Most retailers conduct a full physical inventory count in their stores once, possibly twice, a year. This allows them to reconcile their inventory records to gain a true accounting of what they actually have in stock and provide their auditors with the numbers needed to produce the company’s financial reports. The problem with this counting frequency is that inventory records become increasingly inaccurate in the period between counts.
According to Herb Billings, VP Technology Strategy at Datascan, “By the time the next annual count occurs, inventory record accuracy may be as low as 35% - in other words, nearly two-thirds of what you think you have in stock is incorrect, either due to shortages or overages, and that is costing you sales and possibly customer loyalty.”
The logical solution is to count more often, but this poses challenges of its own. With labor shortages, many stores don’t have the staff available to conduct full stock counts more than once or twice a year. Additionally, the cost to purchase and maintain counting equipment and software can be counterproductive to the ultimate goal of increasing the company’s bottom line. Here is where RFID can lend a hand.
While RFID technology was once prohibitively expensive, the cost of equipment and tags has dropped significantly in recent years, making it an affordable option for most retailers. Tagging mandates by the world’s largest retailer, Walmart, has had a trickle-down effect for other retailers who purchase from the same suppliers, as well – merchandise arrives in store already tagged and ready for RFID tracking.
“One of the great benefits of RFID is that counting merchandise can be accomplished in a fraction of the time of traditional counting methods,” says Billings. “This makes RFID perfect for quick, frequent counts. For example, one or two people can scan high-value or high-theft items weekly in minutes, rather than hours.”
These frequent cycle or category counts greatly increase the ongoing inventory record accuracy, which drives product availability and sales. In fact, studies have shown that frequent stock counts can increase sales 4% to 8%, and in the long term, increase customer satisfaction.
By implementing RFID technology in stores, retailers have the ability to conduct counts as frequently as they choose, providing greater inventory accuracy and delivering the right products at the right times to meet their customers’ demands.