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How Retail Inventory Efficiency And Accuracy Impacts The Customer Experience

  • Written by  Carla Anderson, Oracle Retail

0aaaCarla Anderson OracleRetailAs omnichannel retailing requires greater and greater precision, the stakes surrounding inventory accuracy — or the lack thereof — are increasing dramatically.

According to a report from the International Council of Shopping Centers, an estimated 151 million people visited a mall or shopping center over 2018’s Black Friday weekend. The vast bulk of spending volume for the weekend — 88% — went to omnichannel retailers, i.e. brands with web sites the consumers at least had the opportunity to shop before entering the store.

So far, no surprises. We were expecting a big shopping weekend, most retailers are at least trying to be omnichannel these days, and we know consumers increasingly do product research on the web site before making their instore purchases. Slightly unexpected, however, was this: 27% of those holiday shoppers were in the store to pick up a purchase they’d already made online. Of those click and collect or buy online pick up in-store (BOPIS) customers, almost two thirds — 64% — made one or more additional purchases while they were in the store.

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While these numbers are possibly skewed a little by consumers’ urge to nail down a Black Friday special, it seems clear that click and collect represents a genuine and growing sales and customer loyalty building opportunity. Well, it does only if you’re good at it. Here are two questions retailers should ask themselves:

  1. When the customer comes in to collect the order in your store, is the item there and ready for pickup?
  2. Do you have a simple, customer-friendly process? In other words, can the BOPIS customer make their pickup without having to stand in a checkout line and is it easy for your customer to find the pickup area?

When It Goes Wrong

Here’s an example of what can happen when the answer to either of those questions is no. I recently spoke with a friend who’s a long time customer of a large, well-known chain with a very good reputation for customer service. She called the store nearest to her recently and asked for an item she needed for an upcoming trip; she was told it was in stock, gave them her credit card number, and arranged to pick it up on her way to the airport. It will be, she was told, at the special services desk.

When she arrived at the special services desk, not only was the item not there, they had no record of the transaction. They sent the customer upstairs to the department the item would have come from, where there was also no record of the transaction. So she was sent to yet a third place, with the same result. After 20 minutes of this, she left the store empty-handed but with a lot of frustration, and went to the airport. Eventually somebody at the store found her purchase and sent it to her, along with an apology and a store credit. She’s shopped with this company for years, and is still a semi-loyal customer.

That’s the good news. The bad news is this: every day, on her way to work, she passes within a hundred yards of the mall entrance for that store. “I’ll still use them for particular things, but to click on something and pop in and get it? I’m like, no way. I don’t have 20 minutes to spend chasing around.” In other words, she’s not giving them another chance when it comes to click and collect.

The Empowered Associate

Multiply that one instance by the number of people now trying click and collect — nearly 36 million of them on Black Friday weekend, according to ICSC’s numbers — and you have the potential for a lot of lost opportunity. The question is, how do you prevent that from happening?

I’m tempted to say technology — my employer, after all, is a company that develops technological solutions for the retail industry — but that’s only part of the answer. The retailer in the story above, for example, is by no means averse to technology; they were one of the first to put a tablet in the hands of their associates. What may have happened is that they thought, okay, we’ve done that; check the box and move on.

This is not a new story in retail. Retailers, and not for groundless reasons, tend to have a real fear of failure. Trying something new, at least in a pilot program, is common; rolling out to their associates usually follows the pilot; however, ongoing investment in it, making changes as the business and the customers change, is less common. Giving associates (or customer service representatives) the autonomy paired with the right tools and current, necessary information to handle a customer order from end to end is also fairly uncommon. I have seen a few examples of brute force making click and collect ‘work,’ but that is not a long term, scalable solution.

The Loyalty System

The point here is that the associate, the autonomy (“I can fix this for you, ma’am”), and the data the associate is working from are not freestanding elements; they’re part of a larger system. And the purpose of the system isn’t just to save a sale on a Black Friday special. It’s to cement the customer relationship. It’s to build loyalty with that customer so you are first in mind for their shopping decisions. It’s to enable your employees to do the best they can.

And the purpose of a loyalty system is customer retention. According to figures from conversion rate specialists Invesp, it costs five times as much to attract a new customer as to keep an existing one — even with the occasional appeasement. Compared to new customers, existing customers are 50% more likely to try new products, and to spend 31% more money.

If you’re a retailer and you’re offering click and collect, the in-store pickup is a make-it-or-break-it moment for customer loyalty. If it’s not easy, if the first associate the customer encounters can’t find the item, or worst of all if the item isn’t really there in the store, you’ve lost a customer.

Where Is It?

The core of this system we’re talking about — the thing you have to have to make it work well — is inventory accuracy. Which is a lot rarer than it needs to be. According to the Auburn University RFID Lab, the average level of inventory accuracy for U.S. retailers is 65%, meaning that more than a third of the time, the average retailer can’t tell where a particular item is, or whether they even have it in stock.

If you’re one of those retailers — maybe even one of the ones below 65% — this isn’t a criticism, or necessarily a problem. It’s an opportunity. Let’s just say a 3% improvement in inventory accuracy delivers a 1% overall sales lift. If a store managed to get from 65% accuracy to 93% — which, with the right systems in place, is totally doable — it would net a 9% increase in gross sales, with no other investment required.

It would also vastly improve your ability to execute an omnichannel strategy. If you don’t have 90%+ inventory accuracy, and you don’t have your merchandising and inventory data tied together and easily accessible to everyone who needs the information, you’re handicapping yourself in today’s — and tomorrow’s — retail market.

Single View Of Inventory

For example, retailers such as John Lewis — the largest omnichannel retailer in the UK — realized it was time to embark on a journey to a single view of inventory in order to meet the growing expectations of customers for convenience, choice and experience. They were finding multiple versions of stock information across their various systems and decided to make a change. “John Lewis wanted to implement a full end-to-end solution that fully integrated with the supplier. The new process would give us the information around a product and ability to launch a product online. Fundamentally, the benefits we’re driving will increase the speed to market with a seamless process working with new and existing systems,” said Susan Young, Head of Merchandising Strategy at John Lewis Partnership.

If retailers want to ensure their customers keep coming back, having a customer-friendly BOPIS process seems to be a good start. And to start that BOPIS process off on the right track, they need to put in place the processes and the complementary technology for associates to truly handle a customer order from end to end.


Carla Anderson is Senior Director: Merchandising Strategy at Oracle Retail.

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