When a retailer emails you a sales promotion, you will generally click on it only if you really need or want something it is offering. Once you are into the website, let’s say you see the item of clothing that you liked from the email and proceed to order it. You click on your size but they don’t have it in that color. So you try another color in your size and they don’t have that. You may go further to find another similar item, but chances are you have already lost interest and closed the tab.
The retailer has not just lost a possible sale, but has also disappointed a customer that actually wanted to buy something. The retailer has failed to make good on a promise to you, the customer, because it did not have adequate visibility into its inventory. The product in your size may have been sitting in a brick and mortar branch of the store somewhere, or could have been midway through being processed as a return. But the retailer could not see it, therefore could not make it available to the customer.
Even if it was in-store, the retailer might not have known it. Anecdotally, in-store inventory accuracy is usually less than 70%, which means that 3 times out of 10 a retailer is potentially going to disappoint someone. Retailers are rightly concerned; Retail Systems Research says that 93% see a lot of value in having inventory visibility, yet only 45% have a lot of visibility.
Webstrategies says that retailers could gain 10% more revenue if they had tight cross-channel integration across a single view of items, orders, inventory and customers.
So what is to be done? The Internet of Things holds some of the answer, says RSR: “Will IoT systems help get them there faster? It goes without saying that, if they do [implement them], the rewards will be tremendous.”
Inventory visibility means that when a retailer is preparing for a customer delivery, it can select the most efficient place to dispatch the goods from - for example, a local store rather than a warehouse 300 miles away.
But how does the retailer know this? Only by using IoT devices - such as RFID tags - can the retailer understand its entire inventory picture, thereby knowing in real-time what is in stock, where it is and then making decisions based on this information.
Retailers can even automate these decisions by making inventory “cognitive,” so it effectively makes the decision itself - about stock redeployment from one store to another, or replenishing warehouse levels.
Using IoT devices a retailer can get even more granular, to understand how items move across the store, into and out of changing rooms, or even identifying what items go into changing rooms but never make it to the till. Shelf-level inventory means that visibility is there for the exact style and size of clothing a customer is seeking.
Inventory visibility is one of the most critical elements to success in the competitive retail world today. “Retailers must invest in capabilities to improve enterprise wide inventory visibility with a specific focus on store inventory accuracy,” said consultancy Gartner Group.
This is because the majority of customers (73%) expect to be able to do an online in-store inventory check, but only 32% of retailers currently can offer this. It is time to get serious about real-time inventory visibility. Because the customer is waiting.