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RFID will alter retail landscape in 2014

Retail continues to take a leading role in adopting RFID technology. Now that the mess created by patent licensing firm Round Rock Research has been mostly swept aside by the slew of patent agreements signed during Q4, RFID in retail is set to skyrocket in 2014.

Improved inventory accuracy is the primary goal derived by retailers deploying RFID. But it’s about much more than that. As retailers begin to harvest the data produced by item level tagging, new use cases are emerging that will change retailing forever.

Retailers like Macy's are driving new innovative use cases for RFID.

“The magic really happens when you enhance that customer experience with RFID,” says Bill Hardgrave, Dean of the College of Business at Auburn University and the founder of the RFID Research Center. “This year we’re going to see some of those “wow” applications.”

Retailers are embracing RFID for omni-channel retailing, counterfeit prevention, theft reduction, and to enhance brand loyalty by boosting consumer engagement. Today we examine how inventory accuracy leads to omni-channel retailing and some exciting consumer engaging apps. Next week we look at how RFID can be used in loss prevention and counterfeit detection.

Inventory accuracy has long been the achilles heel of retailers, who spent massive amounts of labor and money to take inventory, only to end up with accuracy levels of 65-67 percent. Retailers like Macy’s, Kohl’s and American Apparel are improving inventory accuracy to 98 percent or higher by deploying RFID.

With improved inventory accuracy comes higher sales and increased profitability for retailers. For consumers, the frustration of out-of-stocks is decreasing. Imagine the day when every product is in stock 100 percent of the time. That won’t happen anytime soon, but by the end of 2014 out-of-stocks will be less of an issue than they were last year.

Ironically, the solution for inventory accuracy and out-of-stocks will ultimately alter the consumer shopping experience. Now that some retail chains are confident about store-level inventory, they can use brick and mortar stores to fulfill orders placed from mobile devices, offering quicker delivery or same-day pickup.

Macy’s, for example, has more than 500 stores capable of fulfilling orders, thanks to the high degree of confidence from an item level RFID-enhanced inventory.

“We’ve been talking about omni-channel for a while, but I think we’ll see some true omni-channel deployments this year,” says Hardgrave. “I think we’ll see a couple of retailers that will really catch everyone’s imagination as far as what you can do when you really do know what products you have and where you have them. Then you are able to provide that customer with a true omni-channel experience. We’ll see some examples of that this year and that will set the tone for everyone else.”

Item level RFID is helping to eliminate out-of-stocks for retailers.

However, it’s those “magical” use cases that are exciting retailers. Apps like magic mirrors and fitting room solutions are no longer elusive. The highly accurate inventory data harvested by RFID may also allow retailers to cross-sell with other retailers, a strategy that was unheard of until recently.

Take a customer trying on a blouse in a fitting room at Macy’s. The interactive displays in the fitting room or on the customer’s mobile device will soon be able to display similar products or styles that are available on the retail floor, or might match the blouse with a skirt from a competing retailer.

“Retailer X might show you retailer Y’s blouse to go with your skirt, because it gives them the chance to not only sell their skirt, but to sell another retailer’s product in a cross-collaboration retail effort,” says Hardgrave.

“This year we’re going to see some of these “wow” applications that retailers will roll out based upon the RFID infrastructure that they have in place. These will be retailers who have been working on RFID and have solved those foundational problems (such as inventory accuracy) and now they can do something very special with the data.”

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