Retailers Recognize the Problem—Not the Solution

A study conducted by Retail Systems Research indicates that retailers have in-store issues that RFID can solve, but they don't seem aware of what the technology can do.

By Mark Roberti

Tags: Apparel, Asset Tracking, Inventory / Warehouse Management, IT/Infrastructure, Operations, Retail, Supply Chain

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Jul 09, 2012—I recently received a May 2012 report titled "The 2012 Retail Store: In Transition," from Retail Systems Research (RSR), that made for very interesting reading. The authors, Paula Rosenblum and Steve Rowen, RSR's managing partners, discussed the changing nature of retail, explaining that competition is no longer a matter of whether a store down the street has nicer items at a lower cost.

"For most retailers," the authors wrote, "competition comes from places they don't even know about, and often for reasons they can't easily understand. Thanks to the Internet and mobile technologies' ability to put the global marketplace in the hands of virtually any consumer at all times, it is very difficult to gauge not only who and where your competitor is, but what makes them a competitor in the first place."

Interesting. The authors went on to ask, "What component of the retail experience does a specific customer care most about at any given moment? In fact, what motivates one customer to take the time and effort to visit a physical store is likely to be very different from that of the next customer coming through the door. Consumer expectations are very different than they once were."

The study asked retailers for the top uses of in-store technologies. Their answers:

• Maintain and/or improve the customer experience (52 percent)
• Put actionable information into the hands of managers (43 percent)
• Increase revenue while holding down operational costs (41 percent)
• Help the company win new customers and retain current customers (41 percent)
• Create competitive advantage and new sources of revenue generation (30 percent)
• Make our employees "smarter" and better informed (29 percent)

RFID can, of course, address all of these issues.

The study also asked, "What are the top business challenges that retailers face?" Here are the answers, for both "winner" and "laggard" categories (though I'm not entirely sure what "winners" and "laggards" constitute in the context of the question):

• Need for more consistent store execution/employee productivity (68 percent of "winners" and 33 percent of "laggards")
• Need to improve customer service while holding the line on payroll costs (47 percent and 39 percent, respectively)
• Store managers lack information they need on the selling floor—too much time spent in the back room (37 percent and 17 percent, respectively)
• Lost sales due to store out-of-stocks (32 percent and 11 percent, respectively)
• Customer dissatisfaction caused by lack of integration between the store and other selling channels (26 percent and 22 percent, respectively)

USER COMMENTS

P Rosenblum

2012-07-09 06:14:05 PM

Managing Partner Hello Mark, Thanks for mentioning our work. A couple of things: 1) due to an editing error our survey did not include a question about segments, and 2) most retailers (and our benchmarks really do focus on the mass of retailers, not a select few) are not deeply involved in RFID initiatives. Therefore, to keep survey length manageable, we did not ask about RFID this year. In past studies it just didn't register high enough on the charts. We are definitely aware of the work Macy's and a few others are doing in apparel, but overall, the technology has yet to make an impact.. For what it's worth, my own opinion is that the power of RFID in stores will become more obvious as reader (vs. tag) prices fall. I believe RFID has the potential to do for stores what bar code did for distribution centers....eliminate the annual physical inventory while improving day-to-day accuracy. But we're not there yet. We will be, but not yet.

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Retailers Recognize the Problem—Not the Solution

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