Real-Time, Always-on RFID that Delivers a Competitive Advantage for Retailers

Transcription

1

2 Real-Time, Always-on RFID that Delivers a Competitive Advantage for Retailers Inventory management with fixed infrastructure RFID readers provides highly-accurate, real-time inventory count and location information that delivers tremendous benefits to retailers, including revenue and gross margin uplift, enhanced customer service, confident omni-channel execution, reduced shrink and data-based operational insights. The financial benefits can be significant: Revenue uplift of 5% to 15% in size and style-intensive categories from reducing out-of-stocks GM improvement of 50 to 200 bp by reducing markdowns for fashion and seasonal items by reducing markdowns RFID enables retailers to sell to the last item, moving from a push inventory model, to a high-visibility pull model that reduces inventory while increasing availability and customer service. The real-time, in-store analytics provided by fixed infrastructure RFID give brick-and-mortar retailers the data-driven insights online retailers enjoy every day and the ability to confidently execute omni-channel programs such as click-and-collect. Without RFID, Inventory Accuracy is Poor For retailers who use barcode scanners for physical counts, inventory accuracy can be abysmal. Counting stock is so costly and intrusive that softlines retailers typically do it only twice a year on average. Even if accuracy is perfect immediately after a count, it declines every day until the next count; the longer the interval, the worse it gets. The rate of decline depends, at least in part, on the robustness of inventory-handling operations such as receiving. With receiving errors, shipping substitutions, shrink and other issues, accuracy 2 usually drops to around 65% between barcode counts, in some cases much lower one major 3 retailer has reported accuracy as low as 40% just before twice-yearly counts. 1 2/6

3 Inaccuracies lead to out-of-stocks, which depress sales, irritate customers and erode loyalty. Harvard Business School found that 8% of retail items are out of stock at any given time and Kurt Salmon says that for high complexity items (like denim and lingerie) it s closer to 20%. This leads directly to lost sales; but even worse, it leads to lost loyalty, which can be even more costly. According to the Whitehouse Office of Consumer Affairs, a customer is worth more than 10 times her first purchase. A missing $50 pair of jeans can cost the retailer $500 in revenue. Critically, if the item is out-of-stock, but the inventory ledger says it is at or above the replenishment level, nothing may sell for weeks until the next count reveals the stockout. While inaccuracy leads to stockouts in one store, it can lead to excess in another. Interstore transfers are prohibitively expensive. So while one store is out of stock, the other is deep into multiple rounds of markdowns, depressing gross margins and revenue. RFID Delivers Accuracy, Operational Excellence and Competitive Advantage Accuracy delivers concrete and immediate benefits. Apparel retailers report significant reductions in out-of-stocks. Marks and Spencer reported inventory accuracy improved by 4 40 percentage points, and out-of-stocks were reduced by a third. This leads to sales uplift of from 5% to 15%, with higher numbers in SKU-intensive categories. According to ChainLink, one retailer reported 30% uplift in women s intimates solely due to elimination of stockouts. RFID allows for smarter allocation models from the DC to stores to ensure enough, but not too much inventory in each store throughout the season. For high-fashion categories with short product lifecycles, RFID can boost gross margins by 50 to 200 basis points for seasonal and high-fashion categories. Retailers also report reductions in shrink. Fixed RFID with real-time location provides the what-when-where needed to root out internal theft. Shift and video data can often be used to identify the source of the problem. Based on industry feedback, we estimate a 25% reduction in the amount of shrink from forensic investigation of internal theft. In a typical apparel retailer with 2% shrink, this means an additional 50 basis points of bottom-line profit. Handheld Readers are a Halfway Solution A portion of these benefits can be realized with handheld RFID scanners, but handhelds bring their own headaches. Though RFID-based counting is much faster than barcode counting, and thus can be done more often, it is still intrusive and labor intensive. Because it is dependent on human training, compliance and diligence, results vary and are often not repeatable. The retail industry s 60% employee turnover rate exacerbates this issue. 3/6

4 Fixed Readers Deliver on the Full Promise of RFID Always-on RFID delivers a constant stream of data filled with real-time information about store inventory that periodic counting does not offer. As a Caltech mathematician told RFID Journal, Data analytics is more restricted with handheld systems. There s value and information that can be gleaned from [handheld] systems; however, the continuous reads 5 from fixed infrastructure lead to a much richer dataset to analyze. In a panel of experts at the Retail Business Technology Conference in London in March 2016, panel members agreed that while retailers may start with handhelds, most will quickly graduate to fixed readers because of the enormous added value fixed RFID delivers. As one said to the audience of over 200: Everyone will be using fixed infrastructure within 5 years. OmniSenseRF Inventory Service Real-Time, Always- On RFID Mojix s OmniSenseRF Inventory Service is a vendor-managed, RFID inventory analytics system deployed in stores and provided as a service. Based on Mojix s high performance STAR fixed infrastructure RFID architecture, OmniSenseRF provides a rich stream of realtime inventory count and location information. There is a universe of additional benefits from in-store analytics that this datastream provides. As analysts for retail expert Kurt Salmon put it: We believe RFID s real impact comes from looking at all of its potential benefits as a whole to demonstrate truly eye-opening value. Beyond just the sales lift associated with improved inventory visibility, RFID has incredible ability to facilitate omnichannel fulfillment and improve the customer experience both of which are rapidly becoming powerful 6 competitive differentiators. Fixed reader RFID delivers on the full promise of RFID, because it delivers not only presence information, but also real-time location information. This knowledge enables retailers to: Deliver superb customer service Gain business insight to make data-driven decisions Enhance operations Enable confident omni-channel execution Deliver superb customer service. Customers expectations for service can best be described as immediate. They want what they want and they want it right now. With RFID, sales associates can confirm that a given size, color or style is in stock instantly. With the help of up-to-date location 4/6

5 information provided by fixed readers, they can locate it in a fraction of the time a visual search takes. Customers waiting with open wallets can quickly find the item they want to buy. Gain Business Insight and Make Data-Driven Decisions Corporate management can peer into each store remotely and confirm planogram and promotional display compliance, identify root causes for under-and over-achieving stores and deploy learnings throughout the chain. RFID can tell you what items went into the fitting room comparing this to POS data can deliver insight in the form of conversion rates by style or SKU. You ll want to find out why customers trying on two items buy one 80% of the time, while they consistently leave the other on the floor of the fitting room. Enhance Store Operations OmniSenseRF Inventory Service can tell you what s about to go out of stock and can automatically trigger a replenishment alert. Abandoned items can be found and returned to their proper location quickly. Replenishment processes can be optimized simply by knowing not only what stock is on the sales floor and in the back room, but also where to find it quickly. Enable Confident Omni-channel Execution Since % of growth in retail has occurred online, and in apparel, online sales now comprise about 15% of all retail sales. While brick and mortar retailers have discovered that the key to competitive advantage is to embrace ecommerce, they know that their greatest assets are their physical stores, with their extensive assortment and potential to deliver an enjoyable experience to consumers who want to see and touch items before they buy. Now, shoppers can combine the convenience of online shopping with the instant gratification of driving to the store and picking up that item of desire click and collect where they often ultimately buy 3-4 times the value of their initial online order. Competitive Advantage from OmniSenseRF Inventory Service Fixed infrastructure RFID provides brick and mortar retailers with many of the same tools online retailers take for granted, enabling them to make decisions based on data, rather than intuition. Mojix s OmniSenseRF Inventory Service is an end-to-end, always-on, inventory management capability available on a monthly service basis. This approach provides a low entry cost, allowing retailers to start fast and quickly realize value. Retailers interested in OmniSenseRF Inventory Service can investigate its potential by contacting Mojix and requesting a proof of concept project now. 5/6

6 Corporate Headquarters: References 1. Inventory accuracy is defined as the percentage of SKUs for which the inventory system-of-record matches the actual physical inventory 2. Typical inventory accuracy for retailers is only about 63% (University of Arkansas), or 65% (Raman, DeHoratius, and Ton, 2001). However, other researchers have reported accuracy as low as 51% (Kang and Gershwin, 2007) 3. ChainLink Research, Understanding Real-World ROI for RFID in Retail, May Ian Walker, M&S Boosted by Womenswear, Wall Street Journal, Apr 10, Scot Stelter, The Emerging Marketplace for RFID Data Analytics, RFID Journal, Jul 6, Kurt Salmon Associates, The Compelling case for RFID, June 13, 2013 Mojix Inc Santa Monica Blvd, Suite 350, Los Angeles, CA Phone: Web: mojix.com For more info: Facebook: Mojix Inc Mojix, OmniSenseRF, STAR, STARflex, and ViZix are all registered trademarks or trademarks of Mojix Inc. Copyright Mojix, Inc. All rights reserved. About Mojix Mojix is a leading connected business solutions company that provides wide-area RFID systems, real-time IoT platform solutions and cloud and mobile development services for IoT and big data applications. We are leaders and innovators in fixed infrastructure sensor networks that collect, store, analyze and interconnect data from multiple sources including RFID, GPS and other sensor devices. Mojix IoT platforms maximize intelligence at the edge and provide big data scalability. Our solutions feature highly configurable application frameworks and elegant user interfaces with advanced analytics, enabling end-to-end business intelligence and data visibility across multiple industries. Mojix creates efficient and agile enterprises by giving assets a digital voice so users can make data-driven decisions. For more information, visit mojix.com. 6/6