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Story of retail stores...from my lens...

Why the retailers are not as successful as they should be?

Story of retail stores...from my lens...

Thursday March 02, 2017,

2 min Read

The business seems really profitable from a distance, but then why are the retailers not making money?

Let us first look at the problems that they face. There are three major problems that the brick and mortar stores have...

1. They are just 40% accurate about their inventory. They don't know what do they have in their stores. And that is true for most of them.

2. They have major leaks in their supply chain and have little or no idea about it.

3. In US alone, the organized theft from the retail stores is about 100 Billion (B as in Boy) dollars every year.

And with the relative success of Amazon, most brick and mortar stores decided to have their ecommerce portals as well. And the retailers want to use the existing infrastructure of stores and DCs (distribution centers) to arrange the delivery or for customer to pick-up. That opens up an absolutely new can of worms for the retailers, which sometimes is referred to as omni-channel in the retail world. It'll be interesting to see how the brick and mortar stores solve this problem as even after investing millions in their PoS (point of sale) and PoE (point of exit) and other systems, they aren't even close to solving their inventory and supply chain problems.

To solve their problems, what is required is a quick way to find which items are present in the sales floor (are where the customer buy their choice of items from), backroom (area where the items are kept for taking to the sales floor) or receiving (an area where the items are received from DC) of the store. Using barcode for each item is definitely not a solution as reading it is painfully slow.

RFID has proved to be effective but pretty expensive, especially when considering the cost of tagging be it at DC or at manufacturer (if there is only one supplier). On top of that, licensing and hardware for software for scanning tags in the store, it can bring it to anywhere between 50k-80k dollars per store.

Is Amazon GO the new solution that retail industry has been looking for? I wonder how expensive it will be.