When you last bought a book, did you go into a bookstore to make your purchase or did you logonto a web seller? Chances are that you bought it from a bookstore. But depending on which European country you live in, there is between a one in five and a one in 10 chance that you bought your volume online.
Now let me pose another question. If you bought online, what was the reason? Perhaps you didn’t have time to visit the bookstore? More probably, it was because you weren’t certain your local store would have the title you wanted.
I mention this because one of the drivers of online buying seems to be customers’ frustrations at not finding what they want in the shop they plan to visit. And we’re not just talking books here. In one product area after another the internet outstrips the high street in its ability to offer a wider range to the consumer.
So how is the high street store to meet this very real competitive threat? Well, one obvious answer is to increase the range of stock held. But that’s no easy task because it involves fine tuning stock ranges and holding smaller quantities of existing ranges to make way for new. It also means being able to restock a larger number of ranges quickly.
Which is why a move by a Dutch bookstore chain could be more significant than it first appears. Boekhandels Groep Nederland (BGN) has recently started to use radio frequency identification (RFID) at item rather than pallet level in some of its stores.
By the end of this year, BGN should have rolled the system out to all of its 40-plus stores. The firm talks encouragingly about dramatic labour savings, reducing reconciliation costs and improving stock control.
And let’s not knock these benefits. According to retail consultancy Martec International, as many as 30 per cent of orders in this kind of situation need reconciliation because of pricing or quantity discrepancies. Not having to pay staff to sort out such snafus means they can either be sent into the store to help customers – or sent off to find work elsewhere.
But the broader significance for big retailers lies in the other benefits BGN is claiming for the system. It says that where it has deployed its new approach so far, it has increased ‘shopper basket size’ and enriched ‘shopper experience’.
What is means by the first of these pieces of jargon is that people who go into the stores buy more books. The second slice of jargon means that fewer shoppers walk out not having been able to find the book they were looking for.
So how does this all work? When a store needs to replenish stock, it orders books from a central warehouse. The central warehouse affixes a unique RFID tag to each book before it is packed and sent out. The warehouse also sends the store an electronic advanced shipping notice of the books it is despatching.
When the boxes of books reach the store they are passed through an RFID tunnel which reads the tags on the books and reconciles the order with the books on the advanced shipping notice.
Now, the main problem with doing this at item rather than pallet level is that it generates massive amounts of data. So in setting up the system, BGN had to find a way to reduce to manageable proportions the vast amounts of data that RFID reading generates.
Jan Vink, BGN’s IT director, has done this by installing software that filters the raw data from RFID tunnel readings – where one book can be read multiple times – so that there is only one piece of data for each book. ‘From the moment you have a unique ID for a book, your data networking is manageable,’ he says.
With a database of information about which books are in which store – even where in the store – it has been possible to develop a system that allows customers to search for books through store kiosks or on the internet.
Customers then have the choice of buying the book there and then or ordering it if it’s not in stock. When competing with the intrenet, It’s a lesson other retailers should take to heart.
Peter Bartram is a Business witer and Journalist, a regular Columnist for Supply Chain Standard, and Author of Twenty Books