Recently, Howard Schultz, the president and CEO of Starbucks, created some waves within the retail industry by claiming that bricks and mortar retail was at an “inflection point” in losing traffic to e-commerce shopping during this year’s holiday shopping season. Visits and sales fell for bricks and mortar stores, with many retailers reporting only half the holiday traffic they received one year ago. Forbes states that over the past four years, cumulative sales for bricks and mortar retailers shrank $30 billion.
In contrast, the online marketplace experienced an unprecedented surge in orders that overwhelmed both UPS and FedEx. Cyber retail sales were so brisk, that online retailer Amazon was forced to shut off registration for its Amazon Prime service when one million customers signed up in a single week.
Clearly, shopper’s habits are changing and the speed of change is increasing. The Wall Street Journal recently noted that this “long term change” in shopper habits has significantly reduced traffic to malls and big box retailers—maybe for good. The WSJ article indicates that rather than browsing in stores to decide on a purchase, today’s consumers explore merchandise and prices online, then make a targeted trip to a store to pick up what they want from the retailer offering the best price.
We all like to shop from our sofa when we can.
In looking at shopper patterns, one of our favorite sources for industry news, Retail Wire, notes that in a recent survey, 19 percent of shoppers report using “click and collect” services more often than in the previous year. Click and collect means reserving or buying an item online and then collecting it in person from a local storefront. At the same time, more shoppers —14 percent this year compared to 7 percent last year— are buying in-store and having the product shipped to their home.
What does this mean for individual retailers, both online and real world? An amplified urgency for inventory management that is as near perfect in accuracy as possible.
A few more survey facts from Retail Wire:
- The ability to check product availability online before traveling to a store is the service that would most improve the shopping experience for 31 percent of U.S. shoppers surveyed.
- The vast majority of respondents (89 percent) said they would either travel to a store to make a purchase or buy online if retailers offered real-time information on product availability.”
Real time availability is possible only via “perfect” inventory management and total visibility into the retail supply chain. According to the National Retail Federation (NRF) 62 percent of retailers say that with the convergence of online and offline shopping and sales, their highest priority for 2014 is supply chain visibility.
RFID has demonstrated in tests, pilots and in-store performance worldwide its unmatched capacity to deliver that visibility. Only RFID enables the accurate, real time data every retailer must have to meet customer expectations and help ensure profit—and profit margins. No other technology comes close.
While the competitive advantages RFID brings to retail operations are understood and openly acknowledged by almost everyone in the industry, we still hear questions about ROI. Retailers, especially those with restrictive budgets, want to know they will get the results they need against their technology investment.
At Truecount, we are seeing that RFID can lift sales by 3, 5, 10 and even 15 percent. For most retail operations, even a 1 percent increase in sales would justify the investment in RFID. Everything above that would be an additional bonus. At the same time, implementing RFID is more value-based than ever. The cost for tags continues to drop and installations are becoming more efficient and cost-effective. Truecount, for example, offers a range of options designed to meet the budget constraints of even the smallest retailer. These include RFID in the Cloud, an option that reduces the upfront investment and eliminates infrastructure costs; and Remote Installation, an innovation that is unique to Truecount. With Remote Installation, you can be up and running with RFID within hours while saving travel and labor expense.
Based on the online and offline figures for holiday sales this year, we agree with Mr. Schultz that the shift in consumer habits is creating a real “sea change” for retailers, and the industry will be increasingly challenged to keep pace. More urgency for RFID now, not tomorrow.
Without RFID, inventory visibility is only 63 percent accurate on average. RFID raises the accuracy rate to 95 – 99+ percent while eliminating other inaccuracies throughout the supply chain, including transportation, delivery and logistical data. With RFID you know with clarity where each item is at every moment at every point in the supply chain. Part of the beauty of RFID is the time it saves. Without RFID, the average inventory count is 250 items per hour. With RFID that accelerates to 25,000 items (or more) per hour, and there is no need to unpack for the count. RFID “reads” through cartons and boxes ensuring transparency for all in and out shipments or deliveries.
Customer preferences have always driven and defined the marketplace. Now, as consumers take their business online, they are redefining the industry with their preferences for technology. Smart retailers will leverage the latest technologies, including RFID, to gain advantage and to engage, delight and retain their customers.
How is your retail operation using technology to meet customer expectations and grow sales? Let us know, and send us any questions you have on RFID and Retail ROI: success@truecount.com.