The Biggest Retail Problem – And How to Solve it With RFID
Think about it: if you don’t know exactly what inventory you have on hand and where it is located, then problems of shortages, surplus, shrink, customer service and missed sales all can occur. In fact, a typical retailer’s inventory is at best just 65-70 percent accurate at the SKU level. Every day, consumers walk out of stores empty-handed because they can’t find the item they want.
RFID Solves this Retail Problem Throughout the Supply Chain
So how can RFID solve the biggest problem in retail? First, you can start seeing improvements in visibility at the beginning of the supply chain in distribution and receiving. With RFID tagged apparel, inventory is tracked and managed in real-time from day one, speeding up and simplifying the process of receiving goods into store inventory while reducing shrink.
For example, after implementing SML’s Clarity® RFID solution for item-level tracking, American Apparel reported a reduction of more than 50 percent in shrink. This is far from an isolated case – many other retailers have reported similar reductions in shrink due to item-level RFID, along with increased sales and reduced out of stocks.
Once the RFID tagged apparel is on-hand at the store, personnel can easily maintain an accurate record of their complete inventory per item, both on the sales floor and in the stock room. This enables the retailer to eliminate missed sales due to out-of-stock situations, making it quick and simple for sales staff to locate just the right item for the customer.
Likewise, improved inventory management also helps retailers better understand which items are flying off the shelves and which ones are gathering dust. In this way, RFID tracking reduces surplus inventory as well as out-of-stocks to maximize store real estate and sales, as well as simplifying the markdown process at the end of the season.
Without RFID, retailers have traditionally performed manual audits once or twice a year to reconcile their inventory. And yet, the very next day, they have to factor in miscounts because inventory can be off by 10 percent due to receiving errors, returns, POS errors, and counting mistakes from the audit itself. The real-time inventory management made possible with RFID eliminates the need for these annual audits altogether.
As RFID technology continues to improve, the gold standard of the future — continuous visibility and inventory accuracy — is increasingly within reach, and will one day make retail’s biggest problem a thing of the past.