Retailers foresee challenges in counting post-pandemic stocks

SML Group research finds that the biggest concern is the visibility of idle inventory, which can be solved with an RFID solution

Claire Swedberg

Under normal circumstances, a supply chain in the clothing and footwear market in Europe and North America transports approximately three billion items between suppliers and stores each month. This is the estimate of radio frequency identification (RFID) supply chain technology company SML Group , which completed a survey of 20 retailers and brands about its reopening plans as pandemic quarantines increase in Asia, Europe and North America. SML’s research indicates that bringing visibility back to the supply chain is a top priority for companies.

When Covid-19 hit China and then Europe and North America, this “pipeline” of three billion items was emptied, according to Dean Frew, SML CTO and senior vice president of RFID solutions. Due to the hasty nature with which the quarantine began, goods collected in stores and warehouses simply ran out and need to be reordered. Therefore, when returning to business after two months of quarantine, many retailers face an unprecedented task of classifying, redirecting or marking the inventory that had been destined for sale months before.


SML interviewed about ten companies in North America and Europe, some of which are SML customers and others, to understand what the garment industry is most concerned about as it prepares to reopen. Inventory visibility is not the only concern, as stores and factories also need to identify ways to provide customer and worker security when reopening their business.

However, understanding inventory on store fronts and open or closed boxes in warehouses or distribution centers seems inaccessible to most companies, the survey indicated. SML found that, regardless of whether or not the stores deployed RFID technology, they all faced the task of understanding inventory levels. In fact, says Frew, at least one company reported that it had hundreds of containers loaded with goods it had not yet opened.

In addition, the sales model is changing as consumers are increasingly buying at home. This usually means placing orders online and picking up products from stores or sending them directly to homes. Without inventory visibility, these purchases can be difficult to guarantee. So now, with quarantines increasing by region, there is pressure for retailers and brands to analyze the inventory they have on site and decide to put it in the store for sale, mark it up or send it back.

SML classified survey respondents into three categories: those who already use RFID in their stores or supply chain, those who have RFID tags on their products but do not use the technology, and a third category in which companies do not have technology RFID in use. . The required system varies, says Frew, and SML is offering solutions and advice for each of these three categories.

The tech company experienced the same slowdown in production that the apparel market faced, says Frew, because its own factories in China stopped making their passive UHF RFID tags when the apparel factories suffered. SML’s label production has restarted in the past few weeks, he reports, and the company has begun to look at future challenges in the clothing market. With that in mind, he launched the survey to understand what his existing and potential customers were up against. “We were trying to understand something unprecedented,” he says. “This led me to talk to these retailers.”

Retailers with RFID technology already operational in their stores have an advantage, argues Frew, as they are already starting to perform inventory counts. As goods are tagged, employees can carry a hand-held RFID reader around a store, warehouse or warehouse and capture a real-time view of what is available. Stores can set up appropriate markdowns for goods that may be out of season, redirecting products that will not sell and requesting items not available for sale. With RFID, he notes, stores will be ready to offer sales quickly through the “buy online, pick up from the store” (BOPIS) or “send from the store” models.

For the second category, in which the tags are in place but not being used, SML offers a software as a service (SaaS) version of its Clarity software, along with the rental of handheld RFID readers, to help these companies to get their inventory counted and managed. SML is partnering with Zebra Technologies and Microsoft to provide the necessary handheld RFID readers and software.

The third category of retail and manufacturing companies – those that have not yet implemented RFID – can still benefit from using the technology now, notes Frew. For companies that don’t have tags or readers on the site, he adds: “We’re saying, ‘Go ahead and start tagging’.” SML can provide technology on-site so that a retainer can apply or produce them. service departments and deliver them to factories. Users can take advantage of SML’s temporary solution, he says, to more quickly leverage the labeled products in their inventory software.

After completing the survey, recalls Frew, the SML team was surprised by the “depth of the challenge” that respondents said they faced. For example, distribution centers reported that 70% of items received at their locations, in closed containers, still needed to be processed and diverted from the original plan. One company indicated that its storage yard contained hundreds of sealed containers that it will now need to process.

The challenge is also being felt in stores. Many of the retailers surveyed, according to SML, believe that the accuracy of their inventory is less than 50%. This is partly due to the shipping of goods, but never received at the store. In addition, less than 10% of retailers responded that they were prepared to effectively provide BOPIS sales to customers.

In the future, several retailers reported that less than five percent of their pre-quarantine orders are an accurate reflection of current consumer demand. “Demand will be less or different” in the near future, Frew predicts. For example, while they mark the prices of products that were waiting in storage, retailers are still unclear what the demand for new products will be. Without an automated system to track inventory movements, understanding of such trends will be limited for many brands and retailers, he predicts.

In addition, less than 10% of respondents think they have technology in place that will help them mark inventory prices. SML has been offering a price reduction solution with its Clarity software for the past six years, says Frew, which allows store employees to read or scan a product label and automatically update price information for this stock keeping unit ( SKU).

According to Frew, SML plans to offer as much flexibility as possible in its solutions to meet the needs of those with and without existing RFID solutions. “The feeling I had with this interview process,” he says, “was how hard the task is for them to physically tell everything and decide ‘What do you expect?’ and ‘What do you send back to the warehouse?’ It is a daunting task, especially when you add these issues to security. “

For those who already use RFID, Frew predicts, the transition to opening a business will be much faster than manually counting your stocks. “We are excited about them,” he says, “Your investments were wise. We hope that there are also great success stories for other companies ”. SML is currently in discussions with some of these companies. In the meantime, he says, the company has seen the launch of its RFID solution continue during the pandemic, with more than 400 new stores coming into operation since the beginning of 2020.



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