Data by nature: Why eCommerce analytics are steps ahead

Online retailing not only created a new way of shopping, but it also changed the game when it comes to tracking and analysing the shopping journey. There is almost nothing that is not being evaluated while surfing the webshop. Digital-heat-maps of individual online sessions are analysed, showing every click and scroll through the online store. Every possible KPI is monitored: Conversion rate, click-through rate, average order value, the relation between new and returning visitors, bounce rate and retention to name a few. The really powerful thing about this is that analysis is always followed by action, to improve both the effectiveness of the webshop and the experience of its customers.

Data by design? Time for brick and mortar to take some lessons

Naturally, eCommerce has a significant advantage when it comes to analytics, a digital channel is always going to produce more data. Brick-and-mortar stores need to adapt to compete however, and technology is trying to bridge this gap between the physical and digital. Some of the more hardware-heavy options include AI-powered cameras, smart shelves or even aisle-roaming robots.

While hardware-intensive solutions like customer-tracking smart cameras are available, with the right software supporting it, a technology that simply tracks products (such as RFID) and leverages the IoT (Internet of Things) can revolutionise analytics for stores. These technologies and their supporting platforms are a big driver of ‘Digital transformation’ which delivers the analytics and data that brick-and-mortar stores are desperate for.

Here are 3 lessons from eCommerce for improving analytics in retail stores….

The need for real-time data

For years, brick-and-mortar retailers have been complaining about imprecise stock-figures and unreliable historical data. Unhappy with its purchasing decisions based on last year’s sales figures, retailers would prefer to have real-time data and inventories that allow for reliable and economically viable decisions. After all, it is important to avoid high-security stocks in order to reduce capital tie-up.

But why do we actually have this problem? Are the data points offered by the ERP systems not enough? Unfortunately not – it is not unusual that the ERP system shows higher stock than actually available on the sales floor. This so-called “ghost stock” is the cause for various problems in sales, e.g. the ERP system says a certain article, for example, a red skirt in size S, is in stock, but in reality, it is not. It can neither be sold nor refilled from the central warehouse – a classical out-of-stock situation. Or vice-versa, the ERP displays a lower inventory level than is actually available. The reason for these deviations is insufficient accuracy in individual processes that dangerously sum up over time.

Today’s intelligent article management is based on three pillars: fast, RFID-based article identification on item-level, tracking of every movement in real-time and proactive analysis with concrete recommendations for actions to take for the sales personnel. This is the foundation for optimum customer service and efficient processes.

What does real-time data mean for Brick and Mortar Stores?

  • High Stock accuracy
  • Increases product availability of the shop floor from accurate replenishment
  • Allows for convenient omnichannel services like click-and-collect
  • Equips store staff with up-to-the-minute stock information – allowing them to assist customers better

Meaningful KPIs in the store

When measuring KPIs, the practical benefits for retailers are paramount. Three areas of data in the store can be distinguished:

KPIs for Store performance

 

Inventory Accuracy

Whether five or 800 stores, KPIs for measuring inventory accuracy are significant for every retailer and still represent one of the main challenges in today’s business. Retailers, on average, can actually make accurate statements on just about 75% of their inventory (based on SKU level). However, this is not enough to meet customers’ expectations for omnichannel services. Therefore, inventory transparency and corresponding KPIs are essential for retailers´ success.

 

Product availability

Product availability on the sales floor, also known as on-floor availability, is the second central parameter. Initially, it is less about the exact position and more about the fact that the articles are on the sales floor – after all, only items that are actually available can be sold. This key figure can be combined with an alert system that makes sure not to fall short of the defined minimum availability. Complementary to classical ERP-systems, RFID-based merchandise management takes the data granularity to the next level, by knowing exactly at each moment in time if products are really on the salesfloor or still lingering in the backroom of a store.

Detego RFID Software Dashboard

KPIs for individual product & campaign performance

 

Product dwell-time on salesfloor

Having data on item level, store managers are also given important information on the dwell times of articles on the sales floor. This information is more valuable than simple sales data, as it tells us the average time individual products spend on the sales floor before being sold. This can be used to gauge whether products are performing & corresponding with the sales plan. Common recommendations made from this data include moving items do a different location on the salesfloor (i.e. adjusting the planogram)  or relocating excess inventory to another store – both of these measures reduce profit-sapping inventory bloat and end-of-season markdowns.

 

Fitting room conversion rate

One of the most famous KPIs in e-commerce is the conversion rate that describes the ratio between purchases and website visitors and also provides information on certain items that were already in the shopping cart, but for some reason have not been purchased in the end. Specifically, this aspect was incredibly difficult to measure in the store for a long time but can now be measured in fitting rooms using IoT and RFID technologies. This provides meaningful insights into how many, and above all, which articles does a customer take into the fitting room and which one does she/he actually buy?

Detego Reports - Fitting Room Conversions

KPIs on customer engagement and service quality

On an operational side, KPIs can also be used to manage service quality. We’ve already covered product-availability and stock accuracy, which affect the customer just as much as the store with out-of-stocks or unavailable sizes being all-too-common pain points. The replenishment rate provides another angle to combat this, as it shows how quickly articles are replenished on the sales floor.  On the other hand, the fitting room response time describes how quickly sales personnel handle customer requests coming from the fitting room. The KPI “Conversion rate per campaign” shows the success of a campaign and if campaign-specific countermeasures are necessary.

Turning data into actions

The final lesson brick-and-mortar retail should learn from the webshop? Turning data into actions. Since nobody needs a data graveyard, any analysis needs the goal of creating immediate actions to improve. Today’s systems help the management team as well as the store personnel with concrete and automated recommendations for actions to take. This saves time in the decision-making process, unburdens the sales personnel, and enables them to do the right things at the right time.

KPIs should be suitable for everyday business use. Presented visually and self-explanatory, they need to be linked to clear recommendations for actions to take. This frees up store personnel time and provides a data-driven way of optimization. Examples range from simple in-store replenishment advice, i.e. “The minimum stock for article #47699-0010 has been reached – please refill three pieces” to more advanced topics, e.g. to choose a different placement in the store for a specific article when the dwell time on the sales floor is too high compared to other stores. Advanced systems can even utilise AI and Machine learning to automate and refine certain processes, like adjusting store planograms and creating optimal pick paths when replenishing stock.

Detego Instore Edition Refill Advice

Conclusion

Brick-and-mortar retail needs support and an update to the toolbox when it comes to analysis and measures. Not only does the sales personnel benefit from intelligent recommendations for action, but the management team also gains efficient control mechanisms across the entire store network. Decisions are made based on real-time data and therefore allow timely action. Ultimately, the end customer is pleased about a first-class service, which – thanks to the individual and informed advice through the sales personnel – even exceeds the standards of the online retail.

Webinar

Item-level Reporting from
Source-to-Store

Register for this webinar where we outline the impact of digitisation on supply chain analytics and operational efficiency. Covering the wealth of item-level data unlocked by RFID, the presentation will explain the new KPI’s available for modern supply chains and their impact on retail operations.

Complete Supply chain visibility was once an optional bonus for retailers, but in the modern industry it is becoming more and more of a necessity.

Whilst in the past, limited tracking of shipments in the supply chain was commonplace, in the modern environment with its more complex supply chains, delivery options and increasing customer expectations, retailers need to do more.

This isn’t just us saying so, retailers recognise this too. According to a report by Zebra Technologies, 72% of retailers are working on digitizing their supply chains in order to achieve real-time visibility.

What Is Supply Chain Visibility?  

Having visibility means being able to accurately track products and shipments throughout the supply chain, from the manufacturer, to the distribution centre and finally to the store. Having this visibility prevents shipping errors, improves operational efficiency and allows retailers to leverage products to service their customers better.

See also: a single view of stock for retail

Extent of supply chain visibility

Why Do Retailers Need Visibility?

Managing supply chains effectively is always a priority for retailers. But as these supply chains get bigger the challenge becomes more daunting. Visibility is needed to align such large operations, and this is before you add new pressures like omnichannel, traceability and online orders.

Additionally, supply chain visibility is arguably even more important in ecommerce than for pure-play brick and mortar retailers. Not only do you need to know exactly what stock the fulfilment centre has, but what stock it is due to receive and when. And since pure-play brick and mortar retailers are now few and far between , this now means that most retailers’ supply chains need to be more advanced and transparent than previously required.

This is before mentioning the divisive omnichannel word, which often requires even greater transparency and synergy between stores and distribution centres and includes multiple delivery options.

There are also more classic supply chain challenges that can be helped by achieving visibility. General inefficiencies and inaccuracies can be reduced by adding more checkpoints throughout the supply chain – particularly when these are done at an item level, and not shipment or carton level.

Adding this visibility also makes better communication between different stages of the chain possible, which leads to smoother operations. Having visibility at an item-level also makes traceability of items through the supply chain possible. This can make a massive difference in combatting supply chain shrinkage, and in some cases the grey market.

3 reasons supply chin visibility is important

The ‘New’ Challenges:

 

Multi/omni-channel businesses – It seems like an age ago, but traditional retail supply chains went in one direction and to one place – stores. Now almost all retailers also run their businesses online meaning their they operate on multiple sales channels, therefore, their supply chains service far more destinations than before.

Multiple delivery options – A relatively recent challenge created by the growth of online and the already mentioned omnichannel purchasing options. Retailers want to offer their customers as much stock and as many purchasing options as possible, but without the technology to support it, this can cause problems. In an Accenture survey, respondents claimed that 31 percent of their Ship from Store orders triggered a split shipment.

Customer expectations – Customer expectations has shifted. In a 2019 report, it was found that Half of shoppers reported abandoning a purchase due to a lack of cross-channel buying options. This is a major impact on sales, and many retailers are starting to adapt to the change in expectations.

The Old Challenges:

 

Supply chain inefficiency – Supply chain inefficiencies and miscommunication through “Chinese Whispers” are costing UK businesses over £1.5bn in lost productivity according to analysis of industry data from Zencargo.

Supply chain shrinkage – According to the National Security Survey, businesses in the United States lose $45.2 billion through inventory shrinkage a year. Whilst retail stores make up the majority of this, supply chains still experience large amounts of inventory shrink, particularly when they have no visibility of products.

What are the benefits of having supply chain visibility?

  • Better customer service

  • Improved inventory control

  • Shorter cycle times

  • Smoother operational processes between stores and DC’s

  • Better data for more intelligent business decisions

  • Reduce out of stocks

  • Track and trace products

  • Offer effective omnichannel services and delivery options

How Do You Achieve Supply Chain Visibility?

  • Implement a system that works at an item-level (not whole cartons)

  • Accurately track products at as many points as possible during shipping

  • Inbound and outbound counts at every stage of shipping

  • Implement effective exception handling

  • Use a cloud-based system to integrate all stages of the supply chain and achieve as close to a real-time view of merchandise movement as possible

  • Send advanced shipping notices (ASN’s) so warehouses and stores now exactly what they’ll receive

  • Use this visibility to enable traceability of each item throughout its journey

Retail Supply chain tracking

The Detego Platform allows retailers to gain complete visibility over their operations

If you’re looking for a solution or partner to help achieve better supply chain visibility, consider our platform!

Using RFID item level-tagging, the cloud-based Detego platform gives each individual item a unique digital identity. Items are then tracked from factory to shop floor using radio frequency identification (RFID) methods. RFID makes this possible as inbound, outbound and even exception handling can then be done through RFID reads – which are fast, accurate and can be done without opening cartons.

Since RFID works on the individual item-level, the result of this is complete visibility of the supply chain. The platform utilises the IoT to create a complete overview of every single product in the supply chain, as its cloud hosted this can be close to real-time and is the ‘single point of truth’ for the entire business.

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The cutting edge of supply chain analytics and how digitisation is taking the guesswork out of retail logistics.
Best-practice approach and strategy for implementing RFID across the supply chain

Online returns have been a challenge for retailers since the beginning of eCommerce. This is because of both their volume compared to normal stores, and the costs associated with processing them. In the wake of COVID-19, this problem could prove more critical then ever, as online becomes retailers’ singular sales channel. There is already early evidence of this, with preliminary data from Quantum Metric showing that eCommerce associated with Brick and Mortar retailers saw an average revenue weekly growth rate increase of 52%, and Nike Inc.’s digital sales went up by 36%.

The eCommerce returns dilemma

Online shopping is popular for a reason, but the convenience and choice of eCommerce comes at the price of not being able to ‘try before you buy’ for customers.

This simple difference is the reason online returns are so much more prevalent than for Brick and Mortar stores. In eCommerce the customers’ homes becomes the fitting room. And, just like any fitting room, products end up back on the shelves. According to Happy Returns, while shoppers return only 10% of what they buy in stores, they send back up to 50% of what they buy online.

This is compounded by customers accounting for this when ordering online. A survey from Barclays found that 30% of shoppers deliberately over-purchase and subsequently return unwanted items. Additionally, 20% regularly order multiple versions (often sizes) of the same item so they could make their mind up when they are delivered, all of which is facilitated by the retailer at great cost.

While it might seem logical to have stricter returns policies, or make customers cover the cost of returns, consumer expectations make this a risky strategy. According to the 2017 UPS Pulse of the Online Shopper survey, 68% of shoppers view returns policies before making a purchase. This leaves retailers with a catch-22 situation when it comes to losing out on online sales or losing profits from processing the inevitable returns that comes with those sales.

Retail returns by product type

What are the challenges of retail returns?

So why are returns such a strain on retailers?

Cost of returns First and foremost is the simple cost of returns. Since returns are in themselves essentially lost sales, the added cost of returning them, which according to CNBC is on average 30% of the purchase price, can heavily impact retailer’s margins.

Processing returns and reverse logisticsOn top of this is the resources and effort of processing returns and getting the stock back available to be sold as quickly as possible. This reverse logistics can be particularly challenging and can result in returned stock not being available for purchase again for some time, often leading to out-of-stocks on the webshop. According to the Barclays report, 57% of retailers say that dealing with returns has a negative impact on the day-to-day running of their business.

Contamination concerns with COVID-19? – A unique and recent challenge, particularly for apparel retailers, is dealing with the potential contamination and contact of returned good with the COVID-19 virus. Initial research suggests that the virus can only survive on fabric surfaces for 24 hours, but for up to 72 on plastics like packaging. This will need to be addressed by eCommerce retailers who continue trading throughout the epidemic.

Return fraudThis is a challenge shared by brick-and-mortar stores. Fraudulent returns cost the US alone 27 billion dollars a year. This can involve the ‘returning’ of stolen merchandise for cash, stealing receipts to enable a false return or using someone else’s receipt to return unpurchased store stock. Naturally, using receipts for returns presents a risk, APPRISS found that receipted returns are more than twice as likely to be fraudulent as other methods.

Summary of retail returns fraud US

How to reduce the impact of returns on eCommerce

So what options are there for retailers looking to tackle their returns problems?

  1. Reduce the likelihood of returns, without harming customer experience or sales: Include accurate and detailed product descriptions. Use uniformed/standard sizes where possible and provide a more specific sizing filter. Offer virtual ‘try-ons’ with augmented reality/3D imaging.
  2. Set clear and accessible rules regarding returns: Make sure customers know what and how they are allowed to return items, this reduces spending resources processing illegitimate returns.
  3. Improve visibility: Maintain a single view of stock with item-level inbound and outbound processes, this will also allow for online returns back to stores, and ship-from-store. Make this visibility accessible to your entire team and your customers.
  4. Improve efficiency of inbound and outbound processes: Utilise reliable & efficient technologies and automated processes like exception handling. One of the leading technologies for this is RFID, which prevents the need to open any boxes or packages as it can count and verify items without direct line of sight.
  5. Improve internal processes: Ensure returns processes (and supporting software) enables additional layers of merchandise management such as grading items based on quality and tracking when the item was returned.
  6. Counter Return Fraud: Verify legitimacy of returns as much as possible, best practise involves unique item-level validation like RFID or unique serial numbers.
  7. Ensure returned stock is safe to sell: Implement processes to ensure returns are not damaged in any way, implement a policy to account for safe handling of merchandise during theCovid-19 pandemic, either sanitising products or leaving them a set amount of time before adding back into webshop stock.

Using RFID tagging and looking to improve return processes?

NEW: eCommerce returns module

eCommerce/ DTC is increasing due to COVID-19. This causes an over proportional increase in returns which normally would require a ramp up of staff and equipment to handle the process – Detego’s new RFID enabled return process provides an approx 90% productivity increase.

Want the latest retail and retail tech insights directly to your inbox?

Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.
The cutting edge of supply chain analytics and how digitisation is taking the guesswork out of retail logistics.
Best-practice approach and strategy for implementing RFID across the supply chain

Summary of Reiss and Detego’s UK project

 

Luxury high-street brand, Reiss, has been operating in the UK for almost 50 years with 160 stores globally. Their reputation for quality and service is what sets them apart, and they recognised that in the modern environment, serving their customers to the highest possible standard requires strong digital foundations.

To achieve this, Reiss has initially implemented the Detego platform across its 50 UK stores. Digitising their view of stock as well as increasing their stock accuracy across all stores were priorities, as these would provide an important baseline for future projects as well as allowing them to continue to serve their customers with a high level of service.

The rollout was completed in 8 months and has since seen results of 99% stock accuracy in stores and a consequent 4% uplift in sales.

 

The Challenge:

Responding to shifting customer expectations, Reiss looked to begin a ‘digital transformation’ of their inventory to secure stock accuracy, efficiency and stock visibility for their growing omnichannel portfolio.

The Solution:

Reiss began RFID tagging individual products at source, giving every item a unique digital ID that is readable via radio waves from several feet away. They then implemented Detego’s cloud-hosted inventory management software across their store network to digitise store processes with fast and efficient RFID methods. This meant they could perform accurate, daily stocktakes of their stores, rather than doing a just a few each year.

The Result:

Reiss saw their stock accuracy increase to 99% in their stores with a 4% sales uplift as a direct result of this. Additionally, they now have a complete and accurate digital view of stock across their store network. Not only does this mean Reiss staff know exactly what is in their stores at all times, but it is a solid foundation for future expansion into the digital arena.

4% Increase in Sales

99% Stock accuracy

Reiss store

The Steps to RFID success

Best Practise Implementation

Detego worked alongside Reiss to understand their business goals and implement a phased approach to the use of RFID. An initial pilot project involving 5 stores allowed Reiss to understand the implications on process change whilst proving the business case to their stakeholders. Following that, an efficient rollout of the remaining UK stores was enabled by our professional services team and cloud-hosted solution. Reiss chose to focus on the fundamentals of stock accuracy and product availability for their customers first. This allows them to set the foundations for new services and feature additions following the success of this initial implementation.

Transforming stock takes

With the application live in stores, Reiss staff now perform stock takes daily, rather than a handful of times a year. This can be done due to the speed and ease of a Detego stocktake. Because RFID reads can be done without direct line of sight and at a distance of several feet, Reiss staff can do a cycle count of their entire stores in around 30 minutes. Naturally, daily stock takes will drive accuracy but the fact that the Detego stocktake removes human error and is displayed on a user-friendly mobile app means Reiss achieve near-perfect levels of inventory accuracy.

‘The use of the Detego app has really improved our daily processes. Having a stock take every day as opposed to only twice a year really streamlines the accuracy of our stock file and the replenishment process.’

Giorgio Leone-Mazza, Reiss Store Manager

Stock accuracy

As a result of implementing the Detego platform, Reiss now have on average 98% inventory accuracy in their stores. This has a huge impact on Reiss and their customers. Reiss stores’ backroom inventories are very lean and they replenish directly from their central DC. Having an accurate view of stock is crucial in such a system, as inaccuracies mean incorrect replenishment which in turn creates out-of-stocks and unsatisfied customers. With accuracy close to a 100%, Reiss can be confident that their merchandise is leveraged with total precision.

With very few inaccuracies, customers are rarely disappointed by items being unavailable and they can continue to serve their clientele with the same level of service that they’ve been renowned for almost 50 years.

Reiss’ merchandise itself is their second most valuable asset, behind only their customers, so it is important to leverage it as effectively as possible. Having an accurate view of stock is the only place to start this and ensures that they can prevent end-of-season markdowns as a result of ‘losing’ stock for a season due to inaccuracy.

‘We scan every day, giving us the accuracy of the exact stock we have in the store, in roughly 35 minutes’

Manisha Hassan, Reiss Store Manager

The road to Omnichannel

One of Reiss’ main long-term goals for their technology investments was to offer a top-class omnichannel experience, opening up more inventory for their customers to choose from and utilising their stores as miniature distribution centres. Having a highly accurate view of stock is a non-negotiable requirement to offering good omnichannel services, inaccurate stock means inaccurate omnichannel. With an accuracy of near 99%, Reiss will be able to deliver services like click and collect and ship-from-store with confidence.

Reiss’ merchandise itself is their second most valuable asset, behind only their customers, so it is important to leverage it as effectively as possible. Having an accurate view of stock is the only place to start this and ensures that they can prevent end-of-season markdowns as a result of ‘losing’ stock for a season due to inaccuracy.

‘The RFID project at Reiss has focussed on simplicity, driving accuracy very early in the cycle, using software as the base level.’

Martin Schofield, CEO of Retail 247

Reiss RFID with Detego

Did we spark your interest?

Artificial intelligence, the future of smart retail or another empty buzzword?

Artificial intelligence is the poster child for emerging or ‘new age’ smart technologies. Whilst it’s easy to get carried away with ideas of intelligent robots, AI mostly involves intelligent automation systems. This means computer systems that can process and respond to information by themselves, and even learn and self-correct better ways of doing so over time. AI is a broad spectrum, however, and the complexity and ‘intelligence’ of such systems can vary.

AI’s main use for retailers is to automate analysis and decision making

Because AI is still in relative infancy for retail, a large proportion of its use cases for the industry are still being developed and established. We have already seen a strong uptake in AI for customer intelligence in the form of online chatbots and product recommendation engines.

AI uses cases for retail

The other areas of potential, namely optimisation of business processes like supply chain planning, demand prediction and store operations, are beginning to take shape but all share a common problem – they need large amounts of data. This has been the main thing holding AI back in certain areas of the retail value chain, but by utilising another technology becoming increasingly common in the industry, this could all change…

RFID in retail, the story so far:

If the ‘AI revolution’ hasn’t really taken off yet, the RFID one is well underway. RFID is used in retail to track and manage merchandise, on a single item-level, with far greater detail and accuracy than traditional systems can manage. The key benefit of RFID for retailers is an accurate and single view of stock across the entire business and its supply chain.

Naturally, RFID systems produce a huge amount of data for products, both in the supply chain and in the individual store. If only there was something that could process all that data…

AI meets RFID: The perfect match

Combining the large amount of item-level data RFID produces with the automated processing power of AI is the natural next step for retail technology.

The key to doing this is each use case adding value or actively solving a problem. At Detego we often talk about ‘avoiding data for the sake of data’ so when using AI to process such data, producing actionable insights and recommendations is vital.

So, what can we do by utilising AI with RFID, and why should retailers care?

So far, the key areas RFID-driven AI automation offers value to retail operations are assisting store staff, assisting customers and optimising inventory management on both a single store scale and across entire store networks.

Our Data Science team are developing solutions for the following use cases, which we will explore in detail in future articles:

Did we spark your interest?

Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.
The cutting edge of supply chain analytics and how digitisation is taking the guesswork out of retail logistics.
Best-practice approach and strategy for implementing RFID across the supply chain

A single point of truth in retail means having a single view of stock across the business. It means stores and distribution centres aren’t islands of merchandise that are clunkily attempting to share their version of stock information with one another as best as possible. Instead, at the foundation of the business is a unified view of every single product. Because this view of stock covers the entire network, items can move between stores and DC’s and remain in line-of -sight the entire time. This has huge benefits for individual operations and the business as a whole.

A single point of truth for retail inventory must be:

Single stock view

What is gained from having a single stock view?

Delivering a single stock view with RFID

So how do you achieve this reliable and complete view of stock? A single view of inventory starts with the single item. By giving each item an RFID tag, you’re essentially giving it a unique digital identity. This means, using regular RFID reads and sensors, you can easily track the item as it moves along the supply chain. Once it has arrived in a store, the stock becomes far easier to count, monitor and control. Because all this information is stored centrally in a single place, the individual item can be seen by the online store (and its customers) and even neighbouring stores and DC’s. This transparency boosts efficiency and makes cooperation between different arms of the retail operation far easier to manage.

Single Stock View Roadmap

The Detego platform is the single point of truth for retail inventory

The Detego platform puts all this together and delivers a single stock view that can be counted on. Using RFID we effectively digitise every single product in the supply chain and the store network. The information can then be fed into existing systems, such as ERP and OMS. This delivers all the benefits mentioned above, and our in store application guides store staff to effectively capitalise on this complete view of store inventory.

Single point of truth across supply chain

‘Detego is our “Single point of truth” in terms of in-store inventory. As a result, we are able to improve our omnichannel services such as click & collect, returns from e-commerce in the store or directly deliver to consumers from the store in a very efficient way. These are exactly the services our consumers expect today.’

Tobias Steinhoff, Senior Director Business Solutions Sales Strategy and Excellence, adidas

Did we spark your interest?

Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.
The cutting edge of supply chain analytics and how digitisation is taking the guesswork out of retail logistics.
Best-practice approach and strategy for implementing RFID across the supply chain

The 6 Key Benefits of RFID in Retail

RFID (Radio Frequency Identification) uses radio waves to track and identify tags attached to objects. The tags contain electronically stored information and are counted or ‘read’ by either handheld or fixed RFID readers.

In many ways RFID is used in retail as an alternative to a barcode system (although it doesn’t have to replace barcodes entirely). The more advanced technology involved in RFID mean it has a far greater level of accuracy and efficiency when it comes to counting inventory. As a result of this it has far broader applications in retail, most of which are built of off the back of this reliable inventory visibility.

By implementing RFID retailers can on average increase their revenue from 5-15% depending on the business. This on top of a margin increase of up to 1% and 10-15% lower working capital due to optimised inventory levels.

According to research in 2018, 69% of retailers cite a significant level of adoption, and this number is continuing to rise.

Inventory Visibility

Inventory Visibility

Due to the ease and accuracy of RFID stock counts, retailers using the technology can reliably achieve full item-level inventory visibility across their stores and supply chains. Crucially, due to the speed of RFID inventory counts, this can be achieved whilst actively reducing the labour intensity of operational processes. This accurate and up-to-the-minute inventory information is the backbone of so many of RFID’s uses in retail (including many of the points discussed below).

One crucial aspect of modern retail that relies on having accurate inventory visibility is Omnichannel retailing. With a complete and up-to-date view of stock across all channels, it is possible to open up the inventory of your entire store network to customers, providing a better customer experience and increasing sales.

 

Benefits of item-level inventory visibility

  • Improved shipping accuracy
  • Excellent baseline for advanced omnichannel retailing
  • Produces more data for better insights
  • Reduces inventory size (and therefore working capital) significantly
  • Increased customer satisfaction from reduced out-of-stocks and a more connected experience

Increasing Product Availability

Product Availability

Ensuring a high product availability is vital to maintaining retail sales. Despite this, low on-floor product availability and out-of-stocks are an alarmingly common problem in the industry, causing unnecessary lost sales as a result of inefficient replenishment processes and stock inaccuracy. This latter cause is practically removed completely by RFID, with typical stock accuracy being increased to 99% from the standard 60-80%.

Additionally, RFID platforms provide an unbeatable basis for efficient and reliable replenishment processes. The main advantage these platforms have is the item-level and real-time inventory visibility gained from regular 99% accuracy stock counts.

 

How does RFID increase product availability?

  • Makes regular cycle counts possible with efficient RFID stock reads
  • Removes stock inaccuracy (from 70-80% to 99%)
  • Creates complete item-level view of stock between both backroom and sales floor
  • Item visibility makes replenishment easier and more accurate
  • Real-time view allows for replenishment alerts for when items/sizes are running low
  • Item-level data from RFID allows for advanced, even AI-assisted planograms for individual stores

Supply Chain Traceability

Supply Chain Traceability

We’ve discussed the difference item-level visibility makes for stores, but when it comes to supply chains the benefits are just as great. With RFID, inbound and outbound reads become far easier, and are done on an individual item level rather than SKU (stock keeping unit). This means each item is accounted for at each step of the supply chain, rather than just shipments or boxes.

This level of stock visibility also drastically reduces the rate of shipping errors or picking mistakes as they are detected by RFID readers and corrected by warehouse staff during exception handling or outbound reads.

Additionally, the location or status of items and shipments are visible in real-time, so stores and DC’s can easily track shipments and know exactly what they will be receiving. This makes any individual item fully traceable, as time and dates of when the item passed each read point in the supply process can be stored.

Benefits of RFID in the supply chain:

  • Item-level visibility across entire supply chain
  • Trace items against individual shipments
  • Smoother operational processes
  • Track shipments for delivery
  • 100% inbound and outbound shipping accuracy

Increasing Process Efficiency

Process Efficiency

The difference in process efficiency from using RFID in retail is extensive, at every end of retail, be it the factory or the shop floor. An RFID reader, regardless of whether its fixed or a handheld, can read hundreds of individual items at once. Crucially though, as each item has a unique ID, they can never be read more than once. The signals also do not require line of sight to be read.

Naturally, this makes RFID inventory counts and inbound/outbound checks incredibly fast and reliable. In the case of store inventories, RFID has been found to reduce cycle count times by a staggering 96%.  This therefore means they are far more convenient to perform and can be done multiple times in a week rather than a year.

 

Processes transformed by RFID:

  • Cycle counts/inventories
  • Fast & Efficient Inbound & Outbound reads
  • RFID-enabled picking and packing
  • Mobile guided replenishment from backroom to salesfloor

Providing Real-Time Data

Real-time Data Insights

Analytics and data is one area that e-commerce is ahead of physical retail. This is largely due to the fact that everything online can be measured, whereas retailers don’t really know what’s happening with their stores and customers in any specific detail, and the stats and data they do collect are often historical and at risk of being outdated.

However, with RFID this can all change. The simplest and most effective use of the data allows retailers to better leverage their greatest assets; their products and their stores. Quality data and analytics can allow retailers to ensure merchandise is in the right place to be sold. Information on which stores are performing better or worse is a basic retail KPI, but with specific item data, RFID produces far more detailed insights. This includes how well individual items are doing in specific stores, right down to specifics such as which sizes of items are selling better where. Insights such as these are naturally actionable, meaning retailers can take steps to move or reinforce stock at specific stores.

 

Data insights and results possible with RFID:

  • KPI based performance tracking
  • Detailed merchandise data & Analytics
  • Operational excellence
  • Actionable recommendations
  • Compliance tracking
  • Eliminates reliance on historical data
  • Predictive capabilities for inventory counts and merchandise management

Transforming Customer Experience

Customer Experience

There are many effects of RFID in retail that go beyond simple operational benefits to actively improve the customer experience. At the most basic level, this includes things already mentioned like increasing product availability, offering convenient omnichannel services and freeing up store associates to spend more time assisting customers.

However, because of the real-time inventory visibility it provides, RFID can go way beyond this in terms of improving the customer experience. For example, with reliable and up-to-the-minute stock information stores can utilise technologies like chatbots or smart fitting rooms to assist customers with their queries, supply information about other items or sizes available and even cross-sell to customers in the store.

 

What ways does RFID improve the customer experience?

  • High product availability
  • Store associates have more time for their customers
  • Convenient omnichannel services
  • A connected experience between online and offline
  • AI-powered chatbots delivering assistance and product information via mobile.
  • Smart fitting rooms providing a hugely improved fitting room experience.
  • RFID-enabled Point of Sale – including self-checkout services

Did we spark your interest?

Although the customer leaves an invisible data trail in the store, brick-and-mortar retailers barely use them to improve customer service – its time to think again.
The cutting edge of supply chain analytics and how digitisation is taking the guesswork out of retail logistics.
Best-practice approach and strategy for implementing RFID across the supply chain