IHL Group’s study, Retail’s Inventory Distortion Problem: Sizing It All Up, spotlights the global inventory distortion problem for retailers today. This combination of out-of-stocks (OOS) and overstocks is an estimated $1.1 trillion problem for the retail industry, according to IHL. Because of this issue, retailers lack confidence in their availability to promise on-hand stock and, as a result, are cautious in leveraging all item quantities for online sales and store fulfillment options such as buy online, pick-up in store (BOPIS). The risk to the customer experience is too high and the average loss of 8.7% of total sales due to inaccuracy is too much.
According to the latest Kurt Salmon RFID in Retail Study, retailers rated some of their top challenges today as the need to:
• Offer more order fulfillment options to shoppers (55%)
• Gain better inventory visibility (33%)
• Increase operating profits (30%)
With inaccurate inventory visibility, retailers struggle to successfully implement unified commerce initiatives because of the inability to cost-effectively meet shoppers’ demands for “buy anywhere, get anywhere” shopping.
The key to offering various fulfillment options is having visibility into the true real-time inventory in every store enabled through item-level RFID. Adopting this technology and regular cycle counting processes helps retailers to prevent inventory distortion and can increase inventory accuracy up to 99% and maintain it at 95-99%. With enhanced inventory accuracy, the number of shoppers who can find the inventory they want can increase sales by 5% to 25%.
“As today’s consumers continue to seek merchandise where and when they want it, retailers must prioritize the implementation of technology that supports a unified commerce strategy,” said Brent Brown, VP and GM, Inventory Intelligence and IoT, Tyco Retail Solutions. “RFID-based solutions enable retailers to confidently present accurate real-time in-stock positions to meet today’s customer expectations and maximize business outcomes.”
Item-level RFID data is arguably the single-most-important merchandise-related information available to help retailers better provide accurate inventory insight to their customers.
Recently, the Platt Retail Institute released findings on RFID’s quantifiable benefits based on research with Macy’s and its RFID program. Macy’s has been a pioneer in deploying item-level RFID, utilizing Tyco Retail’s RFID-enabled inventory solution for many years. This extensive research revealed inventory accuracy results indicating that Macy’s was accumulating inventory variance at a rate of 4%-5% monthly before implementing RFID and monthly cycle counts. With regular RFID cycle counts, the variance was maintained at an overall 2%-4.5% variance, with fewer markdowns across the company’s inventory.