The jewelry industry typically enjoys shrink rates that are far lower than the rest of the retail world. That makes sense because so much inventory is held behind lock and key.
Even a relatively low industry shrink rate of 0.52 percent wasn’t good enough for Erin Limas, the chief financial officer at Borsheims, a single-store jeweler located in Omaha, Neb. With a high-priced inventory that includes a diamond that retails for $14 million, Limas turned to RFID to monitor the high-priced items throughout the 62,500 square-foot store and as a safeguard against employee theft.
The retailer first considered an RFID solution 10 years ago, but low read rates and a high price tag prevented a deployment. Now, Borsheims has tagged about 1,500 units, including luxury watches and about 1,000 diamond rings. By early June, Limas says her RFID-tagged inventory will increase to 5,000 units. The store carries 88,000 SKUs, but Limas only intends to tag a portion of its inventory.
“Our challenge was inventory shrink,” says Limas. “When you think about it, 0.52 percent is still a lot of $100 million in inventory. I was really worried about the expensive inventory.”
Borsheims, a one-store retailer owned by Warren Buffet’s Berkshire Hathaway, deployed a jewelry tracking solution called Zero Shrink provided by Boston-based TJS.
Since Borsheims began tagging watches and diamond rings, the store has experienced zero shrink on tagged items.
The store’s first objective was to tag expensive watches, which represent about $750,000 worth of inventory and are high theft items because of their high resale value. The store used to count the watches manually every day, but that process has been reduced to a 15 minute operation due to RFID. Watches are tagged with an HF cotton thread tag that costs 89 cents. The tags can be reused two or three times.
The tags for the diamond rings cost 59 cents apiece. They are also reusable, although Limas opts to throw them away after a single use.
Aside from inventory management and theft deterrent, RFID helps Limas’ staff to track and trace jewelry as it moves around the store, be it to the back room to be cleaned or if it is inadvertently relocated within the store. In addition, Limas says that RFID can help Borsheims to maintain its historically low prices by improving efficiencies and reducing employee theft.
“We had some employee theft in the past but we definitely don’t have the shrink levels that we used to,” says Limas. “Swiss watch brands have an incredible street value, and we got tired of seeing our watches on ebay.”