Supporting the Five Omnichannel R’s with RFID
The biggest advantage of omnichannel retailing is also its biggest challenge: While consumers can use all channels simultaneously, retailers need to be able to fulfill orders accurately and in a timely manner from every one of them. This presents a range of issues, including where to hold inventory, the inventory mix (assortment, SKU optimization), the location (closest store, DC, etc.) from which to ship for maximize margins, customer prioritization by in-store vs. online, and others. In response, retailers have invested in more sophisticated CRM and inventory systems, customer analytics, in-store beacons, kiosks, interactive fitting rooms, etc. But these investments need to be linked to inventory and location data to honor customer promises. And that’s where sense and respond platforms, including RFID, come in: Using RFID, retailers can know when stock comes into stores and when it is on shelves for purchase and fulfillment from any channel. Taking a look at the five R’s of omnichannel retailing, we can more easily see the value of sense and respond platforms: Relevance: providing relevant offers in relevant channels. In order to provide personalized offers to shoppers via mobile apps, in-store beacons, loyalty rewards, etc., customer data needs to be used in conjunction with inventory data to generate offers. Nothing is more disappointing than receiving a personalized offer in-store via catalogue or online only to find that the item isn’t in stock. Replenishment: keeping fast-moving complex SKUs in stock. Fast movers/core items comprise the foundation of retail transactions. For example, jean purchases drive sales of complementary items such as shirts and belts. In fact, the average shopper buys an additional three to four items after finding what he/she is looking for. So a poor replenishment process leads to lost sales, not just for the out-of-stock item, but the entire transaction. Responsiveness: brick and mortars are in a race. Traditional retailers are competing with online retailers to see which can deliver faster and with more convenience. They’re also fighting to see which can master the ability to recommend item substitutions that are in stock. Real-time inventory data enables store associates and online customer service staff to easily locate items when forecasting delivery dates and making recommendations so that consumers get what they want, when they want it. Responsibility: omnichannel fulfillment can be very costly. If inventory data isn’t accurate, orders may be filled hundreds of miles away, when they could be fulfilled at a local store via in-store pickup or shipping. So it pays to know the closest source of ordered goods. RFID enables retailers to slash the “inventory buffer” they typically use to ensure they really have items available for sale. Returns: everything can be returned to the store. Return processing, including classifying inventory and shipping it to the proper warehouse/DC/Store is usually an expensive headache. It often results in a large box at customer service counter being filled with unsold inventory that is drastically marked down or donated at seasons’ end. In the omnichannel world, a single customer view is important, but only when coupled with being able to deliver an excellent customer experience regardless of what channel is being used. Because inventory accuracy is the foundation for omnichannel retailing, RFID as part of a sense and respond platform can be a key enabler for success.
