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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Is RFID the Silver Bullet for Inventory Accuracy and Visibility?

RFID Whitepaper_Cover_Dec-2014In a recent BRP white paper, RFID – The Silver Bullet for Inventory Accuracy and Visibility?, we explore how radio-frequency identification (RFID) technology is emerging as a critical enabler of the omni-channel experience. RFID provides retailers with real-time visibility to accurate inventory across the enterprise, making it an imperative to real-time retail.

A catalyst for significant economic benefit, RFID gives retailers the ability to automatically identify and track goods, as well as capture instant information on a wide range of merchandise. As the technology has gained traction, it has allowed retailers to reap financial benefits and efficiency gains while strongly supporting the unified commerce model.

Retailers are taking note, evidenced by RFID’s deployment among retailers such as Zara, Saks Fifth Avenue, Lord & Taylor, Macy’s, Bloomingdales, and Chico’s. As the retail industry accelerates the shift towards an omni-channel retail model, more retailers are likely to follow suit by incorporating RFID technology into their environments to support a true unified customer experience.

Evolution of RFID Technology

Despite the inherent benefits of RFID technology, its adoption by retailers has been a slow process for budgetary reasons. RFID per tag costs were previously prohibitive for many retail applications; however, technological advances have resulted in significant price decreases and have made RFID more accessible to a broader range of organizations.

Value Proposition

RFID technology provides retailers with an opportunity to significantly improve sales, gross margin and markdowns through better leveraging of real-time, accurate inventory information. Since logistical inventory tracking can be extremely laborious for all retailers, and particularly those with stock keeping unit (SKU) intensive models, organizations stand to profit considerably by RFID Benefitsemploying RFID.

Omni-channel Enablement

As it relates to omni-channel initiatives, RFID provides fundamental support to businesses that offer a large assortment of styles, colors, and sizes. Near perfect inventory accuracy is needed to realize real-time retailing capabilities such as buy online and pick up in-store, buy online and receive in-store, and buy in-store and ship to home. SKU depth can cause item quantity distortion, as maintaining exactness in inventory counts presents numerous execution issues.

Read the BRP RFID white paper for more details on RFID, including case studies and a 3-step methodology for implementing RFID.


WHITE PAPER: RFID – The Silver Bullet for Inventory Accuracy and Visibility?

While RFID has been slow for retailers to adopt due to cost and ROI challenges, reductions in costs and advancements in technology are certainly making RFID an attractive proposition for retailers.

But is it the silver bullet? What do you think?

As always, I welcome your thoughts and opinions. Please share your comments below.