Expanding Use Cases for RFID – Enabling BOPIS, Cutting Inventory and Speeding Checkout

Retail TouchPoints – The increasing popularity of omnichannel initiatives such as BOPIS and ship-from-store has given new urgency to a perennial retail problem: executing store-level inventory accuracy. Reducing out-of-stocks always has been critical to boosting sales: after all, customers can’t buy what they can’t find. Now, however, with many stores doubling as online fulfillment centers, there are new requirements for quickly locating items ordered online so they can be prepped for shoppers coming into the store to pick them up. That makes its more vital than ever for retailers to know exactly what items are where at any given time.

Comments from Ken Morris:

The growth of BOPIS and other omnichannel services has ramped up retailer demands for more accurate inventory across the entire enterprise. For many retailers, “it’s not just inventory for the stores, it’s also e-Commerce, mobile and call center [channels],” said Ken Morris, Principal, BRP Consulting in an interview with Retail TouchPoints. Many retailers maintain separate inventories for each channel and still rely on technology that syncs them up nightly, or even less frequently than that. This is the equivalent of “trying to cross Fifth Avenue at noon with yesterday’s traffic information,” he added.

When retailers lack up-to-the-minute inventory data, “they use safety stock to account for the lag time,” said Morris. “For example, if the safety stock level for an item is two, and that’s how many are in a store, someone placing a BOPIS order will get a message that the item is out of stock. That’s crazy, because it means retailers are over- inventorying and buying more than they need.”

Costs go beyond just buying more items than are needed: retailers with excess inventory in the wrong places are “marking down product that they could have sold at full price, so they are often making little or no profit,” on those transactions, said Morris.

However, when armed with RFID-enabled inventory data from stores and distribution centers, retailers can enhance the profitability of individual transactions. For example, while most items bought online and shipped from a store are sent from the location that’s geographically closest to the customer, this isn’t always the most cost-effective move.

“I’m on Cape Cod, so most retailers would automatically ship an item from their Hyannis store,” said Morris. “But the reality is that if it’s a seasonal cold-weather item and it’s Cape Cod in the winter, they are quite likely to sell the item at full price in the store itself. But the same product might be sitting in ‘dead’ inventory in Jacksonville, Fla. If the retailer can get a full-price sale on the item, it can more than cover the extra shipping cost to send it from the Florida store.”

Integrating RFID and IoT also can help with in-store task management, providing associates with real-time data about misplaced products or items that need to brought onto the sales floor from the back room.

Retailers that have deployed IoT technologies in their stores also can get more out of their RFID investment. “There are a lot of devices — products themselves and smart shelves — that could be enabled, or already are capable of, broadcasting information, but no one is listening,” said BRP’s Morris. “Even the lights in the store are broadcasting, because when they fail they are providing an alert that they need to be replaced. We think that everything will broadcast in the future, so for example a smart shelf label could alert a system that an item is out of stock.”

Integrating RFID and IoT also can help with in-store task management, providing associates with real-time data about misplaced products or items that need to be brought onto the sales floor from the back room.

There are customer-facing applications as well: “We built a custom app for one of our furniture clients that leveraged RFID for product location,” said Morris. A customer that viewed a living room set online could later go to the store, and if the customer had opted in as a member of the retailer’s loyalty program, “they could bring up what they had previously viewed on the app, and get a map around the store to every product in the set, leveraging RFID,” said Morris. “People are merging the online and in-store experience in this way today.”

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