The True Cost of Inaccurate Inventory on Retail Sales

Accurate inventory management is vital to retail success. Within the State of Retail Insight Report (2023), 48% of retailers reported frequently out-of-stock items are the “biggest challenge” to serving customers. Meanwhile, a lack of visibility within the supply chain also creates inefficiencies. Both of these challenges can have a negative impact on future sales and overall business performance. From the supply chain to the in-store experience, an inaccurate inventory affects every level in a retail organization. When seeking retail solutions that directly address inventory inaccuracy, RFID technology has demonstrated it can achieve and maintain near-perfect inventory visibility. Clarity brings a huge upside: increased sales and profitability.

Stock Availability Challenges

An inaccurate inventory is an ongoing problem for many retailers. Because they are misinformed about the stock on-hand, or the specific products they have, it can cause them to overstock items. The misrepresented inventory can result in additional costs for purchasing, manufacturing, and transporting unneeded items. Furthermore, when retailers with bloated inventory receive deliveries at warehouses and stores, there is an additional labor cost to process and store items. This adds to a growing problem. When retailers process more products than they need to reach performance goals, the end result is decreased profitability.

When customers shop in-store or leverage omnichannel fulfillment options to purchase items, inaccurate inventory levels can negatively impact their shopping experience. Without access to accurate, real-time data, retailers will struggle to consistently fulfill orders. Whether staff are unable to find items that in-store customers have requested, or ordered online to pick up in-store, the overall shopping experience is negatively impacted. This loss of a sale can quickly spiral into many, as customers seek alternative retailers to meet their needs. Also, canceled buy-online-pickup-in-store (BOPIS) orders can have an impact on in-store sales, as the opportunity to drive additional customer traffic to the retailer is compromised.

Introducing RFID

RFID technology can improve inventory accuracy by up to 99%. With the proper technology in place, retailers are able to track their inventory across their supply chain, seamlessly and effectively. With enhanced inventory accuracy and stock level visibility, retailers can identify excess inventory and avoid carrying unneeded items. When the technology comes together, transportation and storage costs are optimized and retailers maximize profits.

Fulfilling customer orders is a necessity in retail. RFID technology facilitates order fulfillment by providing accurate and near real-time information on inventory levels. With this information, retailers can provide reliable stock availability for omnichannel shoppers and in-store staff can quickly find items for their customers. This assurance eliminates the frustration of out-of-stock items, improving the overall shopping experience.

Embracing Innovation

Stock availability poses a significant challenge for retailers. It is a challenge that affects their operational efficiency and customer satisfaction. An inaccurate inventory can lead to a significant increase in costs, damage to brand perception, and erode customer loyalty. To thrive in an increasingly competitive landscape, leveraging RFID will be the key to driving future profits. Retailers that do not embrace RFID will struggle to capture market share from competitors who adopted the technology early.

To discover how your business can benefit from RFID technology visit our resources page or contact us.