Increased visibility improves retail supply chain, enhances returns policies
Currently, brick-and-mortar stores are under tremendous sales pressure. This is due to the growing popularity and adoption of e-commerce, and – more recently – the click-and-collect retail business model, making it a necessary move to shift their business online. Retailers worldwide lose a staggering $1.75 trillion annually due to the cost of overstocks, out-of-stocks and needless returns, according to retail analyst firm IHL Group.
There’s no denying that we live in an increasingly digital world. Everything we want or need can be obtained with just a click of a button or swipe of a finger. But as technology advances, consumers gain more and more power – and with more power comes higher expectations for a great customer experience.
As online shopping continues to grow at a rapid pace, retailers’ supply chains are forced to keep up with demand and provide unprecedented levels of convenience to help businesses drive customer loyalty and achieve consistent revenue streams. Retailers can no longer rely on traditional or outdated supply chain processes if they want to stay competitive with e-commerce giants. That’s why many of them are beginning to shift their focus and give their supply chains a high-tech makeover. According to the recent Zebra Retail Vision Study, 72 per cent of retailers plan to reinvent their supply chains with real-time visibility enabled by automation, sensors and analytics.
In regards to automation, 65 per cent of retailers plan to invest in inventory and supply chain automation by 2021. Due to the fact that multichannel shopping has become the norm, inventory accuracy is more critical than ever, as products from both brick-and-mortar and digital channels flow through the supply chain. Studies show superior omni-channel support requires 90 per cent inventory accuracy or greater. As an industry, retail inventory accuracy falls much lower at around 65 per cent.
To improve accuracy, many retailers are budgeting for digital upgrades that enable automated, real-time inventory visibility via Internet of Things (IoT) technologies such as RFID. Using RFID platforms increases inventory accuracy to 95 percent, while out-of-stocks can be reduced by 60 – 80 per cent with item-level RFID tagging. So, it’s no surprise over 70 per cent of retailers plan to provide, or are currently providing, item-level RFID technology.
Along with RFID, retailers are also turning to analytics to enhance visibility, as well as inventory demand and forecasting. According to Zebra’s study, 75 per cent of retailers plan to invest in predictive analytics by 2021. If retailers can determine what’s selling and what’s not, they can better manage inventory to keep customers happy and avoid out-of-stocks and overstocks. The study indicates one of the key sources of customer dissatisfaction today is out-of-stock merchandise, and McKinsey & Company found reducing out-of-stocks and overstocks can lower inventory costs by 10 per cent.
Retailers are also migrating from siloed supply chain processes to unified commerce models. These models ensure end-to-end, digital and brick-and-mortar enterprise visibility of store associates, shoppers and merchandise. Taking this approach allows stores to double as distribution centres, getting customers what they want and in their hands faster — which means no longer having to solely rely on warehouses to get the job done and providing a better overall shopping experience.
In these challenging times for retailers, it is vital that a coherent returns policy is adopted. This is all about the smart use of technology including mobile devices, handheld printers, personal scanners. Additionally, interactive kiosks should be used to manage returns, which can be facilitated through enabling barcode scanning, label printing, bagging and parcel drop box all within one space. This helps create personalised experiences that improve the customer experience and keep shoppers coming back. This is vital as retail profit margins continue to be squeezed now and in the future.
Retailers should encourage multi-channel returns options, comprising in-store, lockers or via pick-up. Once goods are returned, shops should use scanners, mobile computers or Radio-Frequency Identification (RFID) to keep abreast of available stock for the next transaction of the item in question. The use of inventory visibility is to be encouraged, so goods can be sent efficiently and effectively, where they are required to be.
It’s clear that retailing is not all about the shop window – especially in the world of online retailing. This really is the science and art of online retailing – it’s as much about the back end as the ‘shop window’.
Article by Mark Thomson, Director, Retail and Hospitality EMEA, Zebra Technologies