Jun 24, 2015As I discussed in my Consumers Rule! column, Pam Sweeney, Macy's senior VP of logistics systems, and I were on an RFID panel about omnichannel retailing at the National Retail Federation conference in January. I spoke about the value of seeing the "last unit." Pam said, "it is not the last unit, it is the single unit."
What did Pam mean by the single unit? Imagine this scenario. At a local store, a customer finds a dress in the perfect style, but the retailer doesn't have it in her size in the color she wants. The salesperson checks to see if another store has it and returns with disappointing news—the dress is not available. The really sad news is that the dress is hanging on a rack in another of the retailer's stores.
The salesperson could have—should have—known and offered to have the dress shipped to the customer. But the retailer wasn't RFID-tracking apparel items, so it suffered from poor inventory accuracy. Consequently, the customer left the store disappointed, and the retailer missed the sale on that item (and who knows if anyone shopping at the other location will ever want the dress in that color and size).
The concept of visibility to the single unit turns our thinking about inventory on its side. It globalizes all inventory. The single unit is not restricted to a person shopping at a local store—it is now available to anyone on the planet.
It is the essence of omnichannel retailing—consumer-driven anywhere, any time, any product shopping. Unthinkable in the past, visibility to the single unit is now possible. In an omnichannel world, it is a requirement.
But as I wrote in my last column, Get Hip to BOPIS, most retailers don't have much confidence in their inventory accuracy. Retailers would rather tell an online shopper that an item is out of stock—when, in fact, they know they have three or more of that item in stock—than risk sending the customer to a store to pick up an item that may not be available.
Macy's in the United States and Marks & Spencer in the United Kingdom are among the very few retailers that get that RFID is necessary for inventory accuracy and inventory accuracy is necessary for omnichannel retailing. Essentially, a retailer must know what it has and where it has it, down to the single unit.
Local inventory becomes global, and customer demand can be satisfied from anywhere. Until a retailer can be confident about managing its inventory to the single unit, it is just an underperforming omnichannel wannabe.
Bill Hardgrave is dean of Auburn University's Harbert College of Business and founder of the RFID Research Center. He will address other RFID adoption and business case issues in this column. Send your questions to hardgrave@auburn.edu. Follow him on twitter at @bhardgrave.