Without RFID, Retailers Struggle to Deliver

By Mark Roberti

Research shows that retailers which have not invested in radio frequency identification have been unable to execute ship-from-store or curbside or in-store pickup consistently.

While retailers are still evaluating their holiday 2020 performance, early research suggests that those companies that did not invest in radio frequency identification (RFID) technology to manage their inventory struggled to carry out ship-from-store or offer curbside or in-store pickup consistently. Research from a survey of more than 2,000 consumers across the United States, the United Kingdom, Belgium, the Netherlands and Luxembourg reveals that more than six in 10 shoppers report having had a "mixed or generally bad experience" when they used retailers' "buy online, pickup in store" (BOPIS) services.

The study was conducted for  GreyOrange, a global software provider that leverages artificial intelligence and machine learning to optimize fulfillment operations. The survey showed that buyers shifted a majority of their 2020 purchases to online platforms due to COVID-19 conditions, but more than half plan to resume pre-pandemic buying patterns when possible. The primary reason: a mixed or generally bad experience with BOPIS, as well as challenges with returning items (see  GreyOrange Research Reveals Key Retail Buying Decisions for Consumers in US, Europe).

Retailers also struggled with ship-from-store in 2020. According to findings from a new  Accenture study, none of the 116 retailers covered managed to deliver goods ordered online within 24 hours. On average, retailers took 2.8 days to fulfill orders last year. That compares to 1.8 days in 2019, which is due to shipping delays caused by the high volume of packages shipped after the pandemic began. The research did not break out retailers that invested in RFID technology from those that did not, but companies that use RFID extensively have generally received high marks for their BOPIS and ship-from-store programs.

Source: Avery Dennison

Retailers employing RFID tend to have an in-store inventory accuracy of approximately 95 percent, compared to about 65 percent for retailers that do not use. That means retailers that don't use RFID sometimes offer items they cannot locate in stores to be shipped directly to customers, or to be collected at curbside or for in-store pickup. Another problem is that the lack of inventory visibility for retailers not using RFID causes them to hide inventory from online customers.

Some retailers are hiding as much as 80 percent of their inventory because their IT systems show only two or three items in stock, and they lack confidence that those goods are actually in the store, according to research carried out by the  Auburn University RFID Lab. RFID technology can help retailers boost inventory accuracy from an industry average of 65 percent—some categories can be as low as 35 percent—to 95 percent or better. This enables retailers to show more inventory to online and mobile customers since they can now have confidence that if their inventory system says there are two items in the store, they really are available.

Retailers with complex stock-keeping units (SKUs)—many different versions of the same product—or with poor SKU-level inventory accuracy will experience the most problems with BOPIS and curbside pickup programs, since store associates will not be able to locate items for customers in a timely manner. This often leads to retailers having to cancel orders, resulting in dissatisfied customers, or shipping the items to shoppers from different stores, which increases shipping and labor costs, erodes margins and leads to less satisfied customers.

Source: Avery Dennison

RFID allows a single store employee to take an inventory count of 15,000 items or more within only an hour. This means stores can take inventory once per week or once every other week, rather than once or twice a year. This increases inventory accuracy, which allows retailers to show more inventory to customers online. Store associates can then quickly locate items using a handheld RFID reader, and they can ready those items for pickup or shipment to a customer.

Kris Barton, the director of market development for RFID in  Avery Dennison's Retail Branding and Information Solutions (RBIS) division, says retailers need not install expensive fixed infrastructure to begin achieving benefits from RFID. They can simply use handheld readers to take inventory and find goods faster for omnichannel purposes. "RFID tagging enables significantly improved inventory accuracy, eliminates safety stock and creates more visibility for BOPIS, curbside pickup and ship-from-store programs," Barton explains.

Retailers that start deploying RFID now can easily be ready for the 2021 holiday season, and they can optimize BOPIS and ship-from-store omnichannel modeling.

Mark Roberti is the founder and editor of RFID Journal.