Apr 27, 2016On a recent conference call with a leading RFID integrator discussing RFID adoption, the conversation turned to competing retail projects. During the previous holiday season, the vast majority of retailers failed in their efforts to provide an omnichannel shopping experience for customers. As a result, retailers were setting aside RFID inventory-management projects and escalating their omnichannel efforts. A few days later, I visited the VP of operations for a major retailer. He told me that while the company was interested in RFID, it had other priorities and had decided to focus on enabling customers to buy online pickup in stores (BOPIS).
On my drive home later that day, I passed by a new house being built on my street. The builders had spent the past month preparing the ground and laying the foundation, and now they were beginning to frame the house. Why, I wondered, would retailers try to build an omnichannel house without the proper foundation? I can only surmise that retailers still don't understand that RFID is the only reliable and cost-efficient way to obtain high inventory accuracy—and having high inventory accuracy is the only foundation on which an omnichannel house can be built.
The first floor of an omnichannel house is represented by the two commerce channels—digital and physical. The digital channel represents online efforts, and the physical one, stores or collection points. Since the inception of the Internet, the general trend has been for brick-and-mortar retailers to add the digital channel. Recently, the reverse is happening as digital retailers are adding physical channels.
The second floor of an omnichannel house is composed of two key omnichannel capabilities—BOPIS and ship from store (SfS). BOPIS blends the digital and physical channels from the customer's perspective, providing an anytime, anywhere shopping experience. SfS blends the channels from the operations perspective, as digital purchases become sourced from the physical stores.
There's a critical subfloor between the first and second floors: visibility to the single unit. For BOPIS and SfS to blend the channels, retailers must know what merchandise they have and where they have each item. Finally, and most importantly, the entire house is supported by a firm foundation, based on high inventory accuracy.
The ultimate outcome of a well-built omnichannel house is a superior customer experience. Retailers are frantically trying to build the first and second floors in an effort to get the roof put on the house very soon. But if they build the house without a firm RFID foundation, they will fail.
RFID should not be viewed as an independent initiative or a competing priority to any omnichannel initiative. Without high inventory accuracy, an omnichannel house cannot be built, or, if it is built, it will not stand.
Bill Hardgrave is dean of Auburn University's Harbert College of Business and the founder of the RFID Lab. He will address other RFID adoption and business case issues in this column. Send your questions to firstname.lastname@example.org. Follow him on Twitter at @bhardgrave.