As retail continues to evolve into a fully digitally-integrated industry, businesses have been looking for new ways to deal with inventory management and its effect on overall sales and profit margins.
The answer has come in the form of advancements fueling the industry’s digital transformation, which now enable near 100 percent inventory accuracy.
Advancements in technology and accounting methods are being put to work to bridge the gap between e-commerce and brick-and-mortar by increasing inventory accuracy to levels approaching 100 percent—far greater than the standard 65 percent accuracy that is typically expected from traditional inventory practices. Recent research by market foresight advisory firm, ABI Research, suggests that retailers applying these new and improved inventory methods can increase annual revenues “by at least 3 percent.”
RFID technology is at the center of this inventory revolution, and it’s becoming progressively more effective as inventory cataloguing becomes more automated. Retailers can now create their own network of information using RFID tags, colloquially known as an “internet of things” or “IoT”, that users and consumers can access at the touch of a button. Advancements in artificial intelligence (AI) have pushed this advantage even further, in some cases removing the necessity of a human touch in inventory accounting altogether.
RFID technology has become more and more popular due to its falling costs and the rising urge for retailers to have complete control over their inventory and supply chain. However, according to ABI Research’s senior analyst Nick Finill, “[RFID] will fail to transform the entire retail market due to its limited viability outside of soft goods and fashion verticals.” To put it simply, there may not be much of a future for RFID-infused produce.
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But, that doesn’t mean that “shelf-based” retailers won’t also be able to increase their inventory accuracy. In fact, the greatest advancements in inventory management are possibly yet to come, including improvements to AI and computer vision.
ABI estimates that roughly 20 hours of labor a week is required to perform your typical grocery store stock check. Combine that with the fact that this still results in only 65 percent inventory accuracy on average and an obvious area for growth and savings emerges.
“In order to remain competitive with e-commerce retailers and other brick and mortar rivals, physical stores will soon be adopting IoT and AI-enabled inventory tools as the standard, rather than the exception,” reports Finill.
It isn’t just the large retailers that can benefit from inventory management, either. There are many SaaS (Software as a Service) offerings available that can be applied to a small business’ inventory strategy. These services, for a fee, can offer similar levels of insight that larger corporations often acquire with their own, proprietary programs. This can be done without requiring significant capital to implement.
Small businesses now have the ability to “go digital” in a way that only large, integrated networks were capable of in the past. If anything, that should drive further adoption of new inventory management methods by large retailers as they learn to compete with an increasingly bespoke marketplace and a more integrated and educated consumer.
Inventory management may seem like simple housekeeping to the newly initiated but it’s clear that it’s a valuable facet of sales and retail that can’t be ignored. In fact, near-perfect inventory accuracy is the obvious by-product of an industry that is being forced to become more efficient and flexible with every passing day.
The average retail consumer has the ability to walk into a physical store while simultaneously being able to access information about that same store’s stock. As this omnichannel approach becomes more accessible and widespread, retailers that give consumers instant and accurate information about their inventory will likely see the highest rate of growth.