By Dean Frew, senior vice president of SML RFID Group.
Most retailers today have access to loads of data – much more than in years past. Big data is everywhere, and the name of the game is "analytics". However, if a retailer's inventory data is less than 80 percent accurate, what good is the hottest analytical software? It's like looking at a 1 megapixel image on a 96" HD television.
In order to use data analysis to improve operations for greater efficiency and profitability, a business first needs access to complete, up-to-date and accurate data. Apparel retailers need real-time data on their product inventory and their customers' buying behavior, or the analytics are worthless.
Item-level RFID inventory management is fundamental to addressing data inaccuracies. This simple fix enables the collection of more accurate and timely inventory data, which retailers can use to make higher impact decisions about appropriate inventory levels to match demand. This data also allows reduction of out-of-stock levels, and visibility into the origins of shrink to better address it. In a nutshell, retail RFID solutions that are creating value are execution in nature, rather than just reporting in nature. These solutions help management fill empty slots on the sales floor, while helping sales find just the right item for a customer, as well as speeding up the receipt of goods delivery into a store.
This is never more visible than when we address the data integrity issues that prohibit a successful implementation of an omnichannel strategy. And the omnichannel strategy has never been a hotter topic, as retailers are driving to leverage inventory across their entire enterprise to service what a customer desires. Fundamentally, omnichannel is all about delivery of value through whatever channels the customer prefers, better connecting retailers and brands with their customers to build loyalty.
The best retailers know that omnichannel without inventory accuracy is just a half-baked promise they can't really deliver. There are retailers today that are using a 5:1 rule (or more) for fulfilling omnichannel orders in the store. This is not very effective. Effective omnichannel requires a high degree of confidence that the customer's pick-up order is actually available at the store; or whether a designated store has the product on-hand that it is supposed to ship same-day or overnight.
Matching the right product with the right customer is fundamentally an issue of inventory, and item-level RFID is the only technology that can effectively address this fundamental issue. Resolving this underlying concern improves omnichannel success as well as in-store sales.
Customers are most disappointed when the item they want to buy is not on the shelf. Most often this is due to retailers conducting manual inventories approximately twice a year. Items are out-of-stock on shelves on a daily or weekly basis, leaving customers out of luck and management in the dark. Complete visibility into itemized inventory opens up an entirely new universe of data and predictive analytics, helping retailers avoid out-of-stocks today while better predicting what the customer will want next month or next year.
A sophisticated item-level RFID inventory system allows savvy retailers to move to a "one-inventory" model by replacing segmented data pools with a single, cohesive, accurate picture of inventory across the entire enterprise.
While the industry is still in the early stages of this inventory model, it is clearly gaining momentum with best-in-class retailers that have the foresight and vision to see what's coming. Integration between e-commerce suites and RFID inventory applications has begun, and will continue to accelerate as omnichannel becomes increasingly important.
The tipping point toward mass adoption is just around the corner. It's an exciting time for the apparel industry!