Digital Transformation of a Horse and Buggy in Retail
It goes without saying that retail technology has seen a transformational change, particularly over the last 20 years, with the rise of digital processes that impact the customer experience. The term “Digital Transformation” is now commonplace in business. Digital transformation can be defined as breaking down the barriers between the real and digital worlds, so that computer applications and artificial intelligence can be used to create new and unprecedented efficiencies, as well as helping businesses gain a competitive advantage. As a result of its growing popularity, more retailers are creating and funding projects to kick-start digital transformation across their stores.
The physical store experience has changed very little over the past century. However, consumer trends and even demands are now putting pressure on physical retail stores to digitize. Shoppers are now accustomed to the immediate, personalized and convenient experience of shopping online. Technology companies like Amazon are now recreating these experiences in the physical environment with prototype frictionless stores that prioritize convenience and shopper interaction.
RFID technology is the foundation on which most digital transformations can be built which would otherwise be unsuccessful if using the technology which has been in place for the last 35 years. The Horse and Buggy metaphor is a great example of how both RFID and digital transformation are both ground-breaking technologies, and yet work better together. In this particular case, RFID technology symbolizes the Horse and Digital Transformation the Buggy.
Item-level RFID technology enables retailers to collect vast amounts of information about their inventory in digital form within seconds. Due to its low-cost, RFID tags can be placed on the majority of stock that have no power source and can still be accurately recorded within stock counts. If retailers want to take part in the digital transformation, the first thing they should do is look at their current inventory situation.
The retail industry has been running inventory at the SKU level for the last 35 years, scanning each item as it comes through. This outdated method has evolved as the industry currently demands a more advanced level of inventory management. With the rise of online shopping, retailers have been forced into a state of crisis, with more than 11,000 stores expected to close this year. Retailers have therefore concluded that they need to innovate and turn to digital transformation as a solution. However, a question remains, how do retailers expect to thrive off digital transformation when the current average inventory accuracy is only 65%?
With GS1 standards based Item-Level RFID technology retailers can maintain an accurate view of their inventory at all times with an average 98% inventory accuracy. Digital transformation, in the retailing world, requires the ability of knowing accurate physical stock inventory in order to give the computers control of that stock, making successful digital transformation impossible without precise item-level inventory.
It’s important that retailers have a clear view of how they plan to engage with digital transformation. This is a good investment with a relatively quick ROI. However, this transformation requires the correct technology to pull the ‘buggy’ and support the inventory access it so crucially requires to be successful. By stepping back from the digital hype retailers can begin to analyze their inventory accuracy and determine how this will impact the business in terms of profit and revenue before building a digital transformation strategy around digitized inventory data.