All good things start with a challenge.
Physical stores play a crucial role in retail business. Did you know that Amazon plans to open more retail stores? Did you know that most online shoppers visit a physical store either before or after they buy product, even if they eventually buy the product online?
Fact: retail companies with a physical store presence capture the majority of retail sales.
However, the shopping experience still needs a lot of improvement. For example, 2 in 5 consumers don’t complete a transaction because they don’t like the level of customer service they receive (American Express Global Consumer Barometer) while 86% of consumers say they are willing to pay more for a better customer experience (American Express).
Solution:
How are retailers responding to these challenges?
Retailers need to re-imagine the business processes at their physical stores and enable these stores to compete against online shopping. To accomplish this, stores must invest in solutions that address the widening capability gap between online and physical stores. First, we must invest in solutions that foster a better understanding of customer interests so that we can better engage customers across their shopping journey. Second, stores need a better accounting of store floor inventories for the purpose of both managing costs but also to enable frictionless customer experiences across channels. Digital solutions can enhance the store experience. These solutions are enabled by devices such as tablets, smartphones, in-store kiosks, video screens, digital signage, interactive hangers, augmented reality, use of social proof, virtual reality, and of course retail sensors. Stores that invest in digital solutions and technology with a unified commerce perspective will better compete against online and win back their customers’s loyalty.
Strategy:
What is an efficient strategy for digitizing retail stores?
We need to integrate the digital edge to the digital core. In order to digitize retail stores, we need to: (1) establish an infrastructure at the store 
level, (2) capture and process the required data, and (3) add business context from the digital core to analyze and enable end users to take meaningful action in a responsive and real-time fashion. We can then build apps that will improve shopping experience, increase productivity, ensure shelves are stocked with what customers want, deliver a low TCO solution, and provide near real-time access to information from the digital core at the edge anywhere, anytime.
And that is the goal of our co-innovation with Intel.
SAP and Intel Co-innovation:
How can SAP and Intel help retailers to digitize retail stores?
Let’s see what we can do with our SAP standard solutions today and where there is an opportunity to innovate.
We have SAP HANA, which is a revolutionary platform that helps to perform real-time analytics and develop and deploy real-time applications. 
You can also pair SAP HANA with SAP Fiori to deliver great user experiences. The HANA Platform contains proven business logic and can integrate cloud apps for all different areas of business. It can also help to ingest IoT data from sensor to cloud via IoT Services, acting as a digital enablement platform on which developers and our partner ecosystem can innovate.
Also, we have the SAP Fiori apps for In-Store Merchandising that are available as a SAP standard solution. The apps are responsive and help to improve customer 
service and to increase the productivity of store associates. As a testament to SAP In-Store Merchandising solution, we have over 200 retailers in different segments and sizes that are using SAP for In-Store Merchandising.
Now, what is missing? Our solution (which is a part of the digital core) does not yet take advantage of opportunities to digitize edge processes that can yield further efficiencies for our customers. For example, we support receiving of stock by scanning the handling unit and products but we don’t support sensor based or automated receiving, we support stock information but they are not based on real-time sensor feed and we support print labels but we don’t support digital labels.
So, what can we do?
This year at NRF Intel released a new platform called the Intel® Retail Sensor Platform. It connects and collects data from retail sensors (through RFID tags), enables seamless and secure data flow between the edge devices and the cloud, connects to SAP HANA, and it ingests and analyzes the data in near real-time. The retail sensor data can also be combined with other data, such as video, and quickly analyzed to provide a cohesive, near-real-time portrait of store activity.
As part of this solution, our colleagues from Products & Innovation, LoB Digital Assets & IoT at the Waterloo Lab are developing edge processing and accelerator software that leverages the SAP intelligent edge. It extends the SAP data and processes from the core to the edge to help enrich IoT sensor data with business context enabling real-time decision-making. In addition, it accelerates local applications and workflows at the edge.
With these key components we can re-imagine the In-Store business model and processes. Additionally, we can support a range of new use cases. The first part of the Intel and SAP Co-innovation aims to improve In-Store customer service at fashion retail stores by leveraging retail sensors to make In-Store Business models more efficient.
We originally had a number of use cases on our list that could be supported based on our combined technologies. In a design thinking workshop we decided upon three use cases to start with:
- Misplaced Product Detection & Correction,
- Real-time Inventory & Automated Receiving, and
- Shrinkage Detection.
The benefits that we have with this joint solution include: improving the shopping experience, increasing productivity of store associates, making sure shelves are stocked with what the customers want, reducing solution TCO, and providing real-time access to information from the digital core to the digital edge, anywhere, anytime.
And this is how our POC demo dashboard looks like:
And this is the link to a video "Dynamic Edge Processing makes The Spin!"
Please watch it from minutes 2 on: https://www.sap-tv.com/video/#/38059/the-spin-with-megan-meany-episode-71
What has been done so far and what are the next steps?
The first part of the co-innovation was defined in a DTS event in Chicago. We conducted review sessions with some fashion retailers and the feedback confirmed that we are heading in the right direction. A POC demo dashboard was built and was successfully showcased at SAPPHIRE (see the attached picture). As for the next steps, we will review the scope with more customers and recruit pilot candidates, we will set pilot projects live and build references in 2016, we will build a value chain by enhancing the scope with other teams, and we will plan to showcase at Retail Forum 2016 and NRF 2017.
Business value:
Brian Krzanich, the CEO of Intel, quoted during a live session with Bill McDermott at SAPPHIRE: “…On average retail has a 65% accuracy rate on inventory. Every 3% of inventory accuracy improvement tends to be about 1% of growth….” Link to video: This is the link to video (see at ~ 1:52:18):http://events.sap.com/sapandasug/en/session/26848
Summary:
Our goal is to complement our standard solutions with customer pilots. We want to build customer references and we want to show that Retail companies – such as fashion retailers – can use Intel and SAP to carry out business transformation to ultimately improve customer service
Please contact us if you know of a fashion retailer who would be interested to become a pilot customer.
Related Links:
Contact:
- Alireza Ghasemi, Solution Owner In-Store Merchandising, SAP
- Jamie Buchanan, VP LoB Digital Assets and IoT, Emerging Technologies, SAP
- Sarah McMullin, Director Emerging Technologies, SAP
- SAP Managed Tags:
