In the world we live in today, having options is everything. When someone mulls over a purchase, two common considerations are: when do I need this by and where can I get it? In this day and age, if the answer to the former is “not for some time,” then online research or purchases are common. If, however, the answer is “as soon as possible” or “tomorrow,” brick-and-mortar stores are still the choice. Either answer prompts the significant follow up question, “where can I make my purchase?” Research, typically online or in a catalog, occurs until the informed consumer finds the product he or she wants.
So, what if the consumer needs her product immediately and recognizes the product is on a retailer’s website and she heads to the store only to discover it to be out-of-stock? Is there an in-store kiosk available from which a shopper can order the product from another store and have it deliver to her local store or doorstep? In addition, consumers are increasingly “buying with a click” or simply buying on a whim; therefore, retailers need a strong online and mobile presence to service these consumers, especially in today’s connected world. By not having inventory available in store or affording customers alternative purchasing option, a retailer may not only miss out on a sale, but may also endanger that customer’s loyalty or brand perception.
How are retailers able to avoid lost sales, disappointed customers or diminished loyalty? The answer is omni-channel retailing. Omni-channel retail is a concept of interconnectedness. A retailer needs to combine all the heterogeneous parts of the supply chain, into one smooth, completely connected framework. Put another way, omni-channel retailing means connected customers can shop for and purchase the same items across many channels.
Many retailers have embraced omni-channel retailing and its advantages, but unlike most other retailers, Macy’s has a not-so-secret weapon in RFID technology which affords more accurate, real-time inventory visibility. As highlighted during its recent investor meeting, Macy’s is enhancing its omni-channel retail strategy by broadening its overall RFID strategy. While the technology is already deployed in US stores (select apparel items and display shoes are tagged), the company is expanding store-based fulfillment to 500 locations and working with 50% of its suppliers to stock RFID-tagged goods for improved inventory counts.
RFID tagging has been so successful that Macy’s CEO Terry Lundgren expects it to reduce the need for distribution centers whereas stores will serve as distribution centers and closest-to-the-customer fulfillment locations. RFID will play an essential role in achieving the vision of omni-channel retail by ensuring that merchandise is replenished in a timely manner and regular automated cycle counts on inventory are enabled. VDC believes item-level RFID will continue to elevate and evolve the omni-channel retail concept and the technology will play a transformational role in the omni-channel retailing experience.
(A special thank you to Nicholas Reposa for his significant contributions to this posting. Mr. Reposa is currently a Researcher in VDC’s AutoID & Data Capture practice.)