Boosted by strong online buying, holiday sales for 2014 are expected to climb between 3.5 and 4 percent, according to analytics research firm Retail Next. Sales were down on Black Friday, however, and Retail Next says that actual store foot traffic dropped just over 8 percent.
That means the big winner from this holiday season is omni-channel shopping and the RFID technology that drives it.
“Black Friday sales were down and Wall Street thought it would be a bad holiday season,” says RFID expert Bill Hardgrave, Dean of the Harbert College of Business at Auburn University. “But overall sales were up, and people just shifted the way they buy. It re-emphasizes the idea of omni-channel shopping. Retailers are taking note.”
Omni-channel retailing allows shoppers to order an item online and arrange for same-day delivery (in some cases) or pickup at a local store. The key to the strategy is the high inventory accuracy provided by RFID. Retailers with RFID have high confidence in their inventory, allowing consumers to purchase a product online and pick it up at a store.
Hardgrave says that the shifting holiday shopping patterns represent a wakeup call for retailers that have not deployed RFID. Although two-thirds of the top 100 apparel retailers in the U.S. have engaged with RFID, only one-third of the mid-to-bottom 100 have begun to leverage the technology.
“A couple of retailers called me during the holiday season to inquire about RFID and a few more called the first week of January,” says Hardgrave. “None of them are using RFID, but the consumer behavior this holiday season is so indicative of omni-channel that they know they need to get there. They see the writing on the wall.”
Large retailers like Macy’s and Kohl’s relied heavily on omni-channel this holiday season. Macy’s emphasized its confidence in its RFID-driven inventory visibility by making its buy-online, pickup-in-store program available at all full-line Macy’s and Bloomingdale’s locations.
Macy’s also launched same-day delivery pilots in eight major Macy’s markets and four Bloomingdale’s markets to drive additional holiday sales.
“We have new store, omnichannel and marketing strategies in place that we believe will drive incremental business throughout the fourth quarter,” Terry J. Lundgren, chairman and chief executive officer of Macy’s, said in the company’s Q3 earnings release in October.
Kohl’s, meanwhile, which has widely adopted RFID over the last 18 months, allowed customers ordering online to pick up their items at more than 100 Kohl’s locations. Kohl’s fulfilled online orders from more than 800 stores in order to ship online orders faster and more accurately.
“We’re going to see a lot of movement at the mid to lower level of those biggest retailers,” says Hardgrave. “That’s where the action is going to be this year.”