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NRF: RFID Will Be Key to Omnichannel Offerings

Omnichannel may have been the word of the week at the National Retail Federation convention, but retailers will have to improve inventory accuracy before omnichannel can work.

At a breakout session Monday titled, “Achieving Omnichannel Success with Standards-Based Supply Chain Processes” an expert panel including Peter Longo, president of logistics and operations at Macy’s, Mike Molitor, senior vice president of e-commerce at Kohl’s and Dan Smith, chief information officer for Hudson’s Bay Trading Company discussed how important inventory accuracy is to the changing landscape of retail.

Bob Carpenter, president and CEO of GS1 US, an organization that develops and maintains standards for global supply and demand chains and the session’s sponsor, moderated the panel.

“Consumers don’t walk into a store and say, ‘I want an omnichannel experience,’ but they do want a seamless experience across mobile and stores,” Carpenter said. And seven out of ten consumers prefer to interact on mobile devices, he added.

I’m not saying omnichannel is starting, Carpenter said. “It’s here and it’s coming fast.”

Peter Longo of Macy’s spoke first saying that the consumer in her endless savviness has forced omnichannel to happen and that retail is seeing the morphing of the physical environment with the online experience.

“We have to look at networking all the pieces and parts to make them as much alike as possible,” Dan Smith added.

The proliferation of devices is really what’s setting the tone for customer-centric retailing–a term Mike Molitor said he prefers over omnichannel retailing. Now, the question becomes how do retailers get customers the product they are constantly seeking, he said.

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And there’s little room for error, Longo added. If a customer comes in and says ‘You don’t have what I want where I want it,’ he said, “You’ll have a tragedy on your hands.” For consumers, a letdown like that could mean the end of their loyalty to that brand.

Stores and their inventory have to be accurate, Longo said. Retailers can’t send customers somewhere, be it in-store or online, to get something and then it isn’t there.

Speed is another element in the process that retailers will have to continuously improve upon. Consumers want what they want now. “Tomorrow may be too long,” Longo said. “The ultimate enabler of speed is going to be technology,” he added.

When a customer enters a store, they are no more or less likely to buy than anyone else, Smith said. “But if you’ve directed them in there from online, you have increased the chance of purchase,” as that consumer already knows what they want, he said. And what they want had better be available and right where they expect it to be.

Retailers will have to have better communication with their supplier network to make these seamless shopping experiences happen. Creating a community between suppliers and retailers and implementing best practices throughout the supply chain will be critical, Molitor said.

Longo said Macy’s tries to act as a community. “The relationship between retailers and suppliers should be seen as two agents that need to come together to bring goods to customers,” he said.

And part of bringing those goods to customers and retaining those customers will be through the use and implementation of radio-frequency identification (RFID), Patrick Javick, industry development director for apparel and general merchandise at GS1 US said on the sidelines of the panel discussion.

RFID tagging is helping stores maintain high levels of accuracy with inventory, as associates are able to use the technology to count stock daily and its use will be key in the battle for customer loyalty.

This accuracy results in better fulfillment and has led to considerable sales growth in store departments that use it, Javick said. Getting inventory accuracy right is the only way omnichannel can work.

For Macy’s, there is no more potent strategy than omnichannel, Longo said. “It clearly ranks as number one.”

The other panelists echoed similar notions of their organizations.

A lot of the solution to realizing omnichannel retailing will be getting suppliers on board, Smith said. “We can figure out how to make mobile, online and fulfillment work best but it’s got to be done by the entire organization, led from the top. That’s the number one thing that we’re dealing with.”