Retailers are still embracing RFID for the improved inventory accuracy that the technology provides, but many first adopters are beginning to look beyond inventory use cases.
Strong evidence exists that retailers are examining loss prevention, consumer engagement and multichannel store checkout options in addition to inventory accuracy.
At last week’s Auto ID and Sensing Expo at MIT, RFID guru Sanjay Sarma predicted that retailers are ready to make a strong move toward self-checkout. “Apple has already redefined retail, and the question is who will be next,” he said. “We’re going to start seeing more self checkout options soon. I am a big believer in that.”
Richard Jenkins, the head of RFID at UK-based Marks & Spencer, says that his company is looking well beyond inventory management use cases.
“There are so many doors that open once the cost of the tag is absorbed,” Jenkins said at last month’s RFID Live conference. “There are a good many touch points where this technology can be utilized in the supply chain and for customer experience and we’re just starting to scratch the surface.”
For example, M&S – which will consume 400 million UHF tags in 2014 — is using RFID in 40 stores to check for delivery discrepancies. “We’ve made great strides in terms of identifying the flow of merchandise in the store and why product is not where it should be at times,” he says. “We’ve made changes as the result of new information that RFID has provided us.”
Reacting to requests from retailers, the RFID Research Lab, which will re-open at Auburn University next month, is putting heavy emphasis on what it calls the “95 Percent Store,” a concept that will demonstrate how high inventory accuracy levels will impact store processes in the future.
Justin Patton, the longtime director of the RFID Lab, says that many retailers are inquiring about what their stores will look like in 10 years when item level RFID is commonplace. With that in mind, part of the new RFID Lab will devote a space to the “95 Percent Store,” emblematic of how a retail store will function with inventory accuracy levels at a constant 95 percent or higher.
“A major question we get from retailers, especially those who have been using RFID for a long time, is what will my store look like in five to 10 years,” says Patton. “That’s where the 95 percent concept came from. Retailers are excited to learn how inventory accuracy will change store processes.”
At the new RFID Lab, being built at an old supermarket near the Auburn campus, the “95 Percent Store” will emulate what processes might look like between back room and front room inventory, what processes employees will follow, and how those processes will impact checkout, display, promotions and other retail strategies in the future.
“The goal of the 95 percent store is to not only just show retailers how the technology works, but how it can change your store in the very near future when you begin to implement RFID,” says Patton. “So it’s the next generation of the store, rather than just seeing some handhelds scanning apparel items.”
Since inventory represents the top investment for retailers, executives are anxious to learn more about how the accuracy provided by RFID will impact shelf inventory and total store inventory levels, how changes can be made to reduce the amount of store inventory while maintaining the same or greater level of sales, and how new loss prevention strategies work.
RFID-enabled loss prevention provides retailers with a much different strategy than EAS tags. With RFID, retailers know exactly what went out the door and when. Aside from replenishing stolen products immediately, the solution also provides retailers with solid knowledge about what areas on the selling floor are prone to theft. It also allows them to differentiate between actual store shrink and other forms of inventory distortion.
By having accurate inventory counts, retailers will also be able to shift store associates from replenishment efforts to customer-facing positions and consumer engagement apps. As reported in January, the RFID-enabled kiosks being piloted by Kohl’s and the RFID-enabled fitting rooms being developed by Microsoft and Motorola are expected to grow in popularity as interest grows in RFID-enabled consumer engagement tools.
Consumer engagement will be a major focus at the Design Lab currently being built by Impinj. A maker of the chips used in RFID tags and other RFID solutions, Impinj will use the 11,000 square foot facility as a testing ground for some of the newest and cutting edge RFID technologies on the market that hold the potential to dramatically change retail strategies.
With its high ceilings, stocking areas, loading docks and point-of-sale counter, the old grocery store makes for a perfect site to test RFID products and demonstrate use cases for retailers eager to learn how to use RFID beyond inventory accuracy.
Impinj isn’t the only RFID solution provider catering to the retail industry’s desire to see how RFID will work in the future. Last month Nordic ID and Eti-Textil joined forces to create an RFID showroom on the Eti-Textil premises in Elche, Spain.
The RFID showroom resembles a small-scale retail store, containing shelves, racks and basic RFID equipment and tags. All garments in the showroom are equipped with Eti-Textile’s RFID tags. Visitors are free to use Nordic ID RFID mobile computers and fixed readers in RFID tests to determine RFID viability.