OK, I’ll admit it. I’m shocked by the survey report released by IHL Group in May. The report says retailers worldwide lose $778.5 billion in revenues each year to Distortion–nearly $8 billion annually. That’s an astound
ing figure, but it isn’t the “shocker”. What stuns me is the fact that in this “new era” of RFID for retail, inventory distortion remains widely accepted as an immutable fact of running a retail operation.
Consider the impact of inventory data. It drives ordering, allocating, forecasting and replenishment decisions.
In short, it’s highly pivotal. So shouldn’t it be highly accurate?
Even before the IHL global study, results from studies conducted by Dr. Bill Hardgrave of the University of Arkansas RFID Research Center revealed that inventory inaccuracy rates for soft goods retailers are as high as 51 to 65 percent. This means that at any given time, you, as a retailer can be making decisions based on data that is only 35
to 49 percent true, or accurate. As a result, you face Overstocks, which tie up cash and force steep discounting, additional shipping costs and Out-of-Stocks, generally leading to lost sales and unhappy customers. According to the IHL study, Out-of-Stocks alone cost soft goods retailers $6.7 billion in lost revenues each year.
During my years working on the retail side, I learned the importance of the “back room” or retail stock room. While the sales floor is vital as the face of the retail operation, the back room is vital as the engine that drives what happens on the sales floor. Like any engine, the stock room has to operate efficiently and accurately. Clean, accurate real-time data is the fuel that keeps the stock room, and the retail entire operation, running smoothly. So why are such high levels of inventory distortion acceptable”?
In fairness to the retail industry, some of the factors that contribute to distortion may seem beyond a retailer’s control to monitor: internal and external theft, cashier errors, shipping mistakes and miscounts from manual inventory counts. Still, all of these factors—and more—are now easy to “see” and address in real time using item-level RFID. Advanced RFID technology is a ready, waiting, easily available solution to what IHL calls the retail industry’s “$800 Billion Problem”.
Back to Dr. Bill Hardgrave and the RFID Research Center: Working with several leading retailers, including Dillard’s and Bloomingdale’s, Hardgrave established that RFID delivers unprecedented accuracy rates for inventory; accuracy as high as 99+ percent. As a retailer, RFID gives you the ability to fully track and trace inventory throughout the supply chain from “source to shelf to final sale” with near perfect accuracy. Inventory data this precise virtually eliminates Overstocks and Out-of-Stocks, helping you achieve a “smarter” more efficient back room and a near perfect sales floor, and lifting same store sales by 5.7 percent or more.
So what are you waiting for? If you’ve ever considered RFID, the time is now. If not, what do you consider the biggest “stoppers” or roadblocks? Let’s us know. Visit http://www.truecount.com for more information about RFID for retail, or call us to schedule a complimentary consultation.