Retailer struggle

March 25, 2021

Without RFID, retailers struggled to deliver

Research shows that retailers who have not invested in the technology were unable to ship from store or execute curbside or in-store pickup consistently. 

While retailers are still evaluating their holiday 2020 performance, early research suggests that those companies that did not invest in radio frequency identification (RFID) technology to manage their inventory struggled to ship from store or executive curbside or in-store pickup consistently.

Research from a survey of more than 2,000 consumers across the United States, the United Kingdom, Belgium, the Netherlands and Luxembourg reveals that more than six in 10 shoppers report having a “mixed or generally bad experience” when they used retailers buy online, pickup in store (BOPIS) services. The study was done for GreyOrange, a global software provider that leverages artificial intelligence and machine learning to optimize fulfillment operations.

The GreyOrange survey also showed that buyers shifted a majority of their 2020 purchases to online platforms due to Covid-19 conditions, but more than half plan to resume pre-pandemic buying patterns when possible. The main reason: A mixed or generally bad experience with BOPIS, and challenges with returning items (see here). 

Retailers also struggled with ship-from-store in 2020. According to findings from a new Accenture study, none of the 116 retailers covered managed to deliver goods ordered online within 24 hours. On average, retailers took 2.8 days to fulfill orders in 2020. That compares to 1.8 days in 2019, which is due to shipping delays caused by the high volume of packages shipped after the pandemic hit.

The research did not break out retailers who invested in RFID technology from those that didn’t, but companies that use RFID extensively have generally received high marks for their BOPIS and ship from store programs. 

“RFID tagging enables significantly improved inventory accuracy, eliminates safety stock and creates more visibility for BOPIS, curbside pickup and ship-from-store programs,” — Kris Barton, Director, Market Development RFID at Avery Dennison Smartrac.

Retailers using RFID have an in-store inventory accuracy of about 95 percent, compared to about 65 percent for retailers that do not use RFID. That means, retailers who do not use RFID sometimes offer items that they cannot locate in stores for shipping directly to the customer or collecting for curbside or in-store pickup. 

Another problem is that the lack of inventory visibility for retailers not using RFID causes them to hide inventory from online customers. Some retailers are hiding as much as 80 percent of their inventory because IT systems show only two or three in stock, and retailers don’t have confidence that those items are actually in the store, according to research done by the Auburn University RFID Lab. RFID technology can help retailers boost inventory accuracy from an industry average of 65 percent — some categories can be as low as 35 percent – to 95 percent or better. This enables retailers to show more inventory to online and mobile customers because they have confidence that if their inventory system says there are two in the store, there really are two items in the store.

Retailers with complex SKUs – many different versions of the same product – or with poor SKU-level inventory accuracy will have the most problems with BOPIS and curbside pickup programs, because store associates will not be able to locate the items for the customer in a timely way. This often leads to retailers having to cancel orders – leading to dissatisfied customers – or shipping the items to the customer from different stores, which increases shipping and labor costs, erodes margins and leads to a less satisfied customer.

RFID allows a single store employee to take an inventory of 15,000 items or more in an hour. This means stores can take inventory once a week or once every other week, rather than once or twice a year. This increases inventory accuracy, which allows retailers to show more inventory to customers online. Store associates can then quickly find items using a handheld RFID reader, and ready those items for pickup or shipment to the customer.

Kris Barton, director, market development RFID at Avery Dennison Smartrac, says retailers do not need to install expensive fixed infrastructure to begin getting the benefits of RFID. They can use handheld readers to take inventory and find goods  faster for omnichannel. “RFID tagging enables significantly improved inventory accuracy, eliminates safety stock and creates more visibility for BOPIS, curbside pickup and ship-from-store programs,” Barton says.

Retailers who start deploying RFID now can easily be ready for the 2021 holiday season and optimize BOPIS and ship-from-store omnichannel modeling.

By Mark Roberti, RFID Journal

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