For Some Retailers, the Strategy Is Clear—But Can They Execute?

Making shopping in stores as easy as shopping online sounds great, but delivering the experience to customers is a lot more difficult than journalists may think.
Published: September 5, 2018

On Sept. 3, the New York Times published an article titled “Hard Lessons (Thanks, Amazon) Breathe New Life Into Retail Stores,” which says store traffic is up. The writer states, “Stores that have learned how to match the ease and instant gratification of e-commerce shopping are flourishing, while those that have failed to evolve are in bankruptcy or on the brink.”

The article goes on the point out that “Target’s shoppers can order sunscreen or a Tokidoki Unicorno T-shirt on their phone, pull up to the parking lot and have the items brought to their car,” Nordstrom shoppers can return items by “dropping their items into a box and walking out” and Walmart uses 25,000 personal shoppers “to select and package groceries for curbside pickup.” The writer notes that all three retailers reported stronger-than-expected sales growth for the most recent quarter.

These three retailers are on the right track, and those who had spread fears about a “retail apocalypse” were hyping the news of store closings (though the fact that more than 10,000 stores have closed since the beginning of 2017 is not insignificant). But suggesting conventional (brick-and-mortar) retailers have solved all their problems is also overstating things.

Target has done a good job of enabling omnichannel retailing and modernizing its stores to bring shoppers back in—but executing on a true omnichannel strategy is not easy. Inventory accuracy in most retail stores is around 65 percent. In some categories, it may be as low as 30 percent, according to studies conducted by Auburn University’s RFID Lab.

The lab has worked with dozens of retailers exploring RFID solutions, and it has found, anecdotally, that store associates are successful in picking items that have been ordered online only 35 percent to 60 percent of the time. Consequently, it takes two to three days to fulfill an order, rather than two to three hours. Given that Amazon delivers goods within one or two days to its Prime members, two or three days to get an order delivered from a local store isn’t good enough.

Making sure you have the items customers want, when and where they want them, involves logistical complexities that are not easily solved without new technology. You can hire a lot of extra workers and carry a great deal of extra inventory to make sure you have items in store, but that’s expensive and cuts into profits. Even if you do that, store associates can make mistakes—pick the wrong items—and still leave the customer unhappy.

Making shopping in stores as easy as shopping online will take a variety of technologies. A radio frequency identification system must be the basis for all retailers, because only RFID gives you accurate inventory counts quickly and easily, enables the tracking of inventory and ensures that store associates can pick the right item every time (alerts can be set up if an associate chooses the wrong item).

RFID can be used in conjunction with video analytics, Bluetooth Low Energy (BLE) beacons and customer relationship management software to market to customers in store, at the point of purchase. It can be married to artificial intelligence software to better predict sales and required inventory levels to reduce out-of-stocks. What’s more, it can provide data that makes supply chain optimization, staffing optimization and other applications useful.

We’ve outlined how the strategy retailers should be adopting in our free white paper, “Digital Transformation: A Step-by-Step Guide for Brick-and-Mortar Retailers.” It explains why you can’t simply adopt an omnichannel strategy without fixing your inventory problem first, and how all of the technologies mentioned above work together to enable true omnichannel retailing. That is, it explains how to make shopping in stores as easy as shopping online.

If you are a retailer and you want to get it right in the short and long terms, I encourage you to download and digest our white paper.

Mark Roberti is the founder and editor of RFID Journal.