468 Retail and Channel Management Blog

Monday, March 13, 2017

Retailers are adopting IoT technologies for Inventory Management

It’s been a hot topic of 2016, as IoT technologies began making their footprint in retail. As in-store traffic continues to decline, retailers must adapt and bring new life to the brick-and-motor shopping. It is critical as 90% of retail sales are still made in store. Although store traffic is decreasing, this may also be because of online purchasing and decision making on where to shop prior to heading to a brick-and-motor store. Retailers are looking for innovative ways to offer a compelling experience in-store and service that integrates the online experience, but makes it even better. Studies have shown that consumers buy more in-store then they do online, therefore, its in the retailer’s best interest to get their customers to make purchases in-store.

“The idea is to leverage the Internet of Things to add a new dimension of product discovery, education, interaction, even entertainment, to physical stores.” – Forbes

According to Zebra Technologies, a global leader in solution-based technologies for operations, released a 2017 Retail Vision Study, a body of research that analyzed the technology trends shaping the future of the global retail industry. The study revealed that nearly 70 percent of retail decision makers were ready to adopt IoT, and 65 percent plan to invest in automation technologies for inventory management and planogram by 2021. Jeff Schmitz, Senior Vice President and Chief Marketing Officer of Zebra stated, “Every inch of the retail industry is changing, from the aisles of the warehouse to the shelves of the store, and retailers are driving this change in a race to better serve customers.” The study showed that retailers are positioning themselves to meet and exceed customer expectations with new levels of personalization, speed and convenience – with the use of “smart technologies”. By 2021, 65 percent of retailers plan to explore innovative delivery service such as delivery to the workplace, homes, and even parked cars. 79 percent of North American retailers are said to be investing in IoT technologies such as automated inventory verification and sensors on shelves.

When retailers describe integration of IoT technologies, its more then just making it easier for the product to get to the consumer. The goal of many retailers is to fully integrate the ecommerce experience with the brick-and-motor store. This requires a fully integrated system that allows visibility of the inventory on a stock keeping level foe each store front. In the study, 78 percent of retail decision makers said the integration of ecommerce and in-store was critical. Retailers are looking to leverage their footprint and use their store front real estate to play in tune with the e-commerce world. Tom Moore, lead of retail & hospitality at Zebra stated “A lot of retailers are looking to use the store's back room as a warehouse for fulfillment. The three challenges retailers are facing to day is that store inventory software doesn’t share data with their warehouse management system (WMS), outdated management software, and lack sufficient inventory visibility. Together, those hurdles make it difficult to track the goods on the shelves and to match them with incoming e-commerce orders. Most retailers have 98 to 99 percent inventory accuracy at the time they receive their goods from the warehouse, but that number drops to 50 to 60 percent by the time the goods hit the shelves. A store that is willing to pay its employees to perform cycle counts can get the figure up to 70 to 80 percent, but most stores can't afford that expense, he said.”

In order to better track inventory and integrate the ecommerce experience with the online experience, leading retailers have begun to adopt RFID tag technology. RFID technology allows retailers to track retail inventory by automating the tracking of merchandise throughout the supply chain and replaces the process of employees scanning each item manually and inventory counting in-store. As the cost of technology has dropped dramatically, retailers are starting to convert to RFID to access a single, real-time view of all their inventory, for both in-store and ecommerce. The RFID tag was a $1 in 2003, and is now about 10 cents today has made it easier for retailers to begin adopting it for their inventory management systems.

As retailers continue to improve the in store experience and integrate with ecommerce, RFID will play a key role in the inventory management process. “In the era of digital shopping and a complex stream of online, mobile, and brick-and-motor commerce if retailers are not investing in RFID, then they might as well throw in the town,” said Ron Cavallo, Vice President of infrastructure, technology and operations for Hudson’s Bay Digital.

Forbes, Retailers are Spending Billions on the Internet of Things but will it Pay Off

Supply Chain Quarterly, Survey Retailers Drive Demand for Internet of Things


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