RFID Talk Blog

Guest Blog: RFID is a game-changer for omni-channel retailers

For years, RFID has been discussed as an important technology for retailers looking to make their operations more efficient and responsive to rapid changes in business requirements. Now that many retailers have adopted RFID in some way, there is a big movement toward integration of item-level RFID for a variety of products. Major retailers are aggressively deploying item-level RFID for a wide array of merchandise, leveraging a single RFID tag for both inventory management and shrink management using the same in-store infrastructure.

RFID’s credentials in retail are now well established and widely accepted. With RFID, inventory accuracy typically increases from 60 percent to between 95 percent and 99 percent, according to Auburn University. Published reports reveal that this increase in inventory accuracy has been shown to enable retailers to reduce out-of-stocks by as much as 80 percent, with sales increases typically ranging from 4 to 10 percent, and sometimes more in certain instances.

Farrokh Abadi, President and Chief Operating Officer, Shrink Management and Merchandise Visibility Solutions, Checkpoint Systems

And when it comes to omni-channel retailing, RFID may be the “silver bullet” that helps retailers improve customer service and increase competitiveness. “The key is empowering stores with online capabilities and a secret ingredient: RFID,” IHL Group analysts Lee Holman and Greg Buzek wrote in a study this year.

IHL notes that 48 percent of retailers surveyed for their research already have the ability to check inventory at other stores, with another 23 percent indicating they intend to do so within the next two years. RFID clearly is a powerful accelerator of this trend. IHL also points out that RFID has a synergistic impact for retailers because of its ability to be used at the item level for shrink management, theft event analysis and, most importantly, “improving inventory accuracy and the ability to meet customer needs while they are in the store.” This is certainly an important and powerful driver of the customer shopping experience.

Marshall Kay of RFID Sherpas, a leading consultancy that advises retailers on how to utilize RFID in their operations, sees shrink management as an ideal application for RFID because of the technology’s ability to capture, analyze and report huge amounts of unstructured data, such as surveillance camera video feeds and point-of-sale transactions. RFID’s role in shrink management will likely be a strategic one, he says, because the technology is flexible enough to identify shrink sources, help detect and deter theft, and even aid in the apprehension and prosecution of thieves.

The “I’s” Have It: Integrated, Intelligent and Insightful.

New and increasingly complex pressures on retailers – from omni-channel retailing and big data analytics to improving operational efficiencies – require new ways to solve problems. There is a need for new retail technology solutions to conform to the “Three I’s: Integrated, Intelligent and Insightful.”

Retailers need “integrated” solutions that reflect the way they do business, with applications working together in a tightly integrated, synergistic fashion. Reducing shrink increasingly means looking at all store processes, from the receiving dock to the back of the store, from the back to the selling floor, and then from shelves to point of sale and store exits.

Just as retail processes are integrated, solutions have to tie together inventory management and shrink management in a seamless, cost-efficient manner, with the ultimate goal of improving merchandise availability. Ideally, those solutions will allow retailers to future-proof their infrastructure and allow interoperability and even integration of systems for shrink management and inventory management.

Research firm Retail Systems Research has written extensively about the importance of using advanced data analytics and making improvements to traditional perpetual inventory processes as key steps in reducing shrink in retailers’ stores. “Everyone stands to gain profoundly from smarter, less labor-intensive intelligence software, none more so than those in the LP department,” they wrote in their 2011 report “Loss Prevention in a Post-Recession World,” adding, “The time to take advantage of next-gen analytics is at hand.”

Black Friday, RFID, retailers

Apparel retailers are rapidly adopting RFID to improve inventory accuracy and as an added loss prevention tool.

Using that logic, it’s clear that retail solutions also must be “intelligent,” in that they must leverage the huge increases of different forms of data now being created, shared and analyzed on various systems and devices – from WiFi networks and Bluetooth devices to RFID-equipped receiving docks and checkout systems. Those intelligent solutions must be robust enough to help retailers being overwhelmed by this dramatic influx of data, while agile enough to help them quickly and reliably find the proverbial “needle in the haystack.”

Lastly, retailers need more than just forensic reporting on what happened in their store; they need their systems to be insightful in helping them be proactive in their decision-making. New systems can help retailers make smarter, faster decisions in real-time on everything from understanding which merchandising programs are working most efficiently to determining how to schedule their staff more efficiently to increase sales, reduce shrink and improve the shopper experience.

When solutions are integrated, intelligent and insightful, retailers gain essential improvements in operating efficiencies, helping them squeeze out unnecessary costs while driving new sales opportunities through omni-channel retailing, open merchandising and, most importantly, merchandise availability.

 

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