The True Cost of Inaccurate Inventory on Retail Sales
Accurate inventory management is crucial to retail success. According to part one of SML’s State of Retail Insight Report, 48% of retailers find that frequently out-of-stock items are a significant challenge in fulfilling customer orders.
Accurate inventory management is crucial to retail success. According to part one of SML’s State of Retail Insight Report, 48% of retailers find that frequently out-of-stock items are a significant challenge in fulfilling customer orders. Meanwhile, a lack of visibility within the supply chain also creates inefficiencies, negatively impacting future sales and wider business performance. From the supply chain to the in-store experience, inaccurate inventory affects every level of a retailer. Technology now offers innovative solutions that directly address inventory issues and allow retailers to achieve and maintain inventory visibility with minimal labor costs and a huge upside of increased sales and profitability.
Stock Availability Challenges
Inaccurate inventory management is an ongoing problem for many retailers. It can not only misinform retailers about the amount of stock they are holding, as well as the specific products they have, but it can also lead to retailers overstocking items. As a result, retailers’ expenditures significantly increase due to the additional costs of purchasing, manufacturing, and transporting excessive products. Furthermore, when retailers receive deliveries to warehouses and stores with bloated inventory, there is also an additional labor cost to process and store this product which adds to the burden. The end result is decreased profitability as retailers process more products than needed to achieve desired sales results.
As customers continue to shop in-store or leverage omnichannel fulfillment options to purchase their items, inaccurate inventory levels can negatively impact their experience. Without access to accurate, real-time data, retailers often fail to fulfill orders consistently. Whether staff are unable to find items that customers have requested in-store, or ordered online to pick up in-store, the overall shopping experience is negatively impacted. This loss of a sale can quickly spiral into many, as customers seek alternative retailers to shop for their items. Canceled Buy-Online-Pickup-In-Store (BOPIS) orders also impact incremental in-store sales as the additional opportunity to drive customer traffic into the store is compromised.
RFID technology is able to alleviate the current challenges facing retailers by improving inventory accuracy to 93-99%. With the technology in place, retailers can seamlessly and effectively track their inventory across every level of the supply chain. With enhanced inventory accuracy and visibility, retailers can more easily identify and avoid carrying excess inventory, with accurate knowledge of their stock levels. In turn, transportation and storage costs are optimized, and retailers can maximize their profits.
Fulfilling customer orders is a necessity, and RFID technology facilitates this by providing accurate and up-to-date information on inventory levels in near real-time. As a result, retailers can provide reliable information about stock availability for omnichannel purchases and in-store associates can quickly locate items in-store for customers. This assurance eliminates the frustration of out-of-stock items that customers would previously experience, improving the overall shopping experience.
Stock availability poses a significant challenge for retailers, affecting both their operational efficiency and customer satisfaction. This can lead to a significant increase in costs, and damage brand perception and customer loyalty. However, through item-level RFID, retailers can increase their sales by providing valuable information on product availability, as well as removing unnecessary costs. To thrive in an increasingly competitive landscape, leveraging RFID will be the key to driving future profits and those who fail to embrace this technology are likely to fall behind the competition as they struggle to capture market share from companies who have adopted the technology.
Talk to our RFID experts today to learn more about how we can help your business benefit from RFID solutions.