OmniChannel Retailing Definition:
What does omnichannel mean? Omnichannel retailing is focused on creating a seamless consumer experience for the connected customer who uses traditional and digital shopping channels simultaneously throughout the purchase journey. Whether it be an eCommerce website, a print catalog, or an actual brick-and-mortar store, the connected consumer expects the ability to pause and resume the shopping experience at different points across all channels. Customers interact with the brand, and not separate channels within the brand. In order to accommodate this new breed of highly engaged consumers and their shopping habits, retailers need to implement new supply chain and marketing strategies that take advantage of near real-time information.
How will RFID help in omnichannel retailing?
For omnichannel retailing to be successful, real-time information needs to flow seamlessly through the supply chain to the consumer and vice versa. RFID provides the means to accurately track inventory in fulfillment centers and retail stores. According to Auburn University, once an RFID system is implemented, inventory accuracy increases from a meager 60% to a staggering 95%. Inventory visibility allows retailers to minimize out-of-stock situations and reduce lost sales.
To achieve item-level visibility, many companies are affixing a single RFID tag to each stock item. With fixed RFID readers and antennas deployed in the warehouse and retail stores, inventory systems receive real-time information improving efficiency in the distribution process. In the retail setting, employees equipped with handheld RFID readers and supplemented with strategically placed fixed RFID readers will be able to efficiently count stock in minutes compared to hours.
Why is inventory visibility important to the consumer?
For example, after thoroughly researching a product online, a consumer decides to make a purchase. However, instead of purchasing online and waiting for the shipment in the mail, the consumer wants the product immediately and checks the stock availability of the nearest physical store location. The consumer drives to the physical store only to leave empty handed due to the website’s old, inaccurate inventory data. The customer has wasted valuable time and leaves the store with the memory of disappointment. Not only does the store lose a sale in this situation, but they risk damaging their overall brand due to cultivating a poor shopping experience.
In another scenario, the same consumer decides to complete the purchase online, but opts to pick up the product at the store. To fulfill the purchase at the store level, accurate inventory information is required to flow into databases shared between the eCommerce and retail inventory systems. Omnichannel retailing is an extremely customer-centric strategy and focuses on providing the customer with multiple options in the purchase process.
Where does omnichannel retailing and RFID help companies?
Accurate information allows companies to make better-informed decisions and improve the distribution process. In most industries, shaving a fraction off shipping costs will lead to huge savings and return on investments. With RFID augmented systems, companies will implement intelligent distributed order management systems optimizing inventory procurement and allocation. Macy’s CEO Terry Lundgren is so confident in omnichannel retailing that he predicts it will reduce the need for fulfillment centers. By knowing the exact inventory levels across retail stores, he feels that the stores themselves will be able to maintain the optimum level of stock. However, the improved processes are only achievable with item-level visibility, a feat made obtainable with RFID.
Comment below with your predictions on how RFID will continue changing the retail industry.