved their stress to some extent.
The RFID-enabled price tag of each jewelry item contains a unique product ID, enabling product traceability in all stages of the business flow. The mHand scanner reads the codes of the jewelry items placed inside the glass counters without the need to take them in and out.
Tsang said that the RFID-enabled system saved time in stocktaking and logistics management by at least 50% and 60% respectively. As a result, staff can spend more time serving customers.
Chow Tai Fook spent almost two years selecting RFID device vendors, figuring out how to integrate RFID to the company’s inventory system, optimizing the system, conducting series of lab tests and pilot tests at shops, and adjusting workflow in the daily operations.
Since its first pilot test three years ago, RFID technology has already been deployed in all the retail stores in Hong Kong. In China, shops started to use RFID in stocktaking or smart trays early last year. The jeweler will extend the RFID deployment to the retail outlets in Macau and Asia later this year, beginning with newly opened shops.
Chow Tai Fook currently has over 2,000 retail stores in Hong Kong, China, and Macau. The company’s business also covers Taiwan, South Korea, Singapore, and Malaysia.
“The use of RFID in every stage of our retail operations like logistics, stocktaking and sales operations has brought high cost-efficiency to us,” said Tsang. “Internet of Things (IoT) is an emerging global trend. Cost is a key factor in the widespread adoption of RFID tags. With the continuous decrease in cost, RFID will be growing dynamically in the retail sector.”